Muscat: Gulf International Bank (GIB) reported consolidated net income after tax of $50.2 million for the six months ended June 2014, compared to $60.6 million in the prior year period. Net income after tax in the second quarter was $21.1 million.
Total income at $134.4 million was $4.8 million or 4 per cent up on the prior year with year-on-year increases recorded in all income categories with the exception of foreign exchange income and trading income.
Net interest income at $76.6 million for the six months of 2014 was $0.4 million up on the prior year period.
The year-on-year increase in net interest income principally reflected further increases in both loan volumes and loan margins as the bank successfully reorientates its lending activities from transactional-based long term project and structured finance to relationship-based large and mid-cap corporates.
The resultant increase in net interest income was partially offset by lower interest received from impaired loans, which were exceptionally high in 2013, and higher costs associated with balance sheet management initiatives.
These initiatives are part of an on-going programme to minimise the mismatch between the maturities of assets and liabilities. In this context, in May 2014 GIB issued a 2-billion Saudi riyals five-year floating rate note to investors in Saudi Arabia at a highly optimal spread of 72.5 basis points above Saibor.
During the first half of 2014, the nurturing of relationships with large and mid-cap corporates since the adoption of the new business strategy resulted in a 10 per cent increase in average loan volumes as well as increased non-asset based customer-related activities. Fee and commission income at $35.4 million was $7.2 million or 26 per cent up on the prior year, and comprised more than one quarter of total income.