The London-based Saudi International Bank (SIB) reported a sharp increase in profits for 1994, net income rose by almost £25 million ($40 million) to £42.3 million ($68 million). However, the bank attributed most of the rise to exceptional profits from the sale of a stake in a Riyadh-based bank, saying net profits from normal operating activities rose by about 5 per cent to £18.3 million ($29 million).
In December 1994, the bank completed the sale of its 10 per cent stake in United Saudi Commercial Bank (USCB). The London-based bank was one of the founding shareholders when USCB was established in 1983. However, SIB says it was an appropriate time to sell its stake as the Riyadh-based bank has now matured and become a successful commercial operation.
The bank reported a strong performance in its treasury and securities activities, despite the downturn in the international market during 1994. The bank says this was because it had a limited exposure to long-term interest rate positions, and was able to adjust its position quickly in March and April at the downturn in the bond markets.
The bank says income from fees has continued to make a steady contribution to profits from its corporate finance and fund management activity, which mainly involves clients in Saudi Arabia and the Gulf.
The bank has maintained a liquid balance sheet, which it says helps the bank change its credit profile in line with the changing economic environment. Part of the bank’s strategy is to avoid large medium-term credit exposure.
SIB was established in 1975 and is 50 per cent owned by the Saudi Arabian Monetary Authority (SAMA – central bank), 20 per cent by New York-based Morgan Guaranty Trust Company and the remainder held by inter-national banks. These include Riyad Bank and the Jeddah-based National Commercial Bank (NCB), which both hold a 2.5 per cent stake.