Kuwait, 3 March, 2007: Shareholders at the Annual General Meeting of Gulf Bank heard today that a sound strategy and disciplined focus lay behind the Bank's continued record growth and profitability.

Chairman and Managing Director Mr. Bassam Y. Alghanim told that AGM that in 2006, the Bank's total annual Net Profit rose by 24% to a record USD366.3million and earnings per share increased nearly 24% to 39.6 cents.

"2006 was another outstanding year for Gulf Bank," Mr. Alghanim said. "All operating Groups reported excellent earnings growth and asset growth was exceptionally strong. Total assets climbed 56% to surpass the USD 14 billion milestone for the first time.

"The Bank also seized the opportunities of a buoyant economic climate that was underpinned by high levels of liquidity, strong consumer sentiment and growth in public and private sector investment. Continuing high oil prices are expected to deliver a substantial budget surplus for Kuwait in the current 2006/2007 fiscal year.

"Success in the banking industry requires two essential ingredients: a sound strategy and a disciplined focus," Mr. Alghanim continued. "I believe these twin imperatives are the foundation of the Gulf Bank story. When we embarked on our Bank-wide Transformation programme seven years ago, we were determined to play a leading role in Kuwait's banking market.

"By concentrating our attention on the Kuwait market and getting our customer segmentation right, Gulf Bank has achieved remarkable results. In retail banking, we have built a stable base of customers and we've led the way in product and service innovation. In wholesale banking, we have developed solid customer relationships and have become the bank of first choice for many corporates in Kuwait. We have delivered outstanding shareholder returns and maintained an operational efficiency that is the envy of our competitors."

Gulf Bank was again recognised for its excellence in 2006, awarded "Best Retail Bank in the Middle East" by the prestigious Banker Middle East magazine for the second consecutive year.

Gulf Bank also re-affirmed its position as a leading Kuwaiti employer, once again winning the Localization Award from the GCC Council of Ministers for Social Affairs and Labour for achieving the highest rate of Kuwaitization of any company in the country's private sector and for its investment in the development of the skills and abilities of Kuwaitis. In 2006, Gulf Bank became the first Kuwaiti company to be awarded a coveted Stevie? International Business Award for the best HR team.

"Gulf Bank's goal is to become Kuwait's preferred local bank and in 2006 we made significant progress in several key areas of our customer-centric retail strategy," Mr. Alghanim said.

"The Retail Banking Group continued the expansion of the Bank's branch network, growing the number of branches to 38. Most of branches are now in the new format - a contemporary architectural branding inspired by Kuwait's seafaring heritage which provides an attractive and efficient banking experience. The 24/7 Self Service area in the new branches was further enhanced with cash and cheque deposit machines to complement the existing services including internet banking, cash withdrawals and access to customer service agents 24 hours a day, 365 days per year. This remains a significant competitive advantage that is unique to Gulf Bank."

Systems enhancements have improved information availability to ensure customers can access their information whenever they want from anywhere in the world. Gulf Bank became the first bank in Kuwait to introduce a personalised ATM service utilising advanced software developed by NCR which allows for targeted messaging to a specific customer and also allows the customer to choose favourite transactions to minimize time at the ATM.

Gulf Bank achieved continued growth of market share in an intensely competitive retail banking environment. Mr. Alghanim noted that the Retail Banking Group had continued its success in targeting salary consumers with strong customer acquisition across all channels, especially the branch network and the Central Sales team. In 2006, the Bank saw strong growth in both the loan book and deposits.

"Gulf Bank again established a new standard in compelling communication with the launch of the Salary for Life to reward new salary transfers while Red, the university/college student program, was re-launched in September with a distinctive and engaging marketing program," Mr. Alghanim said. "Gulf Bank has also redesigned the customer service experience for our highest-value customers through the re-launch of a new Priority Banking service.

"As these initiatives demonstrate, Gulf Bank is committed to meeting and exceeding the expectations of our customers and to setting new standards of service and performance in our industry.

"The Corporate Banking Group achieved an outstanding performance in 2006," Mr. Alghanim commented. "The Group built on the success of the market-based segmentation of its business divisions and continued to grow its client relationships through a wider offering of Gulf Bank products and services."

Corporate Banking contributed to the progress of Kuwait's economy through major project finance deals including contractor financing for The Avenues Mall and The Lakes developments and for construction of the Main College for Girls in Ardiya, the State Audit Bureau Building and Phase 11of the Subiya Highway project.

"The Financial Markets division witnessed unprecedented growth while the Commercial division saw a strong upturn in deposit acquisition and a significant increase in its portfolio with a concentration on diversification in risk and market sectors. The Small & Medium Enterprise (SME) division also expanded its client base, developing new relationships in the transport & logistics, oil & gas and automotive sectors while helping small business entrepreneurs achieve their goals," Mr. Alghanim told shareholders.

"The International Banking Group achieved strong growth across all its products and services in 2006. The Group continued to expand its business in the Middle East and in emerging markets while supporting the overseas activities of its Kuwait-based clients. In addition, a restructuring of the Group's portfolio in light of Basel II requirements is generating growing income streams.

"The Investment Banking Group performed well despite increased volatility in GCC equity markets, achieving excellent returns on both its foreign investment portfolio and its investments in Kuwait and the GCC Region."

In 2006, the Treasury Group consolidated its position as market leader in both Spot and Forward KD Foreign Exchange dealing with a significant increase in Foreign Exchange profitability. Treasury effectively managed a rapidly growing balance sheet and played a leading role in growing Gulf Bank's customer deposit base. 2006 also saw the Treasury Group offer Foreign Exchange and interest rate hedging products.

Mr. Alghanim stated that Gulf Bank has also led the way in compliance with the Pillar 3 Disclosures under the Basel II requirements mandated by the Central Bank of Kuwait (CBK), with Gulf Bank's disclosures rated as best of all the Kuwaiti banks. In 2006, the Finance Group continued to upgrade its systems and processes, achieving faster turnaround of financial reports and providing increasingly valuable market and performance analysis.

"Gulf Bank remains one of the highest rated banks in the region," Mr. Alghanim said. "It is one of only seven banks in the GCC assigned an 'Aa3' long-term foreign currency deposit rating from Moody's Investors Service and enjoys strong ratings from Fitch Rating and Capital Intelligence ('A') and Standard & Poor's ('A-'). These ratings reflect the strength of our financial performance and capital adequacy and the integral role that Gulf Bank plays in Kuwait's domestic banking and financial services sector.

"Gulf Bank's strategy of balanced growth, a strong domestic focus and a customer-centric mindset has again yielded excellent results for you, our shareholders. I am delighted to announce that the Board of Directors has recommended a cash dividend of 60 fils and 15% bonus share issue, a return of 24% for 2006."

Mr. Alghanim in closing, reiterated the 7 years of consecutive growth of Gulf Bank, "If you invested KD100 with Gulf Bank 7 years ago, your money would now be worth KD700, 7 times more."