Gulf Bank grows Net Profit by 39% in the First Quarter of 2021 Compared to the First Quarter of 2020
Despite the pandemic, Gulf Bank continues to generate profits, due to its prudent policies and conservative approach
Kuwait, 28 April 2021: Gulf Bank K.S.C.P. (“The Bank”) announced its financial results for the first quarter ending 31 March 2021. The Bank recorded a net profit of KD 12 million, an increase of KD 3.4 million or 39% compared to the first quarter of 2020 net profit of KD 8.6 million. This increase was mainly due to the significant improvement in net interest income.
The Bank’s return on assets improved from 0.5% in the first quarter of 2020 to 0.8% and return on equity grew from 5.3% to 7.6%.
The improvement in Net profit was mainly driven by a 13% or KD 3.7 million increase in net interest income caused by a continuing decline in the cost of funds. The higher operating expenses of KD 1.7 million were set off by lower credit costs (including general provisions) of KD 2.2 million.
Compared with 31st December 2020, total assets increased by 2.6% to KD 6.3 billion, loans and advances to customers climbed 2.7% to KD 4.2 billion, customer deposits grew by 3.6% to KD 4.2 billion, and shareholders’ equity stood at KD 637 million.
The Bank’s regulatory capital ratios remained strong as the Tier 1 ratio of 14.3% was 485 basis points above the regulatory minimum of 9.5% and the Capital Adequacy Ratio (CAR) of 17.7% was 621 basis points above the regulatory minimum of 11.5%.
Commenting on the results, Gulf Bank’s Chairman, Mr. Jassim Mustafa Boodai, said: “I am pleased to announce that Gulf Bank has started 2021 strong, with an increase of 39% in net profit during our first quarter compared to the same period last year. Despite the challenges that we continue to face as a result of the coronavirus pandemic, Gulf Bank managed to increase our profitability, generating an operating margin of KD 21 million, an increase of 8% compared to the first quarter of 2020. These results are a testament to Gulf Bank’s sound policies and prudent management, and they demonstrate that the Bank is on the right path to achieving its strategy, while continuing to create value for its shareholders.”
Gulf Bank’s CEO, Mr. Tony Daher, commented: “During the first quarter of the year, Gulf continued to generate strong profit growth despite the challenges facing the economy and the banking sector. Thanks to our stability and prudent risk management policies, we were able to achieve a balanced performance. These results increase our confidence, and confirm that we are on the right course to achieving Gulf Bank’s strategic objectives and push us to intensify our efforts as we continue on our path to leadership in the sector.”
On March 27, 2021, Gulf Bank held its Annual General Meeting and obtained approval from its shareholders to pay cash dividends of 5 fils per share, representing a 50% payout ratio for the fourth consecutive year.
Diraya Awareness Campaign
As part of its ongoing commitment to enhancing economic sustainability, Gulf Bank is participating in the Diraya campaign, an awareness campaign initiated by the Central Bank of Kuwait and the Kuwait Banking Association to educate customers about their banking rights and the general public about all matters related to banking and finance. The campaign aims to increase public awareness of the important role of the banking sector, as well as the various services it provides.
Commenting on the Diraya campaign, Daher continued: “With the latest advancements and progress witnessed by the financial and banking industry, the need for greater financial awareness is more important than ever, in the hopes that customers can make the most of all the services available to them without compromising any rights or security. Gulf Bank fully supports the Diraya campaign and encourages all its customers to follow the campaign’s activities and stay tuned to all its awareness messages.”
Gulf Bank is currently supporting the Diraya campaign by providing dedicated educational and informative messages through the Banks’ various channels, concerning topics such as: banking cybersecurity, customer rights, and the role of banks in the overall development of the economy.
“A” Credit Ratings
Gulf Bank continues to be well recognized in terms of its creditworthiness and financial strength internationally, rated “A” by all four leading credit rating agencies.
Moody’s Investors Service affirmed the Long-Term Deposits Rating of “A3” with a “Stable” outlook.
Fitch Ratings affirmed the Bank Long-term Issuer Default Rating of “A+” with a “Negative” outlook.
S&P Global Ratings affirmed the Bank Issuer Credit Rating at “A-” with a “Negative” outlook.
Capital Intelligence affirmed Gulf Bank’s Long-term Foreign Currency Rating of “A+” with a “Stable” outlook.
Gulf Bank, Bank of the Future
Gulf Bank has also set its upcoming five-year strategy, which will focus on:
- Promoting growth in the corporate banking segment by increasing product offerings and focusing on small and medium-sized enterprises;
- Increasing the Bank’s market share in the retail banking sector, and targeting youth and affluent client segments; and
- Developing the Bank’s digital banking platforms to increase competitiveness and improve customer service.
Commenting on the Bank’s digital transformation strategy, Mr. Daher said: “As part of Gulf Bank’s strategy, we are digitally transforming most of the Bank’s major activities in a way that increases efficiencies, enhances the Bank’s performance, and strengthens its corporate controls. We anticipate that our technological enhancements will facilitate smoother operations for both our customers and the Bank, and we are continuously enhancing our security levels to elevate Gulf Bank’s customer protection and improve service.”
Thanks & Appreciation
Mr. Boodai concluded his remarks by stating: “On behalf of the Board of Directors, we would like to extend our appreciation to the Central Bank of Kuwait and the Capital Markets Authority for their dedicated efforts in supporting and promoting Kuwait’s banking sector. I would also like to thank our shareholders, customers, and Board of Directors for their valuable contributions, with a special note of appreciation to our team members for their loyalty over the years.”