Asia provisions limit net profits at GIC, GIB

06 March 1998
FINANCE

Provisions against exposure to Asia limited profits at Gulf Investment Corporation (GIC) and its wholly-owned commercial bank Gulf International Bank (GIB) in 1997.

Kuwait-based GIC on 18 February announced a record operating revenue of $256 million. This was up 22 per cent from the 1996 figure, but net income after expenses and provisions was up only 3 per cent at $126.6 million. GIC also announced a 15 per cent rise in assets to $12,100 million from $10,500 million in 1996. Only these headline figures were declared as the financial results still have to be ratified at a general assembly.

The net income figure suggests that, unless GIC had a dramatic rise in operating expenses, its provisions rose to about $50 million from $15 million in 1996. 'Due to the uncertainties concerning the economic and financial crisis in Asia, the corporation has decided to take a conservative stand towards provisioning against its exposure in the countries affected,' GIC said in a statement.

It was a similar tale at Bahrain-based GIB where net income fell by 9 per cent to $86.4 million after $30 million was allocated to credit provisions. GIB's operating revenue before provisions was $116.4 million, a rise of 11.4 per cent on 1996. Total assets climbed by 6 per cent to $9,524 million. Both loan and investment security portfolios increased.

In the same vein as its parent, GIB said in a statement: 'In accordance with GIB's conservative and prudent provisioning policy, provisions for credit losses were enhanced to cover any possible risks relating to the bank's exposure in South-East Asia.' GIC is owned by the governments of the six GCC states.

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