The net profits of Bahrain-based United Gulf Bank (UGB) inched up to $15.8 million last year as a fall in investment income cancelled out a rise in interest earnings. The previous year's net profit was $15.6 million. However, the bank says it also made unrealised gains of $16.9 million in 1996 on investments in the Gulf. It is paying a 6.5 per cent dividend, worth $13 million, compared to last year's $12 million.

The total assets of the offshore bank, which is almost exclusively owned by Kuwait Investment Projects Company (KIPCO), fell by 6.7 per cent to $349.8 million. A bank spokesman explains the fall in investment income by saying that after reducing its holdings in managed portfolios in 1995, UGB kept a large part of the money in bank deposits until halfway through 1996, before reinvesting it in equity. Interest income rose by 63 per cent to $14 million. The bank's balance sheet contracted by just under 7 per cent, due to a fall in customer deposits.

During 1996, the bank spent $81 million on equity stakes in three companies which it bought from KIPCO, two of them based in Kuwait and one, United Broadcasting Company, in the Cayman Islands. UGB increased its exposure to the Middle East last year, while reducing it in North America. The spokesman said one of the three shareholdings had been sold earlier this year, boosting first-quarter earnings above 1996 levels, and shares in one of the others could also be sold this year. UGB will continue to invest on its own account as well as in co-ordination with KIPCO. Outside the Gulf, it is particularly interested in Egypt and Lebanon.