Dubai: Gulf International Bank (GIB) reported consolidated net income after tax of $26.8 million (Dh98.4 million) for the three months ended March 31.
"This was a significant improvement over the $132.4 million loss recorded in the fourth quarter of 2009, although compared to a profit of $42.9 million in the comparable prior year period," the bank said in a statement.
However, income in the first quarter of 2009 was not representative of the bank's core underlying earnings due to the benefit derived from a number of exceptional, non-recurring income items. This included interest earnings of about $9.5 million on non-core investment securities sold in March 2009 and the related release to income of a $9.8 million non-specific provision.
At the operating level, GIB reported consolidated operating income of $30.6 million. This was slightly higher than the operating income recorded in the fourth quarter of 2009.
Net interest income, which at $43.2 million for the three months comprised over three quarters of total income and represents the bank's principal income source, was in line with interest earnings recorded in the 2009 fourth quarter although was 33 per cent down on the prior year period. The year-on-year decrease was attributable to the deleveraging and derisking of the balance sheet and the prevailing historically low level of interest rates. Fee-related income at $8.8 million was 12 per cent lower than in the prior year period.
Investment banking fees, representing the principal source of fee income, were nevertheless much in line with the prior year period. Total expenses at $25.6 million for the three months were $6.2 million or 19 per cent down on the prior year period. The significant year-on-year decrease in expenses reflected proactive measures taken in 2009 to align the cost base with the bank's business model.
A net provision charge of only $2.5 million was recorded for the quarter. The limited provisioning requirement reflected the prudent and conservative provisioning actions taken in 2009.
