11 02 2007 - UGB Record Performance Continues for fourth Year 2006, net income increased 25% to US$ 101.5 million

 

United Gulf Bank B.S.C. (UGB), the investment banking subsidiary of the KIPCO Group, has announced another record year with a net profit of US$ 101.5 million, or 12.81 US cents per share, for the year-ended 31 December 2006 – a jump of 25% over the previous and best ever year’s profit of US$ 81 million posted in 2005.

The Board of Directors has recommended to the Annual General Meeting of shareholders and subject to appropriate regulatory approvals, a dividend of 34.6% in cash or 8.65 US cents per share.

UGB’s return on average equity was 23.5% at year-end, achieved with a moderate level of risk as reflected in a consolidated BIS ratio of more than 26%.

UGB Managing Director and KIPCO Asset Management Company (KAMCO) Chairman, Masaud Hayat commented: “UGB has produced a fourth year of historic results in a row. Broad based revenues came from UGB’s expanding Pan Arab financial services network, in particular from KAMCO, its asset management subsidiary, realization of value from a number of portfolio assets and exceptional performance in a number of portfolios where UGB now enjoys a superior track record. Recurring contributions principally from associated companies as well as asset management fees and dividends represented 54% of total income.”

“At the KIPCO Shafafiya (Transparency) Forum in Kuwait in May 2006 we forecasted year-end profits of US$ 85 million. It is therefore indeed a reflection of the diversity and strength of UGB’s asset quality that we once again exceeded our forecast this year,” he concluded.

UGB’s balance sheet grew a further US$ 664 million to reach US$ 2.4 billion, largely as a result of liquidity, new investments and an increase in the carrying value of associated companies resulting from an increased share of profits. The balance sheet is supported by a strong capital base of more than US$ 590 million, as well as high levels of liquidity. UGB’s ratio of liquid assets to the balance sheet total stood at 37% and capital adequacy ratio of more than 26% at the year-end in 2006. This high capitalization excludes the beneficial impact of about US$ 274 million excess in market value of quoted core investments over their book carrying costs.

UGB’s largely MENA based revenues in 2006 reached US$ 242 million, compared to US$ 198.8 million in 2005, coming mainly from our share in profits from our associated companies of US$ 54.5 million, fees and commission income of US$ 53.5 million – principally from wealth management activities, interest income of US$ 34.5 million, trading income of US$ 35 million, gain on sale on matured available for sale investments of US$ 25.7 million and gain on sale of associated companies of US$ 21.5 million.

Commenting on the year ahead, UGB’s Chief Executive Officer, William Khouri, said:

“2006 was another outstanding year for UGB. Our achievements included:

• Moody’s assignment of an investment grade rating of Baa3 and Capital Intelligence’s upgrade to BBB+.
• The raising of US$ 100 million in subordinated FRN due 2016.
• Further extension of our liability maturity profile.
• The launch of Syria Gulf Bank and the 2.5 times over-subscription of its IPO.
• Progress on expansion in our investment and commercial banking network in Tunisia, Qatar and the UAE.

“Our portfolio is seasoning and contains several investments which will see fruition in 2007 leading hopefully to a fifth year of exceptional gains,” he said.

Notes to editors:

UGB, the investment banking subsidiary of Kuwait Projects Company (Holding) (KIPCO), manages a regional network of investment/asset management companies and commercial banks. Its proprietary investments include assets in real estate, telecommunications, private equity, structured products and quoted securities. At year-end 2006, assets under management exceeded US$ 6.4 billion. UGB’s core subsidiaries and associates include: Algeria Gulf Bank, Al-Dhiyafa Investment Company, Bank of Baghdad, Jordan Kuwait Bank, KIPCO Asset Management Company (KAMCO), Manafae Investment Company, Tunis International Bank, United Gulf Bank Securities Company, United Cable Company, United Industries Company, United Real Estate Company, United Medical Services Company, United Gulf Financial Services Company, MAC United, Syria Gulf Bank and United Warehousing & Cooling. UGB and its subsidiary KAMCO have a proven track record of successful investment banking activities including corporate finance advisory, new issue placement and underwriting, mergers and acquisitions, bond issuance and investment product structuring and placement.

KIPCO is an US$ 18 billion enterprise with major activities in financial services, media and telecommunications and a variety of other business sectors across the Middle East and North Africa. The group has substantial ownership interests in a portfolio of some 73 companies operating throughout the region and internationally.

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