Paris-based UBAF (Union de Banques Arabes et Francaises) reported a 17 per cent rise in net profits to FF 55.4 million ($10.7 million) in 1995. Its balance sheet shrank, partly because of slack trade-related business in the Arab world and Japan.

UBAF is jointly owned by France's Credit Lyonnais (44 per cent) and an array of Arab banks (56 per cent) and its main activity is financing trade between France, East Asia and the Arab world.

The bank said in its annual report that net banking income actually fell by 7 per cent to FF 426.0 million ($82.5 million) during 1995.

The reasons for this included the weakness of the US dollar against the franc, increased competition from other banks in a slack Arab trade finance market and a decline in exportrelated business from Japan because of. the high yen.

This fall was offset by lower personnel expenses and provisions and undefined exceptional income of FF 14.7 million ($2.8 million).

UBAF's assets fell by 30 per cent to FFR16,956 million ($3,282.7 million). The bank attributed this to a fall in its interbank lending in Japan, lower trade-related lending (mainly export credits) and the closure of its Bahrain branch. Loans and advances fell 16.2 per cent to FF 3,741 million ($724.3 million) because of slack demand for credit in Japan, repayment of export credits and lower demand for refinancing of documentary credits.

1995 is the second year of profit growth for the bank since it made a loss in 1993 after provisioning heavily against doubtful debts.

The bank raised its capital and its capital adequacy ratio is now 18 per cent, leading the credit rating agency IBCA to upgrade its longterm rating last year from BBB-plus to Aminus.

UBAF is boosting its presence in the Middle East by opening a representative office in Dubai to cover the GCC states, reopening its Beirut office and increasing the number of its staff in Cairo. The bank closed its office in Bahrain in 1995. It is also investing in an information master system.