Gulf International Bank, the Bahrain-based lender backed by Saudi Arabia’s Public Investment Fund, reported a 27 per cent rise in its net profit, boosted by a sharp increase in net interest income amid continued economic momentum.
Net profit attributable to shareholders for the three-month period to the end of June climbed to $33.4 million, GIB said in a statement on Tuesday.
Total comprehensive income for the reporting period surged by 86 per cent to $38.7 million on an annual basis.
“This impressive performance is due to a 58 per cent growth in net interest income, reaching $121.5 million, driven by favourable interest rate environment and improved margins,” the lender said.
A 45 per cent rise in foreign exchange income to $9.4 million, primarily driven by customer-initiated foreign exchange contracts, as well as an improvement in trading income to $12.9 million also supported the quarterly profit, GIB said.
Banks in the GCC are beneficiaries of higher interest rates amid relatively lower inflation in the hydrocarbon-rich region.
Most central banks in the six-member GCC economic bloc peg their currencies to the US dollar and follow the US Federal Reserve's interest rate moves.
The Fed has aggressively increased its benchmark rates over the past several quarters to bring inflation down to a 2 per cent target range in the world's largest economy.
In July, the US regulator increased its policy rate by 0.25 percentage points, pushing it to the highest level in 22 years. It is expected to raise the rates at least one more time this year.
GIB, which is a pan-GCC bank established in 1975 and is regulated by the Central Bank of Bahrain, said its net income for the first six months of the year more than doubled to $81.2 million, up from $39.1 million a year earlier.
“The bank's outstanding performance demonstrates its strategic focus on enhancing and diversifying its core revenue,” the lender said.
Net interest income at $241.9 million was 67 per cent higher on an annual basis, driven by “an efficient balance sheet structure, enhanced lending margins”, GIB said.
Trading income for the first half of this year jumped to $25.4 million, compared a loss for the same period in 2022, primarily due to the improved market value of equity funds managed by the bank’s Saudi-Arabia and London-based subsidiaries.
Provision charge for loan losses during the reporting period, however, rose to $47.6 million, significantly higher than $8.9 million reported in the first half of 2022, which, GIB said, “reflects the bank's prudent approach to risk management”.
GIB, which is owned by all the GCC governments with the PIF being its main shareholder, said its total assets at the end of June reached $44.3 billion, a 36 per cent rise from the end of December 2022.