• Waleed Khaled Mandani:
  • The local economy remained stable, supported by good oil prices, accelerated government project awards and overall recovery of economic activity.
  • The new core banking system’s deployment showcases Gulf Bank’s commitment to better serve its valued customers using cutting-edge technology.
  • The significant capital increase oversubscription reflects shareholders' confidence in Gulf Bank’s potential capabilities.
• David Challinor:
  • For 2023, we had overall growth of 1.2%, with retail growth dominating, leading to another year of market share gains in the retail sector.
  • We’ve embarked on a journey to bring down the cost to income ratio over time and targeting a further fall for 2024.
  • Our NPL percentage continues to be very low at 1.2% which is broadly similar to a year ago.
• Dalal AlDousari:
  • We have a renewed confidence that the mortgage law will ultimately materializes as an alternative financing option through local banks.
  • For the year 2024, we aim to maintain our growth strategy of growing retail faster than the market.
  • We aim to keep our NPL ratio under the 2% mark due to our prudent risk management approach.

Kuwait, 14 February 2024: Gulf Bank held its investors webcast on Tuesday, February 13th, 2024, to present and discuss the Bank's financial performance for year-end 2023. The webcast was organized by EFG Hermes and presented by Waleed Khaled Mandani, Acting Chief Executive Officer of Gulf Bank, and David Challinor, Chief Financial Officer of Gulf Bank. The discussion was moderated by Dalal Al-Dousari, Deputy General Manager of Investor Relations at Gulf Bank.

Operating Environment

Mr. Waleed Mandani, Acting Chief Executive Officer of Gulf Bank, commenced the webcast with key updates regarding Gulf Bank’s operating environment during year 2023. Mandani stated: “During the year, the local economy remained stable, supported by good oil prices, accelerated government project awards and overall recovery of economic activity.”

Mr. Mandani added “One of the key milestones during the year 2023 was the implementation of phase I of the new core banking system. This milestone represents a major leap in the Bank's digital transformation journey. It empowers the Bank to provide enhanced services, improve efficiency, and deliver seamless customer experiences. Another major achievement for the Bank during the year was the launch of the latest version of its mobile application. The new version of the app incorporates advanced security features to safeguard customer data and financial transactions while providing a seamless user experience.”

Mr. Mandani stated “the Bank has obtained the necessary final regulatory approvals to setup Gulf Capital Investment Company, known as Invest GB, to operate officially as a wholly owned investment subsidiary of the Bank. We believe GB Invest complementary services will positively enhance the fees and commissions income of the Bank over the long run.”

Regarding Gulf Bank Capital Increase Mr. Mandani mentioned “Furthermore, during the fourth quarter of 2023, Gulf Bank has successfully completed a capital increase totaling KD 60 million. This was approximately seven times oversubscribed. The significant oversubscription reflects shareholders' confidence in Gulf Bank’s potential capabilities.”

Key Financial indicators

• Net Profit grew by 15.2%.
• Earnings Per Share is up 13.2% to 21 fils.
• Recommended dividends of 12 fils and 5% bonus shares.
• Gross loans and advances reached KD 5.5 billion.
• NPL ratio stood at 1.2% and coverage ratio 466% including total provisions and collaterals.
• Capital Adequacy Ratio of 18% and Teir 1 Ratio of 15.8%.

Margins

Gulf Bank’s Chief Financial Officer Mr. Challinor responded to questions related to margins by saying: “For Q4 we continued to see the margin expand but at a slower pace than for Q2 and Q3. For the full year 2023 our net interest margin was 217 basis points versus the prior year which was 210. And this increase was in line with the guidance we gave at the beginning of the year. As you know the margin dynamics are complex as there are many variables.”

Loan Growth

Regarding loan growth and what segments drove the growth, Mr. Challinor commented: “For the full year 2023, we had overall growth of 1.2%, with retail dominating, leading to another year of market share gains in the retail business. We’re aiming to continue gaining market share, which we have done in both 2022 and 2023, so we think this second half trend will play nicely into our strategic goals for next year. We also believe that the market will be more active next year and have seen signs of positive movement in the project space locally. So, all in all, I think we should expect a solid year of loan growth next year more in line with long-term system average.”

Credit Cost & Asset Quality

Regarding the credit cost and asset quality of Gulf Bank, Mr. Challinor stated: “For 2023, the credit costs were KD 29 million which translated to a cost of risk of 54 basis points, we’ve had 2 consecutive years where credit costs have been historically very low. So, I’m very pleased with this continued low level of credit costs considering where interest rates are. Our NPL percentage continues to be very low at 1.2%, which is broadly similar to a year ago.”

Operating Expenses

Regarding operating expense and improvement in cost to income ratio Mr. Challinor mentioned: “The total cost growth was under 1% year on year, which is a strong outcome, and demonstrates our prudent approach to cost control during 2023. Looking at the cost to income ratio there’s been a meaningful drop of 2% and it now stands at 45.6% down from 47.6% a year ago. Looking forward, we’ve embarked on a journey to bring down the cost to income ratio over time and are targeting a further fall for 2024.”

Real estate Financing

Regarding the home financing law and if there are any updates, Ms. AlDousari stated: “It’s been nearly two years since the first announcement of the draft law of real estate financing for private housing in Kuwait. We have a renewed confidence that the law will ultimately materialize as an alternative financing option through local banks. We are optimistic about the potential mortgage law in Kuwait and its positive impact on the overall credit market. We believe that the law aligns well with our Bank's retail focused strategy, and we are in a good position to benefit from this market opportunity.”

Before concluding the webcast AlDousari concluded with a recap on Gulf Bank 2024 key guidance indicators:

• For loan growth, our strategy remains unchanged, more in line with long-term system average that seems to have been around mid-single digits.
• We have guided earlier that cost to income ratio is expected to decrease. This achieved during the year and it’s at a lower level compared to last year. We expect the declining trend of cost to income ratio to continue.
• We continue to proactively manage our balance sheet and we should expect, at this stage, the full year charge to land somewhere in the 50-70 basis point range.
• Our NPL ratio remained near the 1% levels over the previous quarters. We aim to keep our NPL ratio under the 2% mark due to our prudent risk management approach.