06 February 2005 - UGB Profits Soar to Record US$ 43.3 Million in 2004

United Gulf Bank (UGB), the investment banking subsidiary of the Kuwait Projects Company (KIPCO) Group, has announced the best results in its 25-years history with net profit of US$ 43.3 million, or 5.7 US cents per share, for the year ended December 31, 2004, an increase of 19.6 per cent over the previous record of US$ 36.2 million recorded in 2003.

The Board of Directors has recommended to its Annual General Meeting of shareholders a dividend of US$ 28.65 million in cash, representing 15 per cent of the share value, or 3.75 cents per share.

UGB’s return on average equity was an encouraging 16 per cent at year end, supported by continuing growth in its core business as well as a low cost base.

UGB Managing Director and KIPCO Asset Management Company (KAMCO) chairman Masaud Hayat commented: "In its Silver Jubilee year, UGB has produced a second year of historic results and is in a very healthy financial position, having distinguished itself in difficult and uncertain operating environments".

“At an investors’ conference at the Kuwait Stock Exchange in March, 2004 we forecast year-end profits of US$ 42 million. It is indeed a reflection of the stable nature of our earnings quality that we achieved this level of net income, and even exceeded our forecast,” he said.

Hayat said UGB’s core business lines in wealth management, commercial banking, real estate, portfolio investments, telecoms and corporate finance continue to produce excellent results. He said key subsidiaries and associates, including KAMCO, United Real Estate (URC), Jordan Kuwait Bank, Tunis International Bank and United Industries (UIC) were in a strong growth trend, with performance in 2004 continuing to exceed expectations.

“Consequently, the share price of these investments now substantially exceeds our carrying values by some US$ 266 million,” he said.

UGB’s balance sheet grew a further US$ 200 million to reach US$ 1.38 billion, largely as a result of investments in Wataniya Telecom Algerie, structured investments, US equity funds and capital increases in certain core investments.

The balance sheet is supported by a strong capital base of US$ 279.7 million, as well as a healthy liquidity. UGB’s ratio of liquid assets to the balance sheet total stood at 29 per cent. Capital adequacy in the form of the BIS ratio was 17.7 per cent at year-end. This high capitalisation excludes the beneficial impact of the excess in market value of quoted core investments to their carrying costs referred to above.

In recognition of this financial strength, UGB’s long-term rating was raised by Capital Intelligence to BBB from BBB – in September 2004. UGB's ratings are further underpinned by strong support from KIPCO, record profitability, potential gains in investment portfolios and continued growth momentum.

UGB’s recurring revenues in 2004 reached US$ 105 million, compared to US$ 96 million in 2003. All businesses made a healthy contribution to this figure. In particular, wealth management services, led by KAMCO’s US$ 4.0 billion under management and custody, contributed US$ 20 million; the banking network (Jordan Kuwait Bank, Tunis International Bank and Algeria Gulf Bank) contributed US$ 14 million; core investments in Real Estate (URC and Gulf Egypt Hotels & Tourism) contributed US$ 16 million; and Trading contributed US$ 21 million.

Commenting on the year ahead, UGB Chief Executive Officer William Khouri said: “2005 promises to be another year of progress bolstered by the growth in our key activities, as well as the partial disposal through IPO of one of our indirectly-held business in the Kingdom of Saudi Arabia. The longer-term prospects for the Bank are equally encouraging, as we anticipate further capital gains from our global portfolios, as well as distributions from our telecom and other regional investments and contribution from our growing banking network in emerging Arab countries.”

UGB and its subsidiary KAMCO have a proven track record of successful investment banking transactions including corporate finance advisory, new issue placement and underwriting, mergers and acquisitions, bond issuance and investment product structuring and placement.

KIPCO, with assets of more than US$ 10 billion under management or control, is one of the leading diversified holding companies in the Middle East and North Africa and a major regional force in financial services and media & technology, with further interests in real estate and industry. The largest private sector company in Kuwait, KIPCO employs more than 10,000 people internationally and its shares are one of the most actively traded on the Kuwait Stock Exchange.

For further information please contact United Gulf Bank on telephone +973 17533233 or email info@ugbbah.com.