10 March 2016
Chairman Omar Alghanim: "Gulf Bank is well placed to continue to develop and innovate"

KUWAIT: Gulf Bank today held its Annual General Meeting (AGM) at the Movenpick Hotel, Kuwait, where shareholders approved the company's audited financial results for the year ended 31 December 2015 and endorsed the recommendation of Gulf Bank's Board of Directors for a cash dividend of 4 fils per share.

For the year ended 31 December 2015, Gulf Bank's operating profit before provisions reached KD 108 million and net profit grew 10% compared to the prior year to KD 39 million. The Bank's balance sheet continued its trend of steady growth, with gross customer loans increasing 3% to KD 3,926 million, assets up 2% to KD 5,438 million, deposits up 5% to KD 4,563 million, and equity growing 5% to KD 538 million compared to 2014. The Bank's total capital adequacy ratio remained steady at 15.6%, which is well above the minimum requirement of 12.5%. The Tier 1 capital ratio stands at 14.4%, which is also above the minimum requirement of 10.5%, and comprises 92% of the Bank's total capital.

Loan quality remains strong, reflecting the Bank's prudent risk appetite. Non-performing loans (NPLs) declined from 3.3% at the end of 2014 to 2.7% at the end of 2015, and coverage (collaterals and provisions) on NPLs improved to 348%. Of the Bank's total loan loss reserves of KD 293 million, KD 178 million or 61% are general provisions.

Commenting on the 2015 results, Mr Omar Kutayba Alghanim, Gulf Bank's Chairman said: "As we celebrate the 55th anniversary of the founding of Gulf Bank, it gives me great pleasure to report to you on the Bank's performance and progress. We have transformed the Bank quite dramatically since 2012. Today we have a much stronger Consumer Banking franchise, a more diversified Wholesale Banking business, reduced our concentration on the real estate and non-bank financial sectors, reduced non-performing loans, and increased our loan loss coverage. Overall, this has resulted in a much stronger capital base with a higher level and quality of earnings.

"This progress has been recognized by credit rating agencies. Prior to 2015, Gulf Bank was rated A+ by Fitch Ratings. In June 2015, the Bank received a rating upgrade from Standard & Poor's to "A-" from "BBB+". Then, in November, the Bank received a rating upgrade from Moody's to "A3" from "Baa1". Thus, Gulf Bank ended 2015 with three "A" ratings from the three leading international credit rating agencies. These ratings reflect the restructuring of our portfolio, lower risk appetite, resilient core profitability, and adequacy of its capital buffers. The agencies affirmed the Bank's asset quality, capitalization, revenue-generating capacity, and sound risk management systems and practices. To achieve these ratings in a time of global turmoil, is a testament to the growth and transformation we have completed.

"Our 2015 customer satisfaction survey results showed a marked improvement in service across all customer touch-points, and a decline in complaints. This shows that our brand health has improved significantly, as demonstrated by an increased Net Promoter Score (NPS), especially among priority clients. Based on customer feedback, we have made a significant investment in a new state-of-the-art mobile banking app and online banking platform, both of which will be launched in 2016.

"Consumer Banking continued its strong performance in 2015 with double digit growth in interest income and compounded annual growth in loans of 14% since 2012. Following the review and re-launch of two of our core customer propositions in early 2015, we saw 12% growth in our Kuwaiti Salary new accounts, and 52% growth in the Red (student) accounts. We also launched our new Gulf Rewards loyalty program, which includes Gulf Points for the fastest free flights in Kuwait, as well as "Entertainer", Kuwait's first geo-locator mobile application offering exclusive deals in Kuwait, UAE and London.

There was net growth in Wholesale Banking, despite the purposeful decrease in high-risk sectors. Wholesale has worked hard to further improve its suite of products and services, as well as streamline its operations to deliver faster and more efficient customer service. This has resulted in strong growth in cash management and online banking revenues. Wholesale Banking's updated automated salary process system now enables corporate clients to process salaries online. Additionally, the Wholesale Bank remains actively engaged in the construction sector and the "Kuwait Development Plan," financing many of the key projects in Kuwait.

"I am pleased to report that our progress in 2015 was once again noticed by our peers and we received over 20 major awards for our work across the whole spectrum of the Bank's activities, including consumer banking, wholesale banking, products, performance, marketing and human resources. These included awards from respected international publications such as The Asian Banker; International Finance Magazine (IFM); International Banker; and Banker Middle East and reflects the hard work and effort of the bank's employees.

Focus on Human Capital and Building Talent
"In order to sustain and increase our competitive advantage, we are focused on attracting, developing, and retaining the best talent. Our most recent employee satisfaction survey showed an increase in satisfaction from 78% to 81% across all areas of the Bank. "We are very proud that 64% of our workforce is Kuwaiti and we are committed to increasing that percentage and gender parity. Additionally, we celebrated the first graduates from our Graduate Development Program for talented Kuwaiti nationals (now known as Ajyal).

Events and Corporate Social Responsibility
"During the year, the Bank was also heavily committed to numerous community events focusing on youth, education, health and fitness, helping the underprivileged, women's empowerment, and promoting Kuwait's heritage and culture. For example, in order to raise awareness about health and fitness, the Bank sponsored the first Gulf Bank 642 Marathon, Kuwait's first and only full road race to be internationally accredited by the world's governing body for marathons, which attracted over 2,400 participants.

"During the year the Bank also continued its long term commitment to INJAZ - Kuwait, with a high level of employee volunteers, maintaining its position as lead sponsor. Gulf Bank was also a platinum sponsor of the National Union of Kuwaiti Students (NUKS) conference in the USA, and a sponsor of the Tmkeen Youth Empowerment Symposium, a Kuwaiti initiative delivered by youth to the youth in Kuwait, and we also sponsored the Jahazeen 2 training and development program, which was held in cooperation with Kuwaiti's Manpower and Government Restructuring Program (MGRP)"

"With all these achievements and international recognitions, the Bank is well placed to continue into the next phase of its expansion. Looking ahead, exciting innovations are underway, with our clients at the center of our efforts."

In conclusion, Mr Alghanim said: "I would like to take this opportunity to express my appreciation to our Board of Directors and our Shareholders for their commitment and loyalty. I would also like to thank our valued customers for their continued trust in our products and services. All of this progress would not have been possible without the work of our dedicated staff; I thank them for their services and for being part of the Gulf Bank family."

© Kuwait Times 2016