Bahrain International Bank (BIB) has reported a 10 per cent rise in profits to $16.8 million and a dramatic rise in the bank’s fee-based income for 1994. The bank has also been building up its investment activity, ending the year with the acquisition of a 95 per cent stake in a US fast food chain.
The strong performance bucks a trend recently set by several other financial institutions in the region which recorded a drop in profits as turmoil in the international bond markets depressed trading securities activity.
‘We bet on credit risk rather than interest rate and market risk. We don’t take huge trading positions which is where a lot of banks in this part of the world got hit,’ says Robin McIlvenny, general manager and chief executive. BIB pulled out from its investments in trading securities during 1994, after they rose to $24.9 million in 1993.
The bank’s fee-based income, which included a small proportion of investment income, more than doubled in 1994 to reach $9.1 million. McIlvenny says income from fees, particularly from Gulf clients, will become an increasingly important part of the balance sheet as BIB’s fund and asset management activity grows.
The bank’s assets rose by more than 50 per cent to $700 million last year, mainly due to a 63 per cent increase in direct investments to $432 million. ‘We’ve managed the investment portfolio very well,’ says McIlvenny. The bank has concentrated on direct investments in the UK and US, as well as investing in corporate securities and bonds, real estate and corporate financing in the Gulf.
At the end of 1994, BIB acquired a 95 per cent stake in 99 Burger King restaurants in the south of the US. The remaining 5 per cent was taken by the San Francisco-based franchise operator. The acquisition, which was worth a total $110 million, includes the right to develop 50 more restaurants. McIlvenny says the bank will be selling equity interests to Gulf investors during 1995.