10 March 2003 - UGB Posts Strong Revenues and Net Profit Rebounds 140% to $9.6 Million

UGB achieved strong Growth gross income levels in 2002 of US$58.2 million with operating income up 32% to US$38.7 million. Net Income before provisions surged 79% to US$ 22.6 million while Net profit more than doubled to US$9.6 million from US$ 4 million in the prior year.

Major components of the US$58 million revenues were US$16 million (2001: US$11 million) of fee income principally from asset management related businesses, dividend income of US$6 million (2001: $ 3 million) , investment income from trading portfolios - principally in Kuwait-- and from rental income and other sources US$ 9.4 million (2001: $6.8 million), interest income of $11 million (2001 US$17.5 million) reflecting lower levels of interest rates and more significantly UGB’s share in the improved performances from associated companies of US$12.8 million (2001: US$ 10.4 million). Operating income soared 32% to US$ 38.7 million from US$29.3 million in 2001. Net profit surged by 140% to US$ 9.6 million . These results were achieved after write downs and provisions of approximately US$11.0 million taken principally against direct private equity investments which are now substantially provided for. In view of prevailing market conditions, the Board felt it prudent to retain profits and strengthen the balance sheet rather than pay dividends.

In 2002, the consolidated balance sheet grew modestly by 2 % to US$ 939.4 million from US$ 923.3 million as at 31 December, 2001. UGB continues to be liquid and strongly capitalized. Over the past year, UGB has raised the equivalent of US$ 96 million of CD facilities. Shareholders’ equity stands at US$ 211 million as at 31 December 2002 and the Bank’s BIS ratio remains high at 19 %.

Commenting on the results the Bank’s Chairman Mr. Faisal Al-Ayyar stated:

"United Gulf Bank has distinguished itself in very difficult and uncertain operating environments. These results bear testimony to the quality and earning power of the Bank’s diversified asset base, the depth of its counterparty funding and other stakeholder relationships and the commitment of its shareholder Group. I am also pleased to report that all of the Bank’s businesses including asset management, commercial banking , real estate , portfolio investments and investments in associated companies-showed a healthy return. Furthermore, we have taken steps in 2002 to strengthen the balance sheet and to isolate any negative impact from the financial turbulence of the last three years. We are therefore even better positioned to take advantage of the recovery in the financial markets once this occurs and are already seeing signs of even better performance from our subsidiaries and associated companies in 2003. "

"During the year", he continued, "We strengthened our management team with the addition of senior experienced professionals including Mr. William Khouri- CEO and the heads of our Bahrain based asset management and corporate finance groups. Towards the end of the year, we also expanded our commercial banking activities to Algeria with the establishment of our 60% owned subsidiary Algeria Gulf Bank." Other shareholders in Algeria Gulf Bank are Tunis International Bank (30%) and Jordan Kuwait Bank (10%).

UGB is the investment banking arm and subsidiary of Kuwait Projects Company (Holding) KSC, Kuwait (KPCH). UGB has total assets of about US$ 939 million supported by shareholders’ funds of over US$ 211 million. UGB’s main subsidiaries are Tunis International Bank, Tunisia; KIPCO Asset Management Company, Kuwait; UGB Securities Co; Bahrain and Algeria Gulf Bank SA (under formation) ; Algeria . UGB also has equity interests of 44% in Jordan Kuwait Bank, Jordan ; 34% in United Real Estate Company, Kuwait and 49% in United Industries Company, Kuwait.

UGB’s activities consist of private equity and fund investments, quoted equities, asset management, corporate finance, real estate, treasury and selective commercial banking services.

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