Bader Nasser Al-Kharafi:

• Gulf Bank consistently exhibits robust operational performance, reinforced by strong top-line growth and sound financial position metrics.
• Despite the higher than usual credit costs, we remain confident in the Bank’s future potential.
• The significant loan book expansion during the first half reflects the success of our strategic initiatives in meeting our clients' evolving needs.
• The enhancement in operational profitability highlights our focus on growth and financial discipline, reflecting our dedication on expanding strategically and maintaining fiscal stability.

Waleed Khaled Mandani:

• The successful completion of Phase II of our core banking system is a significant milestone in our journey towards advancing customer centricity.
• We aim to provide our clients with a personalized and seamless banking experiences by transforming our branches into relationship and experience centers.
• Gulf Bank plays a significant role in Kuwait's economic development through direct funding and partnerships with other financial institutions.
• Gulf Bank is recognized for its social responsibility and fostering a workplace environment that promotes diversity and inclusion.

Kuwait, 24 July 2024: Gulf Bank K.S.C.P. announced its financial results for the first half ending 30 June 2024. The Bank reported a net profit of KD 28.2 million, a decline of KD7.6 million or 21.3% compared to 2023 first half net profit of KD 35.8 million.

In addition, Gulf Bank recorded an operating income of KD 96.9 million for the first half of 2024, representing an increase of 5% compared to the same period of last year. Moreover, operating profit before provisions and impairments has increased to KD 52.6 million, representing a healthy growth of 6.6% compared to the first half of 2023.

The decline in net profit for the first half of 2024 is attributed to an increase in total provisions and impairments of KD 11.3 million compared to the same period of last year. Although this rise in total provisions and impairments has impacted short-term results, the Bank is diligently implementing sound risk management strategies to ensure long-term sustainable growth.

As for asset quality, the non-performing loans (NPL) ratio was 1.2% as of 30 June 2024, compared to the prior year level of 1.0%. Additionally, the Bank continues to have significant non-performing loans coverage ratio of 390% including total provisions and collaterals.

Total credit provisions as of 30 June 2024 reached KD 274 million whereas IFRS 9 accounting requirements (i.e., ECL or expected credit losses) were KD 161 million. As a result, the Bank has a very healthy excess provision level of KD 114 million, above and beyond what is required by the IFRS 9 accounting requirements.

Compared to 31 December 2023, total assets increased by 3.6% to KD 7.4 billion, net loans and advances increased by 6.9% to KD 5.6 billion, while customer deposits increased by 9.5% to KD 4.6 billion and total Shareholders’ equity reached KD 802 million.

The Bank’s regulatory Tier 1 ratio of 14.23% was 2.23% above the regulatory minimum of 12% and the Capital Adequacy Ratio (CAR) of 16.35% was 2.35% above the regulatory minimum of 14%.

Financial Performance and growth

Commenting on Gulf Bank’s first half 2024 financial results, Mr. Bader Nasser Al-Kharafi, Gulf Bank’s Chairman said: “For the second quarter of the year 2024, Gulf Bank consistently exhibits robust operational performance, reinforced by strong top-line growth and sound financial position metrics. We faced higher than usual credit costs which resulted in a decline in our net profit growth during the first half of the year compared to the same period of last year, however, we remain confident in the Bank’s future potential.” He added: “Having said that, we have seen our loan book significantly expand during the first half of 2024, reflecting the success of our strategic initiatives in meeting our clients' evolving needs. This growth in loans displays our capacity to navigate and excel in dynamic market conditions, reinforcing our prominent position in the Kuwaiti banking sector.” On the improvement of the Bank’s operational profitability, Mr. Al-Kharafi stated: “I am pleased with the continuous improvement in our operating profitability, especially in net interest income, operating income, and operating profit. This operational enhancement highlights our focus on strategic growth and financial discipline, reflecting our dedication to expanding strategically and maintaining financial stability.”

Operational Efficiency

Following the completion of phase II of the new core banking system during the first half of 2024, Mr. Waleed Khaled Mandani, Gulf Bank Acting CEO commented: "We are pleased to announce the successful completion of Phase II of our core banking system, a significant milestone in our journey towards advancing customer centricity. This achievement strengthens our operational capabilities and reaffirms our focus to meet the evolving needs of our clients in a digitally driven era.” He added: "In partnership with Fintech providers, Gulf Bank is ready to leverage these technological foundational changes to drive operational efficiencies and transform our branches into relationship and experience centers aiming to provide a personalized and seamless banking experiences to our clients."

Customer Excellence

Gulf Bank continues its strategic journey towards customer service excellence. On this front, Mr. Mandani stated: “Gulf Bank is committed to enhancing and developing customer services and implementing the latest and best technological applications, which are rapidly progressing us towards banking industry leadership.” He added:” Our most recent customer offerings included a revamped mobile application, partnerships with local providers to offer our SME customers with advanced payment solutions, and a digital financial market trading platform, catering for our clients’ financial and investment needs.”

Moreover, Mr. Mandani also stressed on the Bank's readiness to support Kuwait’s developmental projects in line with the principles of transparency, achievement, and sustainability by stating: "We are dedicated to providing diverse financing plans that meet the evolving needs of this phase. Gulf Bank plays a significant role in Kuwait's urban and economic development and our contribution varies between direct funding and partnerships with other financial institutions. We have already financed multiple initiatives crucial to Kuwait’s Vision 2035, particularly in sectors such as oil, construction, and infrastructure, emphasizing our essential role in Kuwait's ongoing progress and prosperity.”

Islamic Sharia’a Compliance

During the second quarter of 2024, Gulf Bank's announced that the Board of Directors request for the engagement of an international consultant to undertake a feasibility study regarding the potential conversion of Gulf Bank to operate in accordance with Islamic Shariaa principles. The Central Bank of Kuwait has granted approval for the commencement of this study.

ESG Recognition

Gulf Bank has recently unveiled its 2030 ESG strategy defining its commitment across key pillars: Responsible Governance, Fair Work Environment, Community Engagement, and Banking Responsibility. This strategic initiative reinforces the Bank’s operational integrity and illustrate its profound impact in the domain of sustainability. Celebrating these achievements, Gulf Bank has been honored with two esteemed awards: one acknowledging its exceptional efforts in social responsibility and community engagement from Euromoney, and the other for fostering the best workplace environment that promotes diversity and inclusion from the Gulf International CSR Conference. These awards emphasize the Bank's proactive approach in shaping a future where ESG principles complements its mission and success. Moreover, Gulf Bank was recognized by MEED magazine with two prestigious awards: the "Best Implementation of Diversity and Inclusion Initiatives" and the "Best Initiative for Women in Business" award for the Middle East and North Africa region. These awards were received in recognition of Gulf Bank’s appreciation for women role in economic growth and upholding sustainability principles at the workplace and the community.

Credit Worthiness

Gulf Bank continues to be well recognized internationally in terms of its credit worthiness and financial strength by international credit rating agencies for its sound capitalization, improving profitability and strong asset quality. As of 30th June 2024, Gulf Bank has an affirmed ‘A3’ Long-Term Deposit Rating and ‘Positive’ outlook from Moody’s Investor Services. In addition, The Bank has an affirmed Long-Term Issuer Default Rating at 'A' with a ‘Stable’ Outlook and a Viability Rating of 'bbb-' by Fitch Ratings. Moreover, Gulf Bank has also an affirmed Long-Term Foreign Currency Rating of ‘A+’ with a ‘Stable’ Outlook from Capital Intelligence Ratings.

Appreciation

Mr. Al-Kharafi concluded his remarks by stating: “Moving forward, we anticipate sustainable growth in the years ahead, supported by our efforts towards innovation, solid financial performance, and customer-focused approach.” He added: “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 Financial indicators for the first half:

• First Half 2024 net profit of KD 28.2 million.
• First Half 2024 operating income of KD 96.9 million, an increase of 5% compared to same period of last year.
• Operating profit before provisions impairments reached KD 52.6 million, an increase of 6.6% compared to same period of last year.
• Net loans and advances grew by 6.9% year-to-date to reach KD 5.6 billion.
• Non-performing loan ratio as of 30 June 2024 was 1.2%, with a strong non-performance loan coverage ratio of 390%.
• Capital ratios as of 30 June 2024, Tier 1 ratio was 14.23% and Capital Adequacy Ratio (CAR) was 16.35%.