The London-based UBAF Bank’s profits rose by 8 per cent in 1993 to £18.7 million ($27.9 million), prompting the bank to announce a £5 million ($7.5 million) dividend to shareholders, its first payout since 1986.
‘Payment of a dividend reflects a steady improvement in UBAF Bank’s profits over the last few years and the necessary capital reorganisation,’ chief executive Peter Taplin says. UBAF has achieved an improvement in its sovereign debt position allowing a cut in provisions, and higher income from treasury and trade financing activities, Taplin adds.
UBAF underwent a capital restructuring in the second quarter of 1993 (MEED 12:11:93). New share capital was issued, maintaining shareholdings in the same proportions. UBAF is 75 per cent owned by various Arab banks and 25 per cent by Midland Bank. Capital is now £130 million ($194 million).
The bank recovered £7.5 million ($11 million) from provisions by trading certain less developed country (LDC) sovereign debt for more than the book value. This was added to profits. Specific provisions fell to $152 million, from $186 million in 1992, UBAF says.
UBAF also benefited from higher fees and commissions from treasury and trade finance activities. Treasury income rose by 38 per cent to $8.7 million, most of the increase coming from foreign exchange earnings, which accounted for $5.2 million of this figure.
Income from trade finance fees rose by 31.6 per cent to $7.9 million; Tunisia and Morocco continue to be important markets in this area for the bank. UBAF handled letter of credit confirmations worth $458 million in 1993, compared with $282 million in 1992. Much of the increase came from two deals in Syria. UBAF played a lead role in a $104 million letter of credit syndication for a power station project in Syria with multilateral development agency support. The bank was also involved in a further Syrian deal, worth $62 million, in 1993.
Fee income from commercial banking rose by 16 per cent to $10.7 million, but the fall in customer overdrafts cut interest, leaving total income unchanged at $13.8 million. Customer loans fell by nearly 7 per cent to £234.6 million ($350.9 million). Customer deposits fell by more than half to £68.5 million ($102 million). More than $100 million of this was the result of the repayment of overdrafts by Libyan account holders from their deposits with the bank in advance of the introduction of the UN’s tightening of sanctions in December (MEED 26:11:93).