ShareKUWAIT: Burgan Bank (“Burgan” or “the Bank”) announced its financial results for the first half of 2024 (H1 2024), for the period ending June 30, 2024.
The Bank reported KD 111 million in revenues for H1 2024, marking an impressive growth of 19 percent year-on-year (y-o-y). The increase in revenues was primarily driven by higher net-interest income of KD 71 million, up 17 percent y-o-y and robust non-interest income of KD 39 million, up 24 percent y-o-y. Burgan’s net interest margin also increased to 2.1 percent in H1 2024 as compared to 1.9 percent during H1 2023 – an improvement of 20bps y-o-y.
Driven by higher revenues, the Bank reported a strong operating profit of KD 48 million, up 24 percent y-o-y. The Bank’s cost-to-income ratio also improved by 170bps from 58.3 percent in H1 2023 to 56.6 percent in H1 2024. Its cost of credit - net of recoveries - also remained very low at mere 30bps during H1 2024 despite proactive provisioning. Consequently, Burgan posted a net income of KD 21 million with a very healthy growth of 17 percent y-o-y.
During H1 2024, the Bank delivered strong asset growth of 8 percent y-o-y, reaching KD 7.6 billion by the end of the period. The Group’s loan book grew by 10 percent y-o-y and stood at KD 4.4 billion; primarily driven by its Kuwait operations, which increased by 8 percent y-o-y. Burgan’s deposit base also expanded by 7 percent y-o-y and stood at KD 4.6 billion by the end of H1 2024.
During H1 2024, the Bank maintained solid and healthy capital levels. Burgan reported common equity tier 1 ratio (CET1) of 13.0 percent, Tier I capital ratio of 15.4 percent and capital adequacy ratio (CAR) of 19.3 percent, well above the regulatory requirements and demonstrating sufficient capital buffers to support future growth.
Commenting on the financial results, the Burgan Bank Chairman Sheikh Abdullah Nasser Al-Sabah said: “Burgan Bank has continued to accelerate its forward-moving momentum on the heels of a transformational year in 2023. We have maintained a stable financial core and delivered solid financial results, as we continue to be steadfast in our commitment to positioning ourselves as the most modern and progressive bank in Kuwait.
Looking ahead, we aim to bolster this momentum by continuing to deliver on key strategic goals. That includes ongoing efforts to elevate, innovate and streamline our overall customer experience. It also includes building on a robust business model that prioritizes enhancing operations by investing in technology and digitalization, elevating our innovation capabilities, developing our human capital and fulfilling our environmental, social and governance (ESG) commitments.”
The Chairman further added: “As the year progresses, we are well-positioned for further growth and development, as we maintain an effective risk management approach to capitalize on promising growth opportunities. On that account, we are confident in our ability to advance our strategic priorities and objectives, enhance our performance, boost our competitiveness, and maximize shareholder value.”
Meeting the parameters of financial strength and stability
Affirming Burgan Bank’s strong financial core and stable standing, the Chairman highlighted that the Bank has maintained high international standards in terms of its creditworthiness. This is evidenced by Capital Intelligence Ratings (CI Ratings) affirming the Bank’s Long-Term Foreign Currency Rating and Short-Term Foreign Currency Rating at ‘A+’ and ‘A1’, respectively, with a stable outlook.
Meanwhile, Moody’s Ratings (Moody’s) affirmed the Bank’s long-term foreign currency bank deposit ratings at “Baa1” with a stable outlook. Moreover, the Bank completed its issuance of KD 150 million Perpetual Additional Tier 1 Capital Bonds, with demand exceeding expectations and bonds being oversubscribed. The transaction, lauded as a landmark achievement, is the first Perpetual Additional Tier 1 Capital Bond issuance denominated in Kuwaiti dinar by a bank and ranks among the largest Kuwaiti dinar issuances.
Commenting on the issuance, the Chairman said: “Today, we stand proud to have set a new benchmark on the local level after successfully completing the largest Kuwaiti Dinar Perpetual Additional Tier 1 Capital Bond issuance in Kuwait. This notable transaction attracted high investor interest, reaffirming our robust financial standing and demonstrating confidence in our strategic vision.”
Sharpened focus on digital transformation journey
The second quarter of 2024 was shaped by the Bank’s efforts to continue accelerating its dedicated technology evolution and digital transformation strategy. Of particular significance was Burgan becoming one of the earliest Kuwaiti banks to join the GCC cross-border payments system AFAQ, in adherence to the national digital transformation plan guided by the government and the Central Bank of Kuwait (CBK). Another notable move was the Bank signing a monumental deal with Tata Consultancy Services to upgrade its core banking system by implementing the TCS BaNCS suite of products.
Commenting, Tony Daher, Group Chief Executive Officer at Burgan Bank, said: “The decision to join AFAQ and sign the new deal comes in response to the market’s evolving needs and falls in line with our relentless efforts to adopt the latest state-of-the-art financial technology solutions with the ultimate goal of elevating our customers’ overall banking experience to new heights.”
As delivering digital transformation goes hand in hand with enhancing customer experience through new and upgraded products, Burgan Bank launched its interest-bearing savings account “awal” in Q2 2024. Tailored specifically for children up to the age of 14, the account builds on the success of its predecessor, “BuBa” savings account, and aims to instill a savings culture in young customers. The latest launch attests to Burgan’s steadfast efforts to meet the varying banking needs of all its customer segments. Building on this strength point, the Bank was voted the Best Domestic Bank in Kuwait in the “Best Service” category in the 2024 Euromoney Trade Finance Survey, recognizing its unwavering commitment to service excellence and an elevated customer journey.
Employees remain a primary pillar of success
On the human capital front, Burgan Bank continues to bolster its pioneering position in the domestic banking and financial market by offering one of the most desirable workplaces for national talents.
In line with its dedicated human development strategy that forms a keystone of the Bank’s success, Burgan persisted in introducing dynamic employee advancement programs in the second quarter of this year. To illustrate, it launched an exclusive Investment and Wealth Management Academy in collaboration with the world-renowned provider of learning and development solutions Fitch Learning of Fitch Group. The Bank also launched its women empowerment program, “Burgan Lean in Circle”, to address the challenges faced by females in the workplace, featuring monthly meetups, workshops, mentorship programs and networking events.
Concluding his statement, the Chairman said: “Our employees are imperative to our success as a leading financial institution, and continuing to invest in them individually will help propel us closer to achieving our strategic goals. From this standpoint, we are committed to remaining a top employer of choice in the local market by creating a supportive and inclusive workplace where all employees are given equal, ambitious career advancement and learning opportunities all year round.”
It serves to note that the consolidated financials for Burgan include the results of the Group’s operations in Kuwait, as well as its share of results from its subsidiaries, namely: Burgan Bank Turkey, Gulf Bank Algeria and Tunis International Bank. Through this regional reach, Burgan Bank has one of the largest regional branch networks across Kuwait, Turkey, Algeria, Tunisia and a representative office in the United Arab Emirates.
