Shares sales help to triple TAIC profits

03 April 1998

The sale of shares in Egyptian and Moroccan banks last year helped to triple the net profits of The Arab Investment Company (TAIC) to $41.4 million. The Saudi-based company, which is owned by 16 Arab states, says that 1997's exceptional gains will probably not be repeated this year.

TAIC earned nearly $30 million from the sale of its stakes in Egypt's Commercial International Bank (CIB) and Morocco's Banque Nationale de Developpement Economique (BNDE).

Without this extra gain, the company's operating income in 1997 would have been $42 million, about 5 per cent higher than in 1996. Its main sources of earnings are the interest payments from its portfolios of loans and investment securities. Loans increased by 15.5 per cent to $572.2 million and marketable securities by 14.1 per cent to $345.3 million. About 75 per cent of the company's loans are to borrowers within the Middle East, divided equally between the public and private sectors

'It was a very successful year, and exceptional as well. [Sale of the bank shares] was a chance that we were given and we grabbed it,' says Abdulwahid Mearza, the company's director of financial affairs. He says profits for 1998 are more likely to be in the region of $30 million before provisions, comparable to 1996, although there are one or two equity investments which could be sold to boost profits this year. The company also took some new equity stakes, including a 5 per cent shareholding in Bahrain's First Islamic Investment Bank, and agreed to take a 10 per cent stake in Arab Banking Corporation's new Algerian subsidiary.

During 1997, the company's shareholder governments decided to increase its authorised capital to $400 million from $300 million. Paid-up capital was increased to $360 million from $300 million by the capitalisation of retained earnings. Lebanon paid in $7.5 million in order to become a shareholder. Algeria also said it would like to join, though it has not yet paid for its shares. Mearza expects the money to be paid during the year.

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