Kuwait – 17 May 2016: Gulf Bank today announced a net profit of KD 8.8 million in Q1 2016. This figure is down by KD 1 million year over year. Operating income increased by KD 2.5 million or 6% to 44 million compared to Q1 2015. Furthermore, operating profit before provisions/ impairments increased by KD 1.2 million or 5% to KD 28.4 million.

Net credit costs on loans of KD 0.9 million (specific provisions plus write-offs less recoveries) were booked in Q1 2016 compared with KD 16.4 million in Q1 2015. Loan quality continues to improve reflecting the Bank's prudent underwriting policies and procedures. In addition, non-performing loans (NPLs) declined to 2.8% and coverage against these NPLs increased to 350% compared against 3.0% and 290%, respectively, at the end of Q1 2015. The Bank's total loan loss reserves on the balance sheet stood at KD 311 million. General provisions comprise KD 187 million or 60% of the total. The Capital Adequacy Ratio under Basel III is at 15.4% against the regulatory requirement of 13%.

Commenting on the results, Mr. Omar Kutayba Alghanim, Gulf Bank's Chairman said: "I am pleased to report steady progress this quarter, which follows the positive trend of the last year. We have achieved these results by continuing our policy of pragmatism and good governance, coordinated by a very capable and committed Board of Directors, and executed by our management team and staff. Our focus is to carry forward this momentum; we will be launching a world-class product later this year which will be the first of its kind in the region. The Bank has also recently received approvals from the Central Bank of Kuwait (CBK) and Capital Markets Authority (CMA), as well as approval from shareholders at the bank's recent Annual General Meeting (AGM), regarding the issuance of a Tier 2 Basel III compliant subordinated bond for up to KD 100 million, which will help continue to strengthen the bank's capital adequacy."

Mr. César González-Bueno, Gulf Bank's Chief Executive Officer said: "We closed last year with an "A" rating from the three leading credit rating agencies which is a strong indication of the transformation the Bank has successfully completed and the strategic direction of the Bank. At the Annual General Meeting on 9 March, shareholders endorsed the recommendation of Gulf Bank's Board of Directors for a cash dividend for the first time after the 2008 financial crisis, reflecting the bank's strong financial position. Our Consumer Banking and Wholesale Banking products and services have been well-received and more innovative, easy-to-use products will soon be on the market."

Focused Products and Services

The Bank's credit card business has demonstrated strong performance with 16% growth in credit spends, year-over-year. Gulf Rewards, the fastest and most rewarding loyalty program in Kuwait, is a significant driver of this growth and continues to attract customer and industry attention. Through the program credit card customers earn Gulf Points for each transaction, which can then be used for free flights on any airline and free hotel stays in any of the 300,000 participating hotels worldwide. The program also includes "Gulf Bank Entertainer" which is a mobile app that gives users instant offers at a multitude of retail, entertainment, and children's activities in Kuwait, UAE, and London.

In Wholesale Banking, the corporate banking suite of products continue to be well-received and stand out in the market. The Bank's cash management systems, online salary processing, and collections systems are streamlined to ensure maximum efficiency for customers with services being performed with the click of a button. Last year the Bank's cash management system received several awards and accolades.

Award Recognitions

During the first quarter of 2016, Gulf Bank's efforts were recognized through several important awards. These included the "Best Retail Bank in Kuwait" and "Best Retail Customer Service" awards from International Finance Magazine; "Best Treasury and Cash Management Provider in Kuwait" by Global Finance; as well as the "Corporate Bank of The Year" and "Best Banking Rewards Program" awards from The European. The Bank also received the "Best Corporate Governance Financial Services" award for the Middle East in 2016 at the Ethical Boardroom Corporate Governance Awards, and were winners in the "Finance and Banking" category at the Corporate LiveWire Global Awards 2016.

Importance of Human Capital and Corporate Social Responsibility