Gulf Bank’s first half net profit increases by 11%

Gulf Bank, Kuwait’s second largest commercial bank posted very strong results in the first half of 2005. The Bank maintained and improved upon the new heightened level of profitability achieved in 2004. The second quarter 2005 trading profit (excluding investment gains and provisions) was the highest quarterly trading profit ever achieved by Gulf Bank. The first half net profit increased by 11%, to KD36.6 million (USD125.2 million), reflecting strong core earnings growth in all business areas. Net interest income increased by 12%, despite loan growth being severely curtailed by the introduction of the new ‘80:20’ loan/deposit ratio. The growth in fee and FX income was similarly constrained by the slowdown in new business growth necessitated by the ‘80:20’ ratio. Nevertheless, fees and commissions grew by an impressive 32%, driven by the strong growth in LC/LG business volumes (LC income more than doubled and LG income grew by more than 50%); and treasury income was up 14% on the back of strong growth in customer business. The record first half results delivered major improvements in the key profitability and shareholder return measures. The Return on Assets was 24% higher than the first half of 2004, at 3.25%; and the Return on Equity improved by 11%, from 23.6% to 26.3%. Earnings per share for the first six months of 2005 grew by 13.5% to 43.7 fils. The Bank’s industry-beating cost:income ratio was maintained (at 18.9%), since the first half cost growth of 16% was matched by the corresponding 16% growth in operating income. As the most efficient bank in Kuwait, Gulf Bank continues to invest heavily in its business while also maintaining its world-beating operational efficiency ratio. The Gulf Bank Chairman & Managing Director, Mr. Bassam Alghanim, commented that: “The record first half results continue to demonstrate the bottom line benefits of our transformation strategy. The significant investment in technology, branches and people over the last 5 years continues to yield substantial improvements in customer service, operating performance, market share and profitability.” Dr. Yousef Al-Awadi, Chief General Manager & Chief Executive Officer added that: “We are driven by a commitment to deliver superior customer service matched by unparalleled speed of decision-making, innovativeness and flexibility in creating the best financial solution for our customers. We are pleased to receive ‘The Best Retail Bank in the Middle East for 2005’ award, by Banker Middle East, as further evidence of the strong performance of Gulf Bank. This focus on delivering superior customer satisfaction continues to deliver superior returns for our shareholders”. Gulf Bank has been receiving strong ratings from the world’s top international rating agencies, namely: ‘A’ (Capital Intelligence), ‘A-‘ (Fitch), ‘A2’ (Moody’s), and ‘BBB+’ (Standard and Poor’s). The positive ratings reflect the Bank’s sound profitability, good asset quality, stable retail deposit funding and adequate capitalization.