MOST of the Gulf banks to have announced interim results have reported higher profits for the period, with one or two exceptions. The most notable of these is the region's biggest bank, Arab Banking Corporation (ABC), whose interim net profits were down 9 per cent on the year at $61 million due to lower non-interest income. Gulf International Bank's halfyear profits were steady at about $44 million, with a slight fall in interest income offset by rising fee earnings.

Other Bahrain-based offshore banks offered a mixed bag of results. TAIB Bank reported lower earnings, while earnings on US investments helped Bahrain International Bank to report higher income. Faysal Islamic Bank of Bahrain's interim profits also rose.

Nine of Saudi Arabia's commercial banks have reported higher net profits. In the case of two - Al Bank Al-Saudi Al-Fransi and Riyad Bank - operating profits were lower on the year and the figures were helped by cuts in expenses. Bank Al-Jazira continued its return to health, posting a profit compared to a loss in the first half of 1995.

However, worries about the quality of some banks' loan portfolios are starting to make themselves felt: Saudi American Bank's half-year profits fell slightly due to higher provisions, and most banks have boosted their provisioning. The trend appears to reflect concerns about the rapid expansion of retail lending in the past couple of years.

Omani banks performed well, except Commercial Bank of Oman where profits slipped back. The bank says its underlying performance has improved in the first six months of this year and attributes the fall to higher provisions against the depreciation costs of new technology. In some cases, lower provisions helped banks to increase their profits.

Bahraini banks also increased their profits. National Bank of Bahrain, which saw its full-year profits fall 15 per cent in 1995, announced a 42 per cent rise in income in the first half of 1996 to the equivalent of $20 million.

Seven out of eight Kuwaiti banks reported higher first-half profits, including a spectacular 500 per cent increase in earnings at Commercial Bank of Kuwait.

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