The Arab Petroleum Investments Corporation (APICORP), a multilateral energy-focused financial institution, today announced the financial results for the full year that ended December 31, 2022.
APICORP posted strong results against a volatile macroeconomic backdrop that included a significant drop in global equity prices and interest rate hikes as it continued to reap the benefits of strategic decision-making and investments. By the end of 2022, APICORP’s balance sheet grew by 10.8% from 2021 to reach USD 8.85bn, while net comprehensive income increased by 40%, reaching USD 164mn.
Commenting on the results, Dr. Aabed Al-Saadoun, Chairman of the APICORP Board, said: “Our financial results in 2022 demonstrate our commitment to excellence in delivering on our unique mandate and adding value to our stakeholders through an ever-growing range of innovative financial and investment solutions. Guided by our strategic priorities and legacy of financing for impact, we continued to solidify our position as a trusted partner for the Arab energy sector and a leading catalyst for a balanced energy transition in the region.”
A favorable LIBOR environment buoys the performance of Corporate Banking and Treasury and Capital Markets units.
Despite the USD 54mn YoY increase in the cost of funding totaling USD128mn by end of 2022 mainly driven by the sharp increase in average 3-month LIBOR rates which jumped from 0.16% in 2021 to 2.38% in 2022, APICORP’s gross operating income from its Corporate Banking and Treasury and Capital Markets assets respectively registered gains of USD 198mn and USD 70mn compared to a gain of US 122mn and a loss of nearly USD 12.5mn in 2021.
APICORP’s balance sheet grew significantly, buoyed by a 48% increase in treasury assets, which reached USD 3.27bn by the end of 2022. The growth was fueled mainly by good opportunities available in money market placements and excess funding raised that was not deployed by the Corporate Banking unit.
Strong performance by legacy investments
Gross recurring operating income from APICORP’s investments unit increased 11% to exceed USD 137mn in 2022 on the strength of a significant uptrend in dividend and investment income that reached USD 121.5mn, as well as more than USD 15.5mn from capital gains from the sale of stakes in portfolio companies including Saudi Aramco, Ashtead Technology, and Yellow Door Energy.
APICORP’s investment portfolio assets grew by USD 191mn to reach USD 1.2bn in 2022 due to an upward revaluation of investments.
Khalid Ali Al-Ruwaigh, CEO of APICORP, said: “During the financial year 2022, we successfully navigated a volatile market with extraordinary resilience that has positively impacted our balance sheet and income. Our vision has allowed us to capitalize on market forces and post exceptional results across all APICORP business units. The high-interest rate environment provided a significant upward push to our performance, but at the same time presented challenges in terms of the cost of funding which we were able to navigate through optimization of our funding solutions.”
2022 was marked by several significant milestones for APICORP in the sustainability space as it continued its drive toward supporting a balanced energy transition. These milestones include deploying more than USD 335mn from its debut green bond proceeds to eligible projects, launch of the Arab region’s first Sharia-compliant financing facility designed for voluntary carbon offsets, as well as introducing the region’s first A/B loan program. APICORP also became the region’s first financial institution to receive a solicited Sustainability Rating (‘A2’) from Moody’s, reflecting the successful integration of ESG factors into strategy, operations, and risk management.
Business Line Highlights
The Corporate Banking unit was a significant driver of APICORP’s overall profitability in 2022 due to its size and total return, with a gross operating income of USD 198mn – up 62% from 2021 and 8% above the budgeted income. The unit’s assets as of December 2022 amount to USD 4.2 bn.
The Investments unit was also a significant income driver in 2022, making up 14% of APICORP’s overall assets on the balance sheet following a YoY increase of 18% from 2021. Overall, the unit surpassed its budgeted income by 75% due to high dividend income from strategic investments and capital gains in the GCC equity market.
Treasury and Capital Markets
While the high interest rate environment helped APICORP’s Treasury and Capital Markets unit portfolio achieve high gross results, the resulting rising cost of funding and interest expenses presented some headwinds. However, the unit still surpassed its budgeted income by 135% owing to rapidly rising LIBOR rates over the course of 2022.