UBK's dividend marks recovery

08 April 1994

Net profits rose by 36 per cent to £10.2 million ($15 million) in 1993 for the UK-registered United Bank of Kuwait (UBK). UBK will pay a 7 per cent dividend of £7.7 million ($11.5 million), its first since the Kuwait crisis. Shareholders will also be offered a 5 per cent bonus share issue after the annual general meeting in May.

The bank attributes the rise in profits to greater revenues from the whole range of its business activities, says general manager Christopher Keen.

Assets slipped marginally to £1,903.6 million ($2,840 million). Loans and advances to customers fell by 15 per cent to £764.7 million ($1,140 million). Customer deposits dropped by 22 per cent to £1,053.6 million ($1,570 million). Provisions were cut by 29 per cent to £8 million ($12 million).

The decline in loans was related to UBK's sale of a £70 million ($104 million) tranche of its UK residential mortgage portfolio in mid-1993, Keen said (MEED 6:8:93). Most loans in the portfolio were below £150,000 ($223,500).

Operating income rose by 9 per cent to £50.6 million ($75 million) mainly because of the sale of part of UBK's mortgage book. UBK said it would use the funds from that sale for its private banking business.

Corporate lending in 1993 had focused on developing two core loan finance businesses, aircraft leasing and public-sector finance. By the end of 1993, UBK had originated about $30 million of aircraft loans to UK airlines which were sold down to European banks. Some £38 million ($56.6 million) of commercial real estate loans had been sold down to banks and building societies by the end of the year.

Funds under management increased by 22 per cent in 1993 to $2,640 million. UBK's investment division and Islamic investment banking unit launched funds in property, trade and currency in 1993 and more are planned for 1994.

Keen said UBK sees good opportunities for funds in the US and UK property markets which have attracted greater interest from Gulf investors. UBK hopes to launch more funds aimed specifically at the Kuwaiti market, such as a US real estate fund and an enhanced Kuwait dinar bond fund, he said.

UBK launched a wholly owned subsidiary, Portman Asset Management in 1993 which, said Keen, had shown good results in its first year and had attracted funds from outside the Gulf. Portman has an investment team of 20 and plans to launch offshore funds for institutional investors this year.

UBK increased its capital by 17 per cent to £235.2 million ($350 million). This was partly due to an increase in authorised share capital and in the bank's Tier 2 capital for Bank of England (central bank) purposes. This was through the issue of further loan stock and other borrowings, to replace some subordinated floating-rate notes that mature in 1994.

UBK's plans for 1994 include widening its private banking customer base. The bank's high yield group is investigating new products.

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