ShareKUWAIT: Gulf Bank KSCP (Bank) announced its financial results for the year ended 2022. The bank reported a net profit of KD 61.8 million, an increase of 47 percent compared to the year 2021. Earnings per share were up 46 percent to 19 fils and the Board of Directors is recommending a distribution of a cash dividend of 10 fils per share, representing a 51 percent cash payout ratio, in addition to 5 percent bonus shares, for shareholders' approval at the annual general meeting to be held in March 2023.
Gulf Bank recorded an operating income of KD 181.1 million for the year 2022, an increase of 6 percent compared to the year 2021. The increase in the net profit was mainly driven by KD 9.9 million or a 7 percent increase in net interest income, a 3 percent or KD 1.1 million improvement in non-interest income, and a decline of 37 percent or KD 17.6 million in total provisions and impairments.
As for asset quality, the non-performing loans (NPL) ratio stood at 1.1 percent as of 31 December 2022, compared to the prior year level of 0.9 percent. Additionally, the bank continues to have significant non-performing loans coverage ratio of 504 percent including total provisions and collaterals.
Total credit provisions ended 2022 at KD 313 million whereas IFRS 9 accounting requirements (ie, ECL or expected credit losses) were KD 190 million. So, the bank has very healthy excess provisioning level of KD 124 million, above and beyond what is required by the IFRS9 accounting requirements.
Compared to 2021, total assets increased by 5 percent to KD 6.9 billion, loans and advances to customers climbed by 7 percent to KD 4.9 billion, and shareholders' equity increased by 8 percent to reach KD 720 million. In addition, customer deposits reached KD 4.2 billion for the year ended 2022. Looking at the bank's regulatory capital ratios as of 31 December 2022, Tier 1 ratio was14.2 percent, that is 3.7 percent above the regulatory minimum of 10.5 percent and the Capital Adequacy Ratio (CAR) was16.4 percent, that is3.9 percent above the regulatory minimum of 12.5 percent.
Strategic momentum
Commenting on the results, Jassim Mustafa Boodai, Gulf Bank's Chairman said: "Our results of 2022 demonstrate excellent strategic progress with Gulf Bank delivering strong net profit, sustained by the growth momentum in our core businesses. We made tremendous strides towards our key strategic priorities centered around digital transformation initiatives to improve the customer experience, accelerate development and further drive operational efficiencies."
Strong performance
Within this uncertain environment, Gulf Bank remained resilient, reflecting its strength, stability, and its support towards stakeholders. Boodai added: "Building on the positive momentum generated throughout 2022, I am pleased to announce that Gulf Bank has delivered a strong financial performance, with an increase of 47 percent in net profit for the year end 2022 compared to last year. Our asset quality profile and balance sheet fundamentals position us very well to achieve our strategic aspirations. We enjoy a strong financial position that enables us to deliver sustainable returns for our shareholders while supporting the future growth of the Bank."
Viability upgrade
Gulf Bank continues to be well recognized in terms of its creditworthiness and financial strength internationally. During the year 2022, Fitch Ratings has upgraded Gulf Bank's Viability Rating to 'bbb-' from 'bb+' and affirmed the bank's Long-Term Issuer Default Rating at 'A' with a Stable Outlook.
In addition to Fitch Ratings' Viability Rating upgrade and affirmation of Gulf Bank's Long-Term Issuer Default Rating at 'A' with a 'Stable' Outlook, the Bank has a Long-term Foreign Currency Rating of 'A+' with a 'Stable' Outlook by Capital Intelligence Ratings and a Long-Term Deposits rating of 'A3' with a 'Stable' Outlook by Moody's Investor Services.
Sustainability
Sustainability is an important and integral part of Gulf Bank's strategy. Boodai commented: "We believe that integrating sustainability and ESG considerations into our practices and activities will enable us to further strengthen our customer experience, offering sustainable products and services for the market, and positioning us as a key leader of sustainability initiatives amongst local and regional financial institutions. We remain committed towards our stakeholders, community, and the overall Kuwaiti economy."
Recognition
As a testament for its endeavors to be the leading Kuwaiti Bank of the Future, Gulf Bank was recognized by several prestigious organizations. During 2022, Gulf was awarded with "Most Rewarding Prepaid Card" for its Mastercard MOUJ Cashback Prepaid Card. Moreover, Gulf Bank was awarded for the best launch experience in the Middle East and North Africa for the launch of the integrated and innovative "Click to Pay" service. Both awards acknowledge Gulf Bank's leadership in providing innovative services and solutions to its customers.
Appreciation
Boodai concluded his remarks by stating: "On behalf of the Board of Directors, I would like to thank our shareholders for their ongoing trust, and our employees for their commitment and dedication. I would also like to thank the Central Bank of Kuwait for their continuous support. Last but not least, I want to thank our customers for their loyalty, and reiterate our commitment to offering them the best banking experiences."
Key positive indicators:
* 2022 net profit of KD 61.8 million, an increase of 47 percent over the year 2021.
* 2022 earnings per share were up 46 percent to reach 19 fils.
* 10fils proposed cash dividends and 5 percent bonus shares.
* Loans and advances to customers climbed by 7 percent to reach KD 4.9 billion.
* Non-performing loan ratio for the year end 2022 was 1.1 percent, with a strong non-performance loan coverage ratio of 504 percent.
* Capital ratios as of 31 December 2022, Tier 1 ratio was 14.2 percent and Capital Adequacy Ratio (CAR) was 16.4 percent.
