The stream of results for the first half suggests that 1995 is unlikely to be a bumper year for Gulf banks. The figures show a mixed performance in markets that are throwing up plenty of new challenges. In the year to date there have been none of the surprises that were seen in the first half of 1994 when bond markets turned sour and international equities tumbled. Those shocks changed sentiment and most Middle East institutions have reduced their external positions and are focusing on domestic markets.

The leading regional bank, Arab Banking Corporation, has reported a stronger performance in the first half of the year, with pre-tax profits up 15 per cent to $91 million. The newly appointed president and chief executive officer, Ahmed Abdellatif, told MEED in early August that this is ahead of the bank's targets for the year, and he expects the pace to continue for the rest of 1995.

Other Manama-based offshore banks have also reported improved performances for the first half of the year, including Gulf International Bank, TAIB Bank, Bahraini Saudi Bank and Faysal Islamic Bank. For several institutions, this a return to form after a disappointing performance in 1994. The offshore Bahrain International Bank, on the other hand, has found the going tougher in 1995 and has reported a slight drop in profits for the first half.

For the region's commercial banks, half-year results show the diverse conditions which prevail in the six GCC states. For Saudi Arabia's commercial banks, profits have improved slightly on the figures at the same time last year. Saudi British Bank and Saudi Cairo Bank, which both experienced a drop in profits in 1994, announced higher earnings in the first half of this year. The strongest performance was reported by the kingdom's only Islamic bank, Al-Rajhi Banking & Investment Corporation, which recorded first half profits up 21 per cent to SR 527 million ($141 million).

However, Saudi American Bank (Samba), which was the first Saudi bank to lift net income to more than SR 1,000 million ($267 million) in 1994, is finding it hard to improve on that record performance. Profits in the first half of 1995 are down on the same period last year.

In Kuwait, half-year results show a consistently buoyant performance. Kuwait Finance House (KFH), Burgan Bank, The Gulf Bank and National Bank of Kuwait (NBK) all reported higher earnings for the first six months of 1995. At KFH, NBK and Gulf Bank, the improving figures come on top of a similar boost in earnings reported at the same time last year. However, Commercial Bank of Kuwait, which only announced its 1994 results in July, is having a tougher time, after reporting losses of

KD 5.7 million ($19 million) last year.

A similar situation prevails in Oman, with banks posting a string of improved profits for the first six months of 1995. Oman International Bank reported earnings up 37 per cent at RO 2.6 million ($6.8 million) and Bank Muscat Al Ahli Al Omani profits rose 57 per cent to RO 3.5 million ($9.1 million). Bank of Oman, Bahrain & Kuwait reported earnings of RO 820,000 ($2.1 million) in the first half of 1995, more than double the figure at the same time last year.

A uniform picture also emerges among domestic commercial banks in Bahrain for the first half of 1995. But National Bank of Bahrain, Bank of Bahrain & Kuwait and Al-Ahli Commercial Bank have all reported lower earnings than in the same period of 1994.