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19/05/2022

Gulf Bank is Kuwait’s second largest bank in terms of attracting foreign investments

Daher in an interview with Bloomberg: Foreign investments in Gulf Bank make half a billion dollars

  • Daher: ''Gulf Bank is no stranger to the MCSI Index.''
  • Gulf Bank is one of 7 Kuwaiti companies on the index
  • Gulf Bank is Kuwait’s second largest bank in Kuwait in terms of foreign ownership
  • We have a positive outlook on the Bank and Kuwait’s economy, despite global market conditions
  • High interest rate and oil prices will have a positive impact on Kuwait’s economy
  • The increase in investment government spending will have a positive impact on the economy and the banks
  • Local Retail and corporate sectors are highly diverse in terms of products
  • Gulf Bank is a local bank operating in an economy that is more stable and less volatile
  • The Kuwaiti banking sector is balanced and profitable, and does not suffer from saturation

Kuwait, 19 May 2022: Amid Gulf Bank’s upcoming addition to the MCSI Emerging Market Kuwait Standard Index, the Bank’s CEO, Tony Daher, recently discussed the Bank’s latest achievements with Bloomberg. Daher noted that Gulf Bank’s upcoming inclusion to the MCSI Kuwait Standard Index is both a testament to, and continuation of, the the Bank’s and country’s national success.

“As it turns out, Gulf Bank is no stranger to the MCSI Index, having been a part of the standard index when Kuwait was upgraded to emerging market status in November 2020,” noted Daher. “We are very pleased to be upgraded from the small cap index and back to the standard index.”

Foreign Investor Engagement

When asked about its attractiveness to foreign investors, Daher noted that the Bank currently has a market cap of about 4 billion U.S. dollars, and a foreign ownership of more than 13% or the equivalent of roughly 500 million U.S. dollars). Amid a backdrop of excellent relationships with foreign investors and is well covered from Arqaam Capital and EFG Hermes, Gulf Bank is maintaining a positive outlook for the stock, with expected foreign net inflow reaching USD 100 million to USD150 million after the upgrade to the MSCI Kuwait standard index

“We are already engaged with foreign investors and we expect more inflow into the stock with the index upgrade,” said Daher.

A Positive Outlook

When asked about how dose the recent MSCI Kuwait Standard Index upgrade is set to influence Gulf Bank’s outlook for profitability amid an uncertain global monetary policy backdrop, Daher noted that Gulf Bank is maintaining a positive outlook.

“In Kuwait, we have two forces coming together at the same time: on the one hand, we have a rising interest rate, and we are fairly early into the cycle which the local banking sector will benefit from. At the same time, we do have high oil prices which are good for the Kuwaiti economy and the local banking sector in general,” said Daher. “While we understand the difficulty in the global markets, we do hold a somewhat positive outlook here in Kuwait for the rest of the year.”

Daher also noted that current oil prices have given way to surpluses in the government budget, resulting in a fairly positive outlook for future project spending in Kuwait.

He continued: “Over time we expect that surplus to go into project spending. We are the second largest conventional bank in Kuwait, and we expect to participate in that project spending as it comes to fruition, so the balance is fairly positive for project spending here in Kuwait going forward.”

Daher indicated that the rise in oil prices above the level of $100 per barrel, in light of the budget price of about $75 per barrel, is likely to get the country out of the deficit phase and return to achieving surpluses again, which reinforces the optimistic view regarding the increase in investment spending on infrastructure projects.

Interest Rate Hikes

When asked about the recent announcement of the Us Federal reserve regarding inflation and the interest rate hike cycle and what dose it mean for Gulf Bank’s interest income and income statement. Daher stated that we are still early in the cycle, and we expect more interest rate hikes to come. This will affect us positively and obviously we will witness net interest margin expansion and our earnings will rise going forward accordingly.

Investment Government Spending

As for how Gulf Bank is planning to deliver growth to international investors, Daher emphasized Gulf Bank’s local touch, as well as its minimal exposure to the variable regional economy.

“Gulf Bank is a local bank, so we are quite exposed to the local economy and we have very little exposure to the regional economy. When you look at our balance sheet, less than 10% is exposed to the GCC,” said Daher. “We are mainly a Kuwaiti bank, so when foreign investors invest in our stock, they are investing in pure local play.”

Product Diversification

Although Gulf Bank is primarily a local bank, Daher emphasized that diversification remains a major unique proposition of the Bank. “Although diversification (in terms of geography) is very limited, diversification (in terms of product) is fairly well-renowned here in Kuwait. We participate in all aspects of the economy — across both retail and corporate — and currently, the output is fairly positive across the board.”

Local Market Fairly Well-Balanced

Amid a global trend of banking consolidations, Daher also noted that the local market is fairly well-balanced, with no plans of local bank consolidations in the near future.

Daher said, “Kuwait currently has 10 banks: five Islamic banks and five conventional banks. However, the market is fairly well balanced, and well profitable ,

Gulf Bank’s vision is to be the leading Kuwaiti Bank of the Future. The Bank is constantly engaging and empowering its employees as part of an inclusive and diversified workplace in recognition of every employee’s role in delivering customer excellence and serving the community at large. With its extensive network of branches and innovative digital services, Gulf Bank is able to give its customers the choice of how and where to conduct their banking transactions, all while ensuring a simple and seamless banking experience.

Gulf Bank is committed to maintaining a robust sustainability program at the community, economic, and environmental levels through sustainability initiatives that are strategically selected to benefit both the country and the Bank. Gulf Bank supports Kuwait Vision 2035 “New Kuwait” and works with various parties to achieve it.

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