The Kuwait-based Gulf Investment Corporation (GIC) has cut its 1994 dividends to $37.5 million from $60 million in 1993, following a 36 per cent fall in consolidated net profits to $62.2 million.
The dividend was announced after GIC’s eleventh general assembly on 27 March in Riyadh, when it released full financial statements for 1994. Preliminary figures were released in January (MEED 3:2:95).
GIC suffered losses in international trading operations, mainly from the declining bond market. It has since reduced its exposure, but continues to be active in those markets.
The losses cut other income to just $6.8 million, down from $135.4 million in 1993. The losses were heightened by the record performance in 1993 in these areas.
The decline was only partly offset by investment and lending activities. Net interest and fee income rose by 11 per cent to $110.6 million. GIC introduced a reversal of provisions, releasing $6.7 million in 1994, compared with holding $43.2 million for 1993.
There was an increase in all the main assets classes. Both loans and investment securities rose by nearly 10 per cent to $3,504.7 million and $1,916.3 million respectively. The rise in lending was due to increased business in the GCC in 1994. Placements rose by 30 per cent to $2,457.3 million. Customer deposits increased by 6 per cent to $7,654.9 million.
Shareholders equity increased by about 3 per cent to $937.7 million, and total assets rose by nearly 8 per cent to $9,224.5 million, giving an equity to assets ratio of 10 per cent.
The bank plans to focus on its core business in 1995, investment banking, commercial banking and global markets, Nadeem Mujtaba, GIC senior vice- president says.
Since January 1995, GIC has reduced its exposure in global markets by 15-20 per cent, particularly in bonds and equities. However, it does not plan a shift away from international trading altogether, Mujtaba says. ‘We see it as a core business. We understand the volatility of these markets, and expect profits to be higher in some years than others,’ he said.
‘This performance in a difficult operating environment demonstrates the group’s diversity of earnings streams and its ability to remain reasonably profitable at all points in the economic cycle,’ Nasser Abdullah
al-Rodhan, chairman of the board and Kuwait’s Finance & Planning Minister said of the 1994 results.