Apicorp’s full-year profit jumps on strong treasury and capital market gains

Total assets grew by 10.8% to $8.85bn, strengthened by a 48% increase in treasury assets

Apicorp's headquarters in Al Khobar, Saudi Arabia. The lender's total assets reached $8.85 billion in 2022. Photo: Apicorp

The Arab Petroleum Investments Corporation, a multilateral lender focused on the energy sector, reported a 40 per cent jump in profit in 2022 from the previous year on strong balance-sheet growth.

Apicorp’s total comprehensive income jumped to $164 million in the year to the end of December 2022, while total assets grew 10.8 per cent to $8.85 billion, it said in a statement.

The lender's balance-sheet strengthened by a 48 per cent gain in treasury assets, which reached $3.27 billion last year.

“The growth was fuelled mainly by good opportunities available in money-market placements and excess funding raised that was not deployed by the corporate banking unit,” Apicorp said.

“During the financial year 2022, we successfully navigated a volatile market with extraordinary resilience that has positively impacted our balance sheet and income. Our vision has allowed us to capitalise on market forces and post exceptional results across all business units,” said Khalid Al-Ruwaigh, chief executive of Apicorp.

Gross recurring operating income from its investments unit increased 11 per cent to more than $137 million last year, driven by higher dividend and investment income that reached $121.5 million.

The lender also benefitted from more than $15.5 million in capital gains following the sale of stakes in portfolio companies including Saudi Aramco, Ashtead Technology and Yellow Door Energy.

Apicorp is owned by 10 members of the Organisation of Arab Petroleum Exporting Countries — Saudi Arabia, UAE, Kuwait, Libya, Iraq, Qatar, Algeria, Bahrain, Egypt and Syria.

The multilateral lender was set up in 1975 to extend financial support to Arab countries in the energy sector.

“Apicorp posted strong results against a volatile macroeconomic backdrop that included a significant drop in global equity prices and interest rates,” it said.

The lender’s investment portfolio assets grew by $191 million to $1.2 billion last year.

“Guided by our strategic priorities and legacy of financing for impact, we continued to solidify our position as a trusted partner for the Arab energy sector and a leading catalyst for a balanced energy transition in the region,” said Aabed Al-Saadoun, chairman of Apicorp.

Despite the high interest-rate environment pushing up its funding costs, the lender benefitted from higher yields on its financing portfolio.

Its cost of funding during the year jumped by $54 million to $128 million, driven by a sharp increase in average three-month Libor (London interbank offered rates) to 2.38 per cent last year from 0.16 in 2021.

Buoyed by higher interest rates, Apicorp’s gross operating income from its corporate banking and treasury and capital markets assets registered gains of $198 million and $70 million, respectively, last year, compared with a gain of $122 million and a loss of nearly $12.5 million in 2021.

“The high interest-rate environment provided a significant upward push to our performance, but at the same time presented challenges in terms of the cost of funding which we were able to navigate through optimisation of our funding solutions,” said Mr Al-Ruwaigh.

Apicorp said 2022 was marked by several significant milestones in the sustainability space as it continued its drive toward supporting a balanced energy transition. They include deploying more than $335 million from its debut green bond proceeds to eligible projects and the launch of the Arab region’s first Sharia-compliant financing facility for voluntary carbon offsets.