Kuwait City, February 12: Gulf Bank K.S.C.P. (“Bank”) announced its financial results for the year ended 2023. The Bank reported a net profit of KD 71.2 million, an increase of 15.2% compared to the year 2022.

Gulf Bank recorded an operating profit before provisions and impairments of KD 103.4 million for the year 2023, an increase of 9.0% compared to the year 2022.

Earnings per share were up 13.2% to 21fils and the Board of Directors is recommending a distribution of a cash dividend of 12fils per share, representing a 57% cash payout ratio, in addition to 5% bonus shares, for shareholders’ approval at the Annual General Meeting to be held in March 2024.

The increase in the net profit was mainly driven by KD 8.2 million or a 5.8% increase in net interest income, a 2.5% or KD 1 million improvement in non-interest income, and a decline of 4.7% or KD 1.4 million in total provisions and impairments.

As for asset quality, the non-performing loans (NPL) ratio stood at 1.2% as of 31 December 2023, compared to the prior year level of 1.1%. Additionally, the Bank continues to have significant non-performing loans coverage ratio of 466% including total provisions and collaterals.

Total credit provisions ended 2023 at KD 312 million whereas IFRS 9 accounting requirements (i.e., ECL or expected credit losses) were KD 187 million. So, the Bank has very healthy excess provisioning level of KD 125 million, above and beyond what is required by the IFRS9 accounting requirements.

Compared to 31 December 2022, total assets increased by 4.7% to KD 7.2billion, loans and advances climbed by 1.3% to KD 5.2billion, and shareholders’ equity increased by 13.4% to reach KD 817million.In addition, total deposits increased by 6.9% to reach KD 5.4billion for the year ended 2023.

Looking at the Bank’s regulatory capital ratios as of 31 December 2023, Tier 1 ratio was 15.8%, that is 3.8% above the regulatory minimum of 12% and the Capital Adequacy Ratio (CAR) was 18.0%, that is 4.0% above the regulatory minimum of 14%.

Strong Performance

Commenting on the results, Mr. Jassim Mustafa Boodai, Gulf Bank’s Chairman said: “Our 2023 performance demonstrates excellent results with Gulf Bank delivering strong and consistent net profit growth momentum. Our strong balance sheet fundamentals and resilient asset quality profile position us very well to achieve our strategic aspirations.”Mr. Boodai added “We remain focused on generating consistent and sustainable long-term value to all our stakeholders.”

Operational Excellence

The operational success of Gulf Bank during 2023 and prior years reflects its strong brand presence and branch network in Kuwait. Mr. Boodai added: “The Bank is reaping the benefits of its Kuwait focused strategy and making tremendous strides towards its key strategic priorities centered around digital transformation and customer centricity. The aim of our strategy is to improve customer experience, accelerate business development and drive operational efficiencies.” One of the key milestones during the year 2023 was the implementation of phase 1of the new core banking system. This achievement represents a major leap in the Bank's digital transformation journey and will enable Gulf Bank to streamline operations and optimize processes to further solidifying its position as a trusted financial partner. In addition, the launch of the latest version of the Gulf Bank mobile application during the year provides customers with a seamless user experience while incorporating advanced security features to safeguard customer data and financial transactions.

Value Creation

During the year 2023, Gulf Bank has successfully completed a capital increase of KD 60 million. The proceeds of the capital increase aim to strengthen the Gulf Bank's capital base, enhance regulatory capital ratios, and enable the pursuit of future growth opportunities aligned with the Bank’s long-term strategy. The total capital increase was approximately seven times oversubscribed. The significant oversubscription reflects shareholders' confidence in Gulf Bank’s potential capabilities.

Invest GB

Furthermore, the Bank has obtained the final necessary regulatory approvals to license Gulf Capital Investment Company, known as “Invest GB” to operate officially as a wholly owned investment subsidiary. The investment subsidiary services will complement the Bank’s core business while enhancing customer offerings predominantly for its private and the corporate banking clients. The consolidated investment activities will positively enhance the fees and commission income of the Bank in the future.

Positive Credit Outlook

Gulf Bank continues to be well recognized in terms of its creditworthiness and financial strength internationally. During the year 2023, Moody’s Investor Services has affirmed the ‘A3’ long-term deposit ratings of Gulf Bank and changed the outlook to “Positive” from “Stable”. This upgrade is an acknowledgement of Gulf Bank’s sound capitalization, improving profitability and strong asset quality.

In addition, Fitch Ratings affirmed the Bank’s Long-Term Issuer Default Rating at 'A' with a ‘Stable’ Outlook and a Viability Rating of 'bbb-'.  The Bank has also an affirmed Long-term Foreign Currency Rating of ‘A+’ with a ‘Stable’ Outlook from Capital Intelligence Ratings.

Commitment to Sustainability

Sustainability is an important and complementary part of Gulf Bank’s strategy. On Gulf Bank’s commitment towards Sustainability, Mr. Boodai commented: “We believe that integrating sustainability and ESG considerations into our practices and activities will enable us to further strengthen our customer experience, offering sustainable products and services for the market, and positioning us as a key leader of sustainability initiatives amongst local and regional financial institutions. We remain committed towards our stakeholders, community, and the overall Kuwaiti economy.”

Recognition

During 2023, Gulf Bank was recognized by several prestigious organizations. Gulf Bank was awarded with “Best Prepaid Card Program in Kuwait" award for 2023 during the Mastercard MENA East Business Forum, for the Gulf Bank Mastercard Prepaid Card. In addition, Gulf Bank was awarded two awards for "Best Training and Development" and "Excellence in Diversity and Inclusion" by the Middle East and North Africa Human Resources Management Summit 2023signifying Gulf Bank's outstanding efforts in enhancing its employees' skills and achievements in promoting sustainability principles within the workplace. Furthermore, Gulf Bank was awarded “The Prestigious Excellence in Data Innovation” award by the 2023 Finnovex Awards Summit in recognition of its excellence in leveraging data to drive transformative change and create new opportunities in the banking industry.

Appreciation

Mr. Boodai concluded his remarks by stating: “On behalf of the Board of Directors, I would like to thank our shareholders for their ongoing trust, and our employees for their commitment and dedication. I would also like to thank the Regulatory Authorities for their continuous support. Finally, I want to thank our customers for their loyalty, and reiterate our commitment to offering them the best banking experience.”

Key positive indicators:

• 2023 net profit of KD 71.2 million, an increase of 15.2% over the year 2022.
• 2023 earnings per share were up 13.2% to reach 21 fils.
• 12fils Proposed Cash Dividends and 5% Bonus Shares.
• Total Assets grew by 4.7% to reach KD 7.2 billion.
• Non-performing loan ratio for the year end 2023 was 1.2%, with a strong non-performance loan coverage ratio of 466%.
• Tier 1 ratio was 15.8%,
• Capital Adequacy Ratio (CAR) was 18.0%.
• 13.4% increase in shareholders’ equity to reach KD 817 million
• 7 times capital increase oversubscription.