United Gulf Bank (UGB), the investment banking and asset management subsidiary of Kipco Group, managed to strengthen its balance sheet last year despite testing times for the sector.

The bank retained a strong balance sheet with total equity of $603.2 million against a $600.8 million a year before and a capital adequacy ratio of 18 per c, well above the Central Bank of Bahrain's minimum level of 12.5 per cent.

UGB saw net profit fall to $1.5 million from $38.7 million the previous year and basic earnings per share were down to 0.18 cents from 4.71 cents.

In order to maintain healthy capital, liquidity and retain resources for future growth, UGB's board has decided to recommend no shareholder dividend for 2011.

UGB explained that the decrease in net profit in 2011 was due to reduced investment fees, commission income and investment impairment provisions.

However, this fall was offset by an almost nine-fold increase in UGB's share of profits from its commercial banking associates. UGB also reduced its expenses during the year.

"Overall, 2011 was a difficult year for UGB with economic uncertainty across the region," said chairman Masaud Hayat.

"As a result, regional stock markets and asset values recorded negative returns. This situation had an impact on our results, but this was partly offset by a major increase in our share of profits from our commercial banking associates.

"This bodes well for the next 12 months and shows the resilience of our investment portfolio. In 2011, our focus was to manage the liquidity and strengthen our capital position - both of which we achieved.

"Even though our profitability was significantly lower in 2011 compared to 2010, we believe UGB is well positioned to capture any upturn in the market in 2012," he added.-TradeArabia News Service