The Bahrain-based Gulf International Bank (GIB) has announced a 38.5 per cent increase in net profits to $88.2 million in 1993. It is GIB's third successive year of recovery following substantial losses in 1987-90, mainly as a result of bad loans to Iraq and the Third World.

GIB attributes the increase in 1993 profits to a sharp rise in off-balance sheet income, particularly from securities.

Full financial details are due to be released after the general assembly, which is to be held in February, the bank says. However, it has released the 1993 figure for total assets, which rose by 13 per cent to $7,171.8 million.

Several issues which were outstanding at the start of 1993 appear to have been resolved, sources at the bank say (MEED 5:2:93). These include the rationalisation of business between GIB and its main shareholder, Gulf Investment Corporation (GIC), which is now understood to have taken over most of GIB's assets management. GIB is wholly owned by the Kuwait- based GIC, which in turn is owned by the six GCC governments. In addition, most of the key recommendations from the GIB strategy review by US consulting firm Booz Allen & Hamilton, submitted in the first half of 1992, are now understood to have been implemented.

GIB sources say they are very satisfied with the results and intend to continue with the strategy developed in 1993. This includes focusing on top-tier corporations and in particular providing a wider range of products such as interest rate swaps and currency hedging operations.

The bank is aware of the opportunities and threats imposed by declining Gulf oil revenues, the sources add. About a third of GIB's loan portfolio is in the Gulf, but it does not feel overexposed in the region. It is anticipated that reduced government spending could open up more opportunities for private financing by banks such as GIB, the sources say.