Gulf Bank records KD 17.3 million in Net Profit for the first quarter of 2023
Net Profit increased by 15% compared to the first quarter of 2022
Jassim Mustafa Boodai:
- I am pleased to announce that we have achieved an excellent performance in the first quarter of 2023 with a 15% growth in our net profit, an encouraging start for the remainder of the year.
- We remain focused on creating value for all stakeholders amid fluctuating operating environments.
- We proceed to make excellent progress on our digital transformation initiatives focusing on enhancing our customer experience.
- We have achieved major milestones within our 5-year strategy, and we are anticipating further significant accomplishments towards the end of 2025.
- With the establishment of Gulf Bank Capital, the Bank will be offering a full suite of investment products and services through this independent investment subsidiary.
- We persist with our journey of embracing diversity at the workplace stemming from our believe in equal job benefits based on qualifications and competency rather than gender.
Kuwait,Gulf Bank K.S.C.P. announced its financial results for the first three months ending 31 March 2023. The Bank reported a net profit of KD 17.3 million, an increase of KD 2.3 million or 15% compared to 2022 first three months net profit of KD 15 million.
Subsequently, the Bank’s return on assets improved from 0.9% in the first quarter of 2022 to 1.0% for the first quarter of 2023 and return on equity grew from 9.2% to 9.9%.
Gulf Bank recorded an operating income of KD 46.4 million for the first three months of 2023, and an operating profit before provisions of KD 25 million for the same period.
The increase in the net profit was mainly driven by a 12% or KD 4.9 million increase in operating income supported by a noticeable enhancement in net interest income of 8% or KD 2.6 million and non-interest income of 24% or KD 2.3 million compared to first quarter 2022. Moreover, operating profit has increased by KD 3.2 million or 15% for the first quarter of 2023 compared to the same period of last year.
As for asset quality, the non-performing loans (NPL) ratio stood at 0.8% as of 31 March 2023, compared to the prior year level of 1.0%. Additionally, the Bank continues to have significant non-performing loans coverage ratio of 692% including total provisions and collaterals.
Total credit provisions as of 31 March 2023 reached KD 303.5 million whereas IFRS 9 accounting requirements (i.e., ECL or expected credit losses) were KD 164.2 million. As a result, the Bank has very healthy excess provision level of KD 139.2 million, above and beyond what is required by the IFRS 9 accounting requirements. This excess provision is the highest ever since the start of the implementation of IFRS9.
Compared to 31 March 2022, total assets increased by 5% to KD 6.8 billion, loans and advances to customers increased by 6% to KD 4.8 billion, while customer deposits reached KD 4.2 billion. Shareholders’ equity reached KD 705 million, an increase of 6%.
The Bank’s regulatory Tier 1 ratio of 13.9% was 1.9% above the regulatory minimum of 12% and the Capital Adequacy Ratio (CAR) of 16.1% was 2.1% above the regulatory minimum of 14%.
On the 18th of March 2023, Gulf Bank held its Annual General Assembly Meeting, where shareholders approved the distribution of a cash dividend of 10 fils per share for the year 2022, representing a 51% cash payout ratio, in addition to a 5% bonus shares.
Strong Financial Performance
Commenting on Gulf Bank’s first quarter 2023 financial results, Mr. Jassim Mustafa Boodai, Gulf Bank’s Chairman said: “Despite the challenging start of the year 2023 with the world economic uncertainty, political tensions and tight monetary policies, the Kuwaiti economic environment remained resilient and stable. Having said that, I am pleased to announce that Gulf Bank achieved an excellent performance for first quarter of 2023 with a 15% growth in our net profit, an encouraging start for the remainder of the year.”
“We remain focused on creating value for all stakeholders amid fluctuating operating environments." Boodai added.
Gulf Bank continues its efforts to enrich customer experience by offering a comprehensive list of products and accommodating services that meet customer needs. The Bank’s brand-new smartphone application provides unique features operating in a fast, secure, and simple customer interface. Moreover, the recent adoption of the latest version of IVR system at the Bank’s Call Center addresses customers growing demand for digital services. On the ground, Gulf Bank owns one of the largest local branch networks, with over 50 branches covering vital locations across Kuwait. This prominent presence assisted the Bank in reducing the average transaction time for the in-branch customers, which ultimately leads to enhancing customer satisfaction to a greater extent.
Commenting on the recent consumer centric business development at Gulf Bank, Mr. Boodai said: “We proceed to make excellent progress in our digital transformation initiatives focusing on enhancing our customer experience. So far, we have achieved major milestones of our 5-year strategy, and we anticipate further significant accomplishments towards the end of 2025.”
As part of Gulf Bank’s 2025 strategy of expanding the Bank’s offering to cater for the high-net worth individuals, the Wealth Management division provides private and distinctive products to meet the wealth customers aspirations. These offerings include the WISE investment services- the Bank’s flagship digital advisory and portfolio management platform- in addition to several alternative investments. With the completion of the establishment of an independent investment subsidiary, the Bank will be able to offer a full suite of investment products and services.
During the first quarter of 2023, Gulf Bank had co-joined KAMCO Invest, as a lead manager, in the issuance of United Real Estate Company KD 80 million bonds. This issuance was the largest Kuwaiti Dinar denominated bond issuance within the real estate sector.
Gulf Bank has concluded its first “Lead the Way” conference in March 2023, shedding the light on the most prominent challenges and opportunities facing women empowerment in Kuwait. The Conference, along with the interactive workshops, inspiring speeches, and insightful panel discussions, were part of the Bank’s commitment to the UNDP sustainability development goals and principles related to women empowerment and equality. On this occasion, Mr. Boodai stated: “We are a firm believer in women empowerment and career development. Currently, we are proud to say that women represent more than 43% of the Gulf Bank’s workforce and 28% of its leadership. We persist with our journey of embracing diversity at the workplace stemming from our believe in equal job benefits based on qualifications and competency rather than gender.”
Gulf Bank remains well recognized internationally in terms of its creditworthiness and financial strength.
During the first quarter of 2023, Fitch Ratings affirmed the Long-Term Issuer Default Rating of Gulf Bank at ‘A’ with a ‘Stable’ Outlook. This affirmation reflects the potential support from the Kuwaiti authorities, if needed, as reflected in its Government Support Rating of ‘a’. In addition, the 2022 Viability Rating upgrade of “bbb-“ indicates Gulf Bank’s good domestic franchise, cautious risk approach and healthy asset quality.
Furthermore, Moody’s Investor Services maintained Gulf Bank Long-Term Deposits rating of ‘A3’ with a ‘Stable’ Outlook.
In addition, Gulf Bank has a Long-term Foreign Currency rating at “A+” with a “Stable” Outlook from Capital Intelligence. At the same time, the Bank’s KWD50 million Basel III-compliant Tier 2 Subordinated Bonds are rated at “BBB+” with a “Stable” Outlook by Capital Intelligence.
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 Central Bank of Kuwait for their continuous support. Finally, I want to thank our clients for their loyalty, and reiterate our commitment to offering them the best banking experience.”
Key positive indicators:
- First Quarter 2023 net profit of KD 17.3 million, an increase of 15% compared to the same period of 2022.
- Loans and advances to customers grew by 6% to reach KD 4.8 billion.
- Non-performing loan ratio for the First Quarter 2023 was 0.8%, with a strong non-performance loan coverage ratio of 692%.
- Capital ratios as of the First Quarter 2023, Tier 1 ratio was 13.9% and Capital Adequacy Ratio (CAR) was 16.1%.