In the second quarter of 2023, the positive trend continues as the net profit attributable to Shareholders of the Bank surges to $33.4 million, an increase of 27%, surpassing last year’s $26.3 million for the same period. This impressive performance is due to a 58% growth in net interest income, reaching $121.5 million, driven by favourable interest rate environment and improved margins. Additionally, foreign exchange income increased by 45% to $9.4 million, primarily from customer-initiated foreign exchange contracts, and trading income improved to $12.9 million. The second quarter provisions reported a charge of $29.1 million, compared to a provision release of $0.9 million in the second quarter of 2022.
The basic and diluted earnings per share attributable to Shareholders of the Bank amounted to US$1.67 cents during the second quarter of 2023, up from US$1.05 cents per share in the same period last year. Total comprehensive income attributable to Shareholders of the Bank during the quarter increased by 86% to $38.7 million compared to $20.8 million from the same period last year.
For the first half of 2023, the Bank’s outstanding performance demonstrates its strategic focus on enhancing and diversifying its core revenue. The Bank achieved a remarkable 108% increase in net profit attributable to Shareholders of the Bank, reaching $81.2 million compared to $39.1 million in the prior year period. The Bank’s net income for the first half of 2023 reached $96.5 million, compared to $46.6 million for the same period last year, representing a 107% increase.
Net interest income at $241.9 million was 67% higher than the prior year, attributed to an efficient balance sheet structure, enhanced lending margins, and the rising interest rate environment. Foreign exchange income of $19.7 million was higher than the prior year period, primarily due to positive traction in maximizing cross-sell activities. The trading income of $25.4 million was significantly higher than the trading loss recorded in 2022 of $3.9 million, primarily related to improved market value of equity funds managed by the Bank’s Saudi-Arabian based subsidiary (GIB Capital) and the London-based subsidiary (GIB UK).
Total operating costs of $182.5 million for the six months were 18% higher than the prior period, reflecting the Bank’s ongoing investment to support strategic growth and transformation.
The provision charge for the first half of $47.6 million compared to a $8.9 million charge in the first half of 2022 reflects the Bank’s prudent approach to risk management. The NPL ratio is at its lowest level of 1.3% as of June 30, 2023 (December 2022: 1.7%).
Basic and diluted earnings per share attributable to Shareholders of the Bank reached US$4.06 cents compared to US$1.56 cents per share in the prior period. Total comprehensive income attributable to Shareholders of the Bank reached $87.4 million, compared to $50.2 million in the prior year period, representing a 74% increase.
Total shareholders’ equity, excluding minority interest, increased by 4% during the period to reach $2.3 billion (December 31, 2022: $2.2 billion) and includes reserves of $222.5 million, which represent 11% of capital, and retained earnings of $86.5 million, representing 4% of capital.
Consolidated total assets at the half-year end were $44.3 billion, up 36% from the December 2022 level of $32.6 billion. Cash and other liquid assets, including short-term placements, reached $23.1 billion, representing a stable level of liquidity and accounting for 52% of total assets compared to 41% as of December 31, 2022. Investment securities of $6.5 billion principally comprised highly rated and liquid debt securities issued by major financial institutions and regional government-related entities. Loans and advances grew by 9% during the period to reach $12.6 billion.
The Bank’s funding profile remained strong in the first half of 2023, with customer deposits of $32.6 billion comprising the majority of total deposits. The Bank’s solid funding position demonstrates the confidence of the Bank’s customers and counterparties based on its strong ownership and financial strength. The Bank maintained a healthy capitalization level, with a liquidity coverage ratio of 146.8% and net stable funding ratio of 146.7%, both significantly above regulatory limits, demonstrating the Bank’s strong liquidity. The Basel 3 total capital adequacy ratio at the quarter-end was strong at 16.1%.
The financial statements for the first half of 2023 were reviewed by the external auditors Ernst & Young (EY) and comply with International Accounting Standard (IAS) 34 – Interim Financial Reporting.
Fitch Ratings have upgraded Gulf International Bank B.S.C.’s (GIB) Viability Rating (VR) to investment grade ‘bbb-‘ from ‘bb+’, while affirming the Long-Term Issuer Default Ratings (IDRs) at ‘A-‘ with a Stable Outlook.
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.