Gulf International Bank B.S.C. (GIB) reported a net profit of $7.9 million for the first quarter of 2021 attributable to the shareholders of the parent, compared to a loss of $47.4 million in the prior year period. The consolidated GIB Group achieved a net profit of $14.1 million compared to a loss of $60.5 million in the same period last year.
Total revenues of $90.6 million for the three months were $17.5 million or 24% up on the prior year with increases recorded in almost all revenue categories. The year-on-year increase in the bank’s core revenue reflects the successful progress in implementing the bank’s strategic transformation plan.
A $24.5 million increase in non-interest income more than compensated lower net interest income, which was due to the pandemic-driven market reduction in interest rates. Net interest income also benefited from marked increases in both loan volumes and loan margins. Fee and commission income at $17.1 million was 30% up on the previous year, reflecting the success of the bank’s strategic revenue diversification initiatives. Increases were recorded in asset management, corporate advisory, trade-related and global transaction-banking fees. Foreign exchange income at $5.9 million was in line with the prior year period and comprised of revenue derived from customer-related activities, including structured products designed to assist customers in hedging their foreign exchange exposures in current volatile markets. Trading income at $9.8 million was significantly up on the loss recorded in 2020, and largely comprised of a strong rebound on the bank’s trading portfolio through gains on investments in funds managed by the bank’s Saudi-Arabian based subsidiary (GIB KSA) and London-based subsidiary (GIB UK). Other income of $1.8 million for the three months was lower than the prior year period due to a one-off gain on the sale of investment debt securities in 2020.
Total expenses at $65.8 million for the three months were 3% lower than the prior year period despite incremental costs associated with the strategic transformation and digitisation of the bank’s infrastructure it’s digital retail banking proposition. The year-on-year decrease in expenses was the result of continued focus on cost optimisation and efficiencies, another of the bank’s strategic pillars. As a result of the enhanced governance on spend and optimisation, the bank expects to continuously improve its cost-to-income ratio going forward.
The provision charge for the first quarter was $9.8 million, compared to a $65.7 million in the first quarter of 2020, a year in which the bank took the prudent measure of providing for the remainder of its historical legacy portfolio.
Basic and diluted earnings per share attributable to the shareholders of the bank reached $0.32 cents compared to a loss of $1.90 cents per share in the prior period. Total comprehensive income attributable to the shareholders of the parent reached $23.3 million compared to a $58.4 million loss in the prior year period, driven by fair value rebound of FVOCI investments and a stronger 2021 performance.
Total shareholders’ equity excluding minority interest increased by 2% during the year to reach $2.1 billion (Dec-20: $2.1billion) and include accumulated losses of $820.8 million which represent 32.8% of capital and reserves of $427.3 million which represent 17.1% of capital.
Consolidated total assets at the quarter end were $35.8 billion enhanced by client related liability driven transactions, and up by 21% from December 2020 level of $29.6 billion. The asset profile at 31st March 2021 reflected a high level of liquidity. Cash and other liquid assets, and short-term placements totalled $19.7 billion, representing a prudently high 55% of total assets. Investment securities principally comprised highly rated and liquid debt securities issued by major financial institutions and regional government-related entities, and amounted to $4.4 billion at the end of the first quarter. Loans and advances amounted to $10.8 billion, being $0.3 billion or 3% higher than at the 2020 year-end.
The bank’s funding profile remained diversified and healthy in the first quarter of 2021 with customer deposits of $25.7 billion comprising the majority of total deposits. GIB’s robust funding position demonstrates the confidence of the bank’s customers and counterparties based on its strong ownership and financial strength. This provides a stable platform for the growth expected in the remainder of the year and going forward, and is reflected in the liquidity coverage ratio of 131.3% and the net stable funding ratio of 165.1%, both significantly above regulatory limits. The Basel 3 total capital adequacy ratio at the quarter end was exceptionally strong at 16.8%.
The financial statements for the first quarter of 2021 were reviewed by the external auditors Ernst & Young (EY) and comply with International Accounting Standard (IAS) 34 as modified by the CBB.
Gulf International Bank B.S.C. is a pan GCC universal bank established in 1975 and regulated by the Central Bank of Bahrain. GIB’s services are delivered across the GCC and international markets through its subsidiaries: GIB Saudi Arabia, GIB (UK) Ltd. Additionally, the bank has branches in London, New York, and Abu Dhabi, in addition to a representative office in Dubai.
GIB is owned by the governments of the Gulf Cooperation Council countries, with Saudi Arabia’s Public Investment Fund being the primary shareholder.