The Kuwait-based Gulf Investment Corporation (GIC) confirmed its record profit increase in 1993 at its annual general meeting in Riyadh on 18 April. Profits rose by nearly 60 per cent to $128.5 million and dividends will rise by about the same percentage to $60 million.
The profits represent a 14.6 per cent return on average equity and a return on paid-up capital of 17.1 per cent. ‘Our capital ratios are significantly stronger….This strength gives us the flexibility to expand our existing business and enter new businesses to sustain or improve our bottom line,’ Khaled al-Fayez, chief executive officer of the GIC group, said in a statement.
GIC’s wholly-owned Bahrain subsidiary Gulf International Bank made a significant contribution to profits (MEED 4:2:94). However, the figures also show a substantial recovery for GIC itself, independent of the subsidiary (see below).
GIC attributes the rise in profits to a record return from financial market activities. Commercial lending and trade finance business also made a contribution, GIC says. The value of traded securities rose by 172 per cent to $989.8 million. Other income rose by 195 per cent to $47.5 million.
Total assets rose by 13 per cent to $8,554.6 million. Loans, which account for more than a third of total assets, fell by nearly 4 per cent to $3,192.2 million. Net interest and fee income declined slightly to $101 million. Provisions rose to $49.1 million from $15 million to take account of increased investments.
The year’s highlights included the expansion of investment banking and financial services. By the first quarter of 1994, GIC had begun talks with Oman on the Manah power project and with Bahrain to establish a private desalination plant (MEED 25:2:94, Oman; 11:2:94, Bahrain). GIC plans to continue with its current strategy, which includes an increased focus on capital markets (MEED 4:2:94).