Gulf International Bank Posts $65.4 Million Q2 Loss

Bahrain-based Gulf International Bank has announced a second three month period loss at $65.4 million as it took provisions against rising loan defaults.

The sources said that the lender, which is owned by the six nations that form the Gulf Cooperation Council, ascribed the loss to a net provision charge of $101.3 million it took during the second quarter.

The bank officials stated in a communiqué that this high provisioning level will offer a conservative buffer in the current challenging environment. In view of the prevailing economic conditions, the bank enhanced its non-specific loan provisions so as to maintain provisions at a level consistent with the historical highest ever corporate default rates.

The bank has recorded consolidated operating income of $89.7 million for the six months ended June 30, 2009, against $102.6 million in the first half of last year. The bank is owned by the governments of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the UAE and the Saudi Arabian Monetary Agency.

Bank's total income during the latest period has witnessed a slump of 16% at $150 million, while total expenses declared at $60.3 million, 20 per cent down on the prior year. Net interest income representing the bank's principal income source, has witnessed a dip of 24% on the prior year level.

The bank ascribed it to the deleveraging of the balance sheet in the current challenging market and economic environment and the negative impact on interest earnings of the substantial reduction in interest rates.