Gulf Bank concluded its Annual General Meeting at the Jumeriah Messilah Hotel Kuwait on 8 March. Shareholders approved the Bank’s audited financial statements for the year ended 31 December 2016 and endorsed the Board of Directors recommendation of a cash dividend of 7 fils per share, an increase of 75 percent compared to 4 fils per share in the prior year.
Gulf Bank recorded a net profit of KD 43 million for the year ended 2016, a 10 percent increase over the previous year. Loan quality continued to improve; gross credit cost (specific provisions plus write-offs) declined by 16 percent to KD 72 million compared to 85 million in 2015. Non-performing loans (NPLs) reached KD 93 million or 2.4 percent NPL ratio, levels that have not been seen since 2007.
The Bank’s capital adequacy ratio is 18.5 percent, which is well above the regulatory requirement of 14 percent. The capital of the Bank was enhanced by the successful issuance of KD 100 million of Tier II capital in May 2016. The assets of the Bank were steady at KD 5,467 million, while total shareholders’ equity was up by 7 percent to KD 573 million.
In terms of profitability, the Bank’s earnings per share for the year ended 2016 was 15 fils compared to 13 fils in 2015. The return on average assets was 0.79 percent compared to 0.72 percent in 2015, and the return on average equity was 7.73 percent compared to 7.43 percent for the previous year.
Commenting on the 2016 results, Omar Kutayba Alghanim, Chairman of Gulf Bank, said: “It is my pleasure to report to you on the performance of Gulf Bank in 2016, we have transformed the Bank quite dramatically in the last several years and we continue to achieve significant milestones and meet key strategic goals. Today, our Bank has strong revenue-generating capacity as well as a clean and sound balance sheet. We have a growing Consumer Banking franchise and a more diversified Wholesale Banking business; we have reduced our concentrations in the real estate and non-Bank financial sectors, reduced non-performing loans, and increased our loan loss coverage.”
Mr. Alghanim continued: “As you can see this has resulted in a much stronger capital base with a higher level and quality of earnings. For the third consecutive year, the Bank achieved double-digit net income growth in a very competitive industry and a challenging economic environment. We increased our cash dividends by 75 percent to 7 fils per share. Our capital adequacy is strong at 18.5 percent and is well above the regulatory requirement. For the first time in the last nine years, non-performing loans fell below KD 100 million or 2.4 percent of total loans. Additionally, we continue to enjoy an “A” rating from the top three international rating agencies. Gulf Bank is well positioned to continue its progress and growth.”
Gulf Bank Rated ‘A’ By All Leading International Ratings Agencies
Gulf Bank is rated (A3) Moody’s Investors Services; (A+) Fitch Ratings; and (A-) Standard & Poor’s -S&P. During this year, all three rating agencies affirmed the Bank’s ratings, its stable outlook and revenue generating ability. These affirmations confirm our dedication to creating value for our stakeholders and building a strong and safe bank.
Innovative Products and Customer Service Are Key to the Bank’s Growth and Performance
Part of Gulf Bank’s growth strategy is its commitment to developing and launching products and services that resonate with our corporate clients and retail customers.
On the corporate side, by developing a robust transaction banking platform, the Bank enabled the automation of corporate and customer employees’ salary processing, corporate transaction approvals, as well as trade finance transactions and cash management requests through an online portal. This automation has lead to further improved customer service and a reduction in operational risk.
On the retail side, in the second quarter of 2016, Gulf Bank launched its new mobile banking application and digital banking portal, raising the market standard for security and ease of use. The Bank’s face recognition mobile banking app was not only the first of its kind in Kuwait, but was unique in recording a 156 percent increase in the Bank’s digital customer base. Additionally, the Bank’s customer loyalty program, Gulf Rewards and the Gulf Bank Entertainer Application, continued to exceed expectations. It is driving growth in the credit cards business, increasing market share, as well as winning a ‘Best in the Middle East’ award for its simplicity and breadth of customer benefits.
To better serve customers with special needs, we have started installing special ATM machines and have trained select branch staff to communicate in sign language.
Gulf Bank’s growth and soundness was strongly acknowledged by the financial services and banking industry on regional and international levels. Gulf Bank won The Asian Banker regional awards for: “Best Credit Card Product in the Middle East for Gulf Rewards”; “Internet and Mobile Security Technology Implementation of the Year in Middle East and Africa”; and “Enterprise Risk Technology Implementation of the Year in Middle East and Africa.”
Furthermore, at the end of the 2016, Gulf Bank was notified by Guinness World RecordsTM that it would win the ‘largest prize linked to a bank account’ in the world for its Al Danah account’s KD One Million prize. Gulf Bank received the award during the annual Al Danah draw that took place on 5 January 2017.
Human Capital Initiatives
Gulf Bank strongly believes in investing in human capital and is proud that 66 percent of its workforce is Kuwaiti. The Bank is committed to growing that percentage, increasing gender parity, and a workplace in which advancement is based on performance and measured on achievement.
The Bank’s Ajyal Graduate Development Program, delivered in cooperation with Institute of Banking Studies (IBS) Kuwait, identifies and nurtures young Kuwaiti talent early in their careers to develop them into ‘holistic bankers’ and prepare them for future leadership positions. Two classes have successfully completed the intensive 9-month program and another class has begun their training.
Leading in Corporate Social Responsibility
Gulf Bank’s corporate social responsibility remains dedicated to serving all the people of Kuwait and contributing to the development of our beloved country. Its focus continues to be on education, entrepreneurship, heritage, and women’s empowerment.
To address one of the major challenges facing our region, the Bank continues to sponsor INJAZ- Kuwait to deliver Arabic and English language education programs on entrepreneurial and leadership skills to help young people build successful careers.
Gender Diversity: Women in the Corporate World Conference
As Gulf Bank is committed to gender parity and to further understand key motivating factors and challenges women face in the workplace, the Bank held the “Women in the Corporate World” non-profit conference in May 2016. Leading international, regional and local speakers and participants attended; the Bank believes that initiatives such as this conference not only improve internal company cultures, but also positively reflect on society and advance the region both economically and in a socially responsible direction.
Memorial Pearl Diving Journey
Sponsorship of the Memorial Pearl Diving Journey continues to form a key part of the Bank’s long-term commitment to preserving the heritage and continuing the traditions of Kuwait. Recreating a pearl diving journey each year helps to remind young Kuwaitis of the difficulties and challenges faced by their forefathers and helps uphold the traditions and values of our ancestors.
Gulf Bank 642 Marathon
Now in its second year, the ‘Gulf Bank 642 Marathon’ continues to highlight the importance of health and fitness. This event caters to all levels of fitness and to families, with four different distance categories (5km, 10km, 21km, 42km), and had record turnout. Participants included individuals, families, teams of walkers and runners from various backgrounds and organizations. This is the only marathon in Kuwait to have its 21km and 42 km distance categories internationally accredited, meaning those races appear in the international calendar of races.
This year the ‘Gulf Bank 642 Marathon’ partnered with the UNHCR (United Nations High Commissioner on Refugees), also known as the UN Refugee Agency, and its ‘Voices for Refugees’ initiative. This online awareness and fundraising campaign is to stand with refugees to make their voices heard and humanize their plight.
In conclusion, Mr. Alghanim said: “I would like to thank our valued customers for their continued trust in Gulf Bank. I would also like to extend our sincere appreciation to our Shareholders, Board of Directors, the Central Bank of Kuwait and the Capital Markets Authority for their ongoing support throughout the year. Moreover, I thank our staff for their dedicated service and for being part of the Gulf Bank family.”