Mahfouz:

• Gulf Bank delivered solid performance while strengthening its operating platform.
• Kuwait’s economic landscape showed signs of improvement, supported by fiscal reforms and renewed development activity.
• We launched our new five-year strategy for 2030, which centers on reinforcing our market position, driving sustainable growth across core businesses, and completing our transition to a Sharia-compliant bank

Challinor:

• Gulf Bank had a very strong loan growth of 150 million in Q4, which brings the full year growth to 7%.
• Total operating expenses grew only 2% for the full year, which is the lowest cost growth the Bank has seen since 2020.
• Looking forward into 2026, we’d expect corporate credit costs to remain low and the retail credit cost to start normalizing closer to historical levels at some point.

Gulf Bank held its year-end 2025 earnings webcast on Thursday 5th February 2026, to present and discuss the Bank's financial performance. The webcast was organized by EFG Hermes and presented by Sami Mahfouz, Acting Chief Executive Officer of Gulf Bank, and Mr. David Challinor, Chief Financial Officer of Gulf Bank. The discussion was moderated by Ms. Dalal AlDousari, Head of Investor Relations at Gulf Bank.

Operating Environment

Mr. Sami Mahfouz, Acting Chief Executive Officer of Gulf Bank, commenced the webcast with key updates regarding the operating environment and Gulf Bank’s overall position during the year 2025. Mr. Mahfouz stated: “The operating environment in 2025 remained challenging globally, shaped by geopolitical tensions, tariffs threats and elevated volatility; while locally, Kuwait’s economic landscape showed signs of improvement, supported by fiscal reforms and renewed development activity. The approval of the Public Debt Law, progress on real estate and housing legislation, and an increased government capital spending improved the domestic economic momentum.”

Mr. Mahfouz added “Gulf Bank delivered solid performance while strengthening its operating platform. During the year, we concluded our 2025 five-year strategy, completing several foundational initiatives, including the core banking transformation, enhancements to digital and omni-channel capabilities, and the continued expansion of our investment arm InvestGB. These efforts improved efficiency, service delivery, and our ability to support clients across key segments.”

He added: “We launched our new five-year strategy for 2030, which centers on reinforcing our market position, driving sustainable growth across core businesses, and completing our transition to a Sharia-compliant bank. During the year, we received the Central Bank of Kuwait’s initial approval to proceed with the conversion, marking an important milestone. In parallel, we continue to assess strategic opportunities, including the potential merger with Warba Bank, in close coordination with the regulators.”

Margins

During the financial commentary to questions raised regarding the net interest margins and the outlook in light with the interest rate cuts, Mr. David Challinor, Chief Financial Officer of Gulf Bank stated: “On the Q3 earnings call, I mentioned that the outlook for margin was to the downside. And in Q4 we saw the margin drop by 4 basis points. Benchmark rates were cut between September and December and this led to corporate asset repricing, which reduced income yields. Looking forward to 2026 the biggest negative impact to margin would be further benchmark rate cuts. And the impact of a 25-basis point cut is 3.3 million KD to net interest income, which translates to around 4 to 5 basis points of margin.”

Loan Growth 

In regard to loan growth, Mr. Challinor noted: “We had very strong loan growth of circa 150 million in Q4, which brings the full year growth to 7%, and our guidance at the beginning of the year was mid-single digit so that was comfortably achieved. The growth this year has been dominated by the corporate segment and Q4 was no different. Now, when we look at retail, the growth environment continues to be challenging for us, although we could expect improved conditions if benchmark rates were to fall further in 2026. Looking ahead into 2026, I’d expect corporate to continue its strong growth momentum whilst also seeing a pick-up in our retail activity. So, overall, I think high single digits loan growth is going to be achievable for 2026.”

Asset Quality

When asked about the Bank’s asset quality and credit cost Mr. Challinor, remarked: “Year-to-date credit costs were down 15% versus last year. And when we split the components between retail and corporate we saw that retail was relatively flat compared to last year and corporate was significantly down, the latter driven by both lower specific provisions and higher recoveries. And in Q4 specifically, almost all the credit costs came from the retail book which was also the case in Q3. Our stage 2 percentage continued to fall in Q4 and now stands at only 2.7%. And our NPL percentage also fell in Q4 and now stands at only 1.1%.  Looking forward into 2026, we’d expect corporate credit costs to remain low and the retail credit cost to start normalizing closer to historical levels at some point.”

Operating Expense

When asked about the operating expense and cost to income ratio Mr. Challinor mentioned: “Total operating expenses grew only 2% for the full year, which is the lowest cost growth the Bank has seen since 2020. And this was achieved despite additional costs relating to both our Islamic conversion and potential merger. And also, we had an 8% increase in depreciation which relates to the completion of our digital transformation in prior years. When we look at the cost-to-income ratio for Q4, it was 47.1%, which was the lowest level of any quarter during 2025. But on a full year basis it’s 49.9% which is an increase of 3.5%from 2024. And the increase is due largely to the 5% drop in operating income driven mainly by asset repricing. Going forward, I’d expect BAU costs to continue to be optimized and managed well, but we expect a ramp up in Islamic conversion costs and potential merger costs.”

Conversion to a Sharia compliance 

When asked about the updates in terms of the conversion to Islamic Sharia compliant Bank Mr. Mahfouz noted: “We continued to advance our strategic transformation toward becoming a Sharia-compliant institution. Following the most recent Central Bank of Kuwait’s preliminary approval to begin Sharia compliant conversion activities, we have established dedicated governance structures and cross-functional teams to manage the conversion process across all operational, legal, and product-related areas. We are also investing in employee training to build the required competencies and are working closely with our technology partners to ensure systems readiness in line with the Central Bank of Kuwait framework.”

Potential Merger

Mr. Sami Mahfouz, Acting Chief Executive Officer of Gulf Bank, commented on a question regarding the updates on the merger with Warba Bank by stating: “We have commenced the due diligence process and continue to evaluate the potential merger with Warba Bank. Independent financial and legal advisors are currently working on a comprehensive assessment under the supervision of the Board of Directors and the relevant regulatory authorities. Any future developments will be communicated in accordance with disclosure requirements.”