United Bank of Kuwait (UBK), the Kuwaiti-owned consortium bank, has reported a 39 per cent rise in net profits for last year to £11.1 million ($17.8 million). The increase was due to good performances across the range of the bank’s activities, says general manager Christopher Keen. The bank is paying a dividend of 9 pence ($0.14) a share, up from 6.5 pence.
The London-based bank operates largely in the UK and the US and its main lines of business are in asset management and advice, real estate and corporate lending. UBK is currently waiting for permission to open a representative office in Dubai and plans to launch an Islamic home loan service for Muslims in the UK. The bank also intends to launch the latest tranche in its programme of UK commercial mortgage securitisations – the bank has already put together £50 million ($80 million) worth of property deals to be securitised.
Pre-tax profits for 1996 were a record £15.6 million ($25 million), 30 per cent up on the year. Total assets fell slightly to £1,754 million ($2,806 million). Loans to customers rose by about 3 per cent to £740 million ($1,184 million), while interbank placements fell by 30 per cent to £302.6 million ($484.2 million). Investment in debt securities rose by a similar percentage to £334 million ($534.4 million). On the liability side, customer deposits were down 21 per cent at £732 million ($1,712.2 million), while interbank deposits rose. ‘We are a little more reliant on interbank funding, and I’d expect that trend to continue,’ Keen says.
The Dubai office is intended to give UBK better access to existing and potential clients in the southern part of the Gulf, though it may also provide spinoffs in the form of advisory mandates. ‘The principal purpose is to make us stronger in exporting capital from the region,’ says Keen. UBK is becoming more active in the region. It has raised about $20 million for equity investment in the Middle East, and lead managed an asset-backed financing for Kuwait’s National Industries Company last year – a type of transaction that is unusual in the Gulf.
However, the focus of its activity will remain on the West. UBK continues to build up its Islamic investment banking business, with about $500 million under management at the end of 1996 compared to about $400 million the year before. UBK now manages total client assets of $2,300 million.