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Gulf International Bank B.S.C announces full year profit of $104.5 million

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At their meeting on Thursday, 16th February 2012, the Board of Directors of Gulf International Bank B.S.C. (GIB or the Bank) approved the consolidated financial statements for the year ended 31st December 2011.

GIB recorded consolidated net income after tax of $104.5 million being $4.1 million or 4 per cent up on the prior year. Net income after tax in the fourth quarter was $19.9 million compared to $14.3 million in the fourth quarter of 2010.

Year-on-year increases were recorded in all income categories, with the exception of net interest income. Net interest income, which at $143.8 million represented the Bank’s principal income source, was 8 per cent down on 2010. The year-on-year decrease was attributable to a lower average loan volume associated with ongoing derisking initiatives, and an increase in the cost of term finance as a result of proactive actions taken to minimise the mismatch in the maturity profile of the Bank’s assets and liabilities. While the additional term finance resulted in an increased cost to the Bank, it significantly reduced the Bank’s previous reliance on less stable short-term wholesale funding, thereby protecting the Bank in the prevailing stressed market environment. In particular, the minimisation of reliance on short-term wholesale funding helped to isolate the Bank from the effects of the eurozone crisis. At the 2011 year end, only 9 per cent of the loan portfolio was funded by wholesale customer deposits. As recognised by the international credit rating agencies, the managed reduction in the leverage of the loan portfolio to a more prudent multiple of equity has strengthened the Bank’s risk positioning.

Fee-related income at $48.5 million was $6.3 million or 15 per cent higher than the previous year. As a result, fee-based income comprised 21 per cent of total income, reflecting positive progress in the implementation of GIB’s new strategic focus on non-asset based, relationship-orientated services. Trade finance-related commissions in particular recorded a 42 per cent year-on-year growth. Trading income at $17.6 million for the year was $4.9 million or 39 per cent up on the prior year, reflecting strong customer-related foreign exchange income. Other income of $17.0 million consisted principally of dividends received from listed equity investments and profits realised on the sale of investment securities. Total expenses of $119.8 million were $6.5 million or 6 per cent up on the prior year. The year-on-year increase in expenses reflected ongoing investment in the implementation of GIB’s new GCC-focused universal banking strategy. A net provision release of $1.9 million was recorded for 2011. The provision release arose on the repayment and settlement of provisioned exposures. The absence of a net provisioning requirement reflected the prudent and conservative provisioning actions taken by the Bank in previous years.

GIB’s Chairman H.E. Jammaz bin Abdullah Al-Suhaimi, commented: “I am pleased with the progress made in the implementation of GIB’s new strategy, which aims at a total transformation of the way the Bank conducts its business and will take it into new frontiers of sophisticated banking. The strategy aims to transform GIB into a pan-GCC universal bank incorporating a unique retail bank offering. The development phase of this strategy was completed in 2010, and the first steps towards implementation were executed in 2011. The strategy implementation has involved the restructuring of the wholesale banking activity and preparations for the launch of a new retail banking business.”

H.E. Al-Suhaimi continued, “We believe that these measures will, within a few years, achieve the levels of profitability and return on equity in line with the expectations of our shareholders. The new institution will also benefit from more diversified and stable funding, thus reducing volatility and minimising the effects of external shocks.  I am confident that the Bank is well placed to take advantage of new business opportunities, continue its key role in Saudi Arabia and the region as a leading financial institution, and ensure prosperity for all its stakeholders.”

Dr. Yahya bin Abdullah Alyahya, GIB’s Chief Executive Officer, stated: “We are delighted to report continued profitability growth in 2011 despite ongoing initiatives to derisk the wholesale lending portfolio and improve the funding profile of the Bank, while at the same time investing in the future of the Bank through new strategic initiatives. GIB’s robust funding position during 2011 reflected the confidence the Bank’s customers and counterparties have in its strong ownership and financial strength. GIB raised $900 million of new term finance during the year, thereby successfully reducing the Bank’s reliance on short-term wholesale funding. Of particular note, during 2011 GIB successfully issued its first ever Shariah-compliant term finance facility, a $300 million Sukuk-al-Murabaha private placement.”

He added, “GIB has been frequently recognised for its commitment to professionalism and excellence, and the very best in customer service. In 2011, the Bank was presented with a number of awards, including three awards from Global Banking and Finance Review: Best Investment Bank in the GCC, Best Investment Bank in Bahrain, and Best Investment Bank in KSA for our subsidiary, GIB Capital. New York-based Global Finance magazine also selected GIB as the Best Investment Bank in Bahrain for 2011, while UK-based emeafinance magazine named GIB as the Best Local Investment Bank in Bahrain.”

Dr. Alyahya continued: “Underscoring GIB’s financial performance was the re-affirmation of the Bank’s long-term issuer ratings by Fitch, Moody’s and Standard & Poor’s. The agencies noted GIB’s strong ownership and capitalisation, improved liquidity, and conservative provisioning. Such recognition constitutes a positive independent endorsement of the proactive and conclusive actions taken by GIB and its shareholders to address the challenges created by the global financial crisis.”

Dr. Alyahya also indicated that “the Bank’s Basel 2 Total and Tier 1 capital adequacy ratios at 31st December 2011 were 23.3 per cent and 19.2 per cent respectively. These are both exceptionally high by international comparison, underscoring the Bank’s intrinsic financial strength. With these strong capital ratios and as a result of the actions taken to strengthen the Bank’s liquidity position, GIB is already in full compliance with almost all of the Basel Committee’s Basel 3 guidelines that are planned to be implemented over the next few years.”
Consolidated total assets at 31st December 2011 were $16.8 billion. The asset profile at the 2011 year end reflected a high level of liquidity that is being maintained as a precautionary measure in the prevailing market environment. Placements and liquid assets amounted to $6.5 billion at the year end, representing a very high 39 per cent of total assets. In addition, investment securities, which principally comprise highly rated and liquid debt securities issued by major financial institutions and regional government-related entities, amounted to $3.2 billion. Following the actions taken in 2009 and 2010 to derisk the balance sheet and eliminate the Bank’s vulnerability to external shocks, GIB has no direct exposure to European government debt impacted by the eurozone crisis and has accordingly not been impacted by the turmoil in the European debt markets. Loans and advances amounted to $6.8 billion, being $0.8 billion down on the 2010 year end level. As a result, the loan to equity ratio was a conservative 3.4 times, while the ratio of loans to customer deposits and term finance was a prudent 53 per cent. The Bank is applying a prudent approach to its funding activities in the current environment, with a focus on enhancing non-asset based fee income. At the end of 2011, customer deposits represented 85 per cent of total deposits. Importantly, the Bank is a net placer of funds in the interbank market. Term finance at the year end amounted to $4.2 billion, being $0.5 billion up on the 2010 year end. In December, the Bank successfully issued a $300 million three-year Sukuk-al-Murabaha private placement as part of $900 million of new term finance raised during the year.

Gulf International Bank (GIB) is a leading bank in the Middle East with its principal focus on the Gulf Cooperation Council (GCC) states. The Bank is 97.2 per cent owned by the Government of Saudi Arabia. In addition to its main subsidiaries Gulf International Bank (UK) Ltd. and GIB Capital, the Bank has branches in the Kingdom of Saudi Arabia, the United Kingdom, the United States of America, in addition to representative offices in the United Arab Emirates and Lebanon.

For further information, please contact Mr. Abdulla Naneesh, Corporate Communications at GIB Bahrain: Tel (+973) 17 522 680, Fax (+973) 17 522 656.

Banking

UBX appoints new Chief Investment Officer

In line with its strategy to explore and invest in companies and platforms of the future, UBX—the Fintech and Corporate Venture Capital arm of Union Bank of the Philippines (UnionBank) — is announcing the appointment of Matthew Kolling as the company’s Chief Investment Officer (CIO).

Matt Kolling

Matt Kolling

As CIO, Kolling will be managing UBX’s Corporate Venture Capital (CVC) fund. He will also play a key role in raising capital for UBX while assisting the company in key corporate transactions, including the structuring of joint ventures and acquisitions.

Prior to his appointment at UBX, Kolling has been Head of Venture Investments at Aboitiz & Company since 2019, wherein he had been working with UBX on investment portfolio decisions. Before that, he held senior positions in Private Equity, Venture Capital, and Investment Banking at firms such as Providence Equity Partners and Morgan Stanley in New York.

Kolling has more than 20 years of experience in managing investments and deals in the Technology and Telecommunications industries and is active in Venture Capital and startup communities in the Philippines and the Southeast Asian region. He currently chairs the Manila Angel Investors Network, among others.

“We at UBX are excited to welcome Matt as our new CIO. We firmly believe that Matt will be instrumental in driving value creation opportunities, both within the CVC fund and our corporate ventures. We look forward to working with him as we fulfill UBX’s vision of a future where banking services are embedded into everyday experiences that matter,” said UBX president and CEO John Januszczak.

Meanwhile, UnionBank president and CEO Edwin Bautista said, “The addition of world-class talents in our pool reinforces our strategy to future-proof the organization and our business as we prepare for many new opportunities that come with the changing times.”

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Banking

It’s all relative: Older generations feel helping out the family financially is more important since the Covid-19 outbreak

It’s all relative: Older generations feel helping out the family financially is more important since the Covid-19 outbreak 1

Before Covid, 23% of people prioritised helping younger generations out financially, that increased to a third as a result of the pandemic

A recent survey* conducted by Hodge has revealed that the Covid pandemic has led to more people wanting to help younger family members financially.

A third (31%)** of those questioned said that since the Covid outbreak giving a financial gift to children or grandchildren is more important to them, compared to 23% who said it was a priority before the pandemic.

The traditional “Bank of Mum and Dad” is still very much open for financial help, with parents being responsible for 72% of the gifts, but the study also revealed that financial gifts can come from all corners of the family – including children (14%) and siblings (14%).

The survey also found that a third of people have received a financial gift from family, with those aged between 25-34 as the most likely to receive

The most popular reason for gifting money to family is for special occasions such as a quarter of gifts were given for weddings and birthdays but 11% of people have received money to help with big purchases such as cars and houses. In addition, 19% of people have received help with day to day finances, with around 14% of those receiving a gift have done so to pay off debt.

Emma Graham, Business Development Director at Hodge, said of the research: “Our study showed that, as a nation, we all want to help our family out when it comes to money. And whilst we all think of the Bank of Mum and Dad or Gran and Grandad as a traditional source, we were surprised to see that 14% of brothers and sisters are also helping out.”

The findings come from a recent intergenerational study conducted by Hodge, who interviewed over 3000 people about their attitudes towards finances and their aspirations for the future. The full research findings can be found at https://hodgebank.co.uk/2020/05/19/money-its-all-relative/.

As part of the study, people were also asked about paying back the gift, with 40% of beneficiaries expecting to pay their parents back, but this dropped to 28% if the gift came from grandparents.

From the gift donor’s perspective, 26% expect the gift to be paid back, however just 15% of grandparents expected the money back.

Hodge has produced a set of guides on how families can navigate the tricky subject of giving financial gifts within a family, as well as the considerations and steps that be families should think about taking before a gift is given, such as is it a loan or a gift and thinking about contingencies if the family member’s circumstances change. The guides can be found here: https://hodgebank.co.uk/news/

Emma continued: “It’s clear that families feel strongly about offering financial support to each other if they are able and this has increased since the Covid pandemic. Before Covid, 23% of people prioritised helping their families out financially in the next five years. Since the Covid-19 outbreak that has increased to a third of people saying helping a family member financially had become more important.

“So, it is clear that the Covid-19 lockdown and subsequent predicted economic downturn, has led to more families looking to share wealth to help younger children or grandchildren during this difficult time. Many people may look to Later Life mortgages, where many products have reduced their rates and have flexible lending criteria, to help out a loved during these difficult times.”

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Banking

New report identifies the factors which will determine SMEs’ chances of a successful COVID recovery

New report identifies the factors which will determine SMEs’ chances of a successful COVID recovery 2

·         Analysis of the performance of over 1,000 UK small and medium-sized businesses by Allica Bank provides roadmap for SMEs 

·         Regular training, an openness to innovation, and a clear vision all contribute heavily to an SMEs’ chances of success  

·         Allica Bank has launched a programme of free workshops to expand on the findings and support business owners 

Business bank, Allica Bank has combined data and insight from over 1,000 UK SMEs with a multiple regression analysis to determine what factors most closely aligned with an SMEs’ chances of success and separated the highest-performing businesses from their peers. These ‘rules for success’ have been compiled from the research data to support British businesses as they look to chart a course to post-Covid recovery.  

The full report identifies six behaviours for small and medium businesses to follow, to maximise their chances of a successful COVID recovery. The six top-line rules emphasised by the data were: 

Rule 1: SMEs should regularly train staff 

Of the top-performing businesses analysed, 47% provided training for employees at least on a quarterly basis, compared to just 32% of other businesses. Regular employee training was linked closely to success by the model.  

Despite this, many small businesses have neglected training and nearly half (46%) of the small businesses analysed only provide training for employees about once a year or less often. This included 15% that never provide employer-funded training. This discrepancy could represent a significant opportunity for small businesses to unlock the potential of their employees and thrive in the post-Covid economy. 

Rule 2: SMEs need to focus on innovation and technology 

Looking again to the best performing businesses, 76% were found to either continually (39%) or often (37%) be considering new opportunities for technology in their business. This is compared to only 51% for businesses considered to be outside of the top ranks, out of which only 27% admitted to continually looking for new technology opportunities. 

Rule 3: Small business must have a formal, long-term vision  

Nearly two thirds (66%) of the most successful businesses in the survey had a formal, long-term vision, compared to just 50% of businesses outside the top 100. Looking to the businesses that scored the lowest on the SME Performance index, only 37% claimed to have a formal, long-term vision. 

Rule 4: SMEs should broaden their customer reach and find new markets 

Of the top-performing businesses, 65% of these have overseas customers compared to just 40% of the worst performing businesses. Among the best performing SMEs, over a third (34%) identified international expansion as one of the top three drivers for their success. 

Rule 5: SMEs need to develop reinvestment plans 

22% of the best performing SMEs reinvested some of their profits into the business in the past three years with an average 9% of profits being redeployed. Tellingly, this is nearly double what other businesses admit to reinvesting in their business (5%). 

Rule 6: SMEs should engage with local business organisations and networks  

Of the top 100 SMEs, 30% had obtained external credit to expand over the past three years (compared to 24% of other businesses). Meanwhile, only 16% of all other SMEs had engaged with local enterprise partnerships or growth hubs in the past three years (compared to 23% of the top 100 SMEs). 

Chris Weller, Chief Commercial Officer, Allica Bank, said: 

“All small businesses are different, as are all small business owners, but one trait they share is an innovative resilience. Whilst the coming months and years will undoubtedly continue to present extreme challenges, there is no doubt that small and medium sized businesses across the UK will rise to meet them head on.  

“To give them the best chance to succeed, though, they need to be equipped with the right tools. There is certainly no silver bullet or panacea for every small business, but as this study has found, there are a number of common factors found in the most successful businesses that allow small enterprises to thrive and that they can consider individually for their business.  

“This research has identified common ‘rules for success’ that speak to every aspect of running a business, not just the financials. Once we saw these results, we wanted to use them to help small businesses begin to re-build and prosper, by outlining common factors and then examining how best they can be practically applied to businesses in all sectors of the economy.  

“Small business owners and their employees have been hit hard by the crisis, but they have the drive and resourcefulness to breathe new life into the economy and bring energy to post-Covid Britain. Our commitment at Allica Bank is to give them the support they need to do so, every step of the way.”

The full report contains a wealth of additional data and insight into each of these topics. As part of its mission to empower small businesses, Allica Bank is making the findings freely available and running a series of free online workshops with relevant partner organisations for businesses to attend.

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