Sami Mahfouz:

• • Gulf Bank delivered a strong performance while continuing to enhance its operational platform.
  • The economic situation in the State of Kuwait has witnessed signs of improvement, supported by financial reforms and renewed development activity.
  • We have launched our new five-year strategy 2030, which focuses on strengthening our market position, supporting sustainable growth in our core business, and completing our transformation into a Sharia-compliant bank.
• David Challinore:
• • The loan portfolio witnessed strong growth of approximately KD 150 million in the fourth quarter, raising the full-year growth rate to 7%.
  • Total operating expenses grew by only 2% for the full year, the lowest cost growth the bank has seen since 2020.
  • We expect that credit costs in the corporate sector will remain at their low levels in 2026 and that credit costs in the personal sector will begin to return to their normal levels, approaching previous levels.

On Thursday, February 5, 2026, Gulf Bank held an investor conference to review and discuss the bank's financial performance for 2025. The conference was organized by EFG Hermes and presented by Mr. Sami Mahfouz, Acting CEO of Gulf Bank, and Mr. David Challinor, Chief Financial Officer. The discussion was moderated by Ms. Dalal Al-Dosari, Head of Investor Relations at Gulf Bank.

Operating environment

During the conference presented by the bank to investors, Mr. Sami Mahfouz, Acting CEO of Gulf Bank, reviewed some points related to the operating environment and a brief overview of Gulf Bank's overall position for 2025, saying: "Challenges in the operating environment continued during 2025 at the global level, affected by geopolitical tensions, customs threats and instability. At the local level, the economic conditions in the State of Kuwait showed signs of improvement, supported by financial reforms and renewed development activity, as the enactment of the Public Debt Law, the progress made in the Real Estate and Housing Finance Law, and the increase in government spending on financing large capital projects contributed to strengthening the local economic momentum."

Mr. Mahfouz added: “Gulf Bank has delivered a strong performance while continuing to enhance its operational platform. During this year, we concluded our five-year strategy for 2025, having completed a number of key initiatives, including the digital transformation of core banking services, enhancing digital capabilities and multiple banking channels, in addition to the continued expansion of our investment arm, InvestGP. These efforts have contributed to improving efficiency, elevating banking services, and strengthening our ability to support customers across various key segments.”

He continued: “We launched our new five-year strategy 2030, which focuses on strengthening our market position, supporting sustainable growth in our core business, and completing our transformation into a Sharia-compliant bank. During the year, we received initial approval from the Central Bank of Kuwait to proceed with the transformation process, which is an important milestone in our journey. In parallel, we continue to evaluate strategic opportunities, including a potential merger with Warba Bank, in close coordination with regulatory authorities.”

Profit margin

Mr. David Challenor, Chief Financial Officer, commented on the interest margin and outlook in light of the interest rate cut: “I mentioned in the Q3 meeting that the outlook is for a decline in the interest margin. We have already seen the margin decline by 4 basis points in Q4 when the benchmark interest rate was cut between September and December, which led to a repricing of corporate assets and consequently lower interest returns. Looking ahead to 2026, the biggest potential downside to the margin is a further cut in the benchmark interest rate. The impact of a 25 basis point cut is estimated at around KD 3.3 million on net interest income, which is roughly equivalent to 4 to 5 basis points for the margin.”

Loan growth

When asked about the loan portfolio growth, Mr. Chalinor stated: "The loan portfolio witnessed very strong growth of approximately KD 150 million in the fourth quarter, bringing the full-year growth rate to 7%. We had anticipated at the beginning of the year achieving near-single-digit growth, and we have comfortably achieved this. Growth this year has been primarily driven by the corporate sector, and the fourth quarter was no exception. As for the retail sector, the growth environment remains challenging for us, although conditions are expected to improve if benchmark interest rates decline further in 2026. Looking ahead to 2026, I expect the corporate sector to continue its strong growth with the same momentum, coupled with improvements in the retail sector. I believe it will be possible for us to achieve high single-digit loan growth for 2026. "

Asset quality

Mr. Challinor also commented on asset quality and credit costs: “Year-to-date credit costs are down 15% compared to last year. When broken down by retail and corporate segments, we found that retail costs were relatively stable compared to last year, while corporate costs were significantly lower due to reduced provisions and higher loan recovery rates. Our Stage 2 loan ratio continued to decline in the fourth quarter and is now just 2.7%. Our non-performing loan ratio also fell in the fourth quarter to a low of just 1.1%. Looking ahead to 2026, we expect corporate credit costs to remain low and retail credit costs to begin returning to more normal levels.”

Operating expenses

Regarding operating costs and expenses, Mr. Chalinor said: “Total operating expenses grew by only 2% for the full year, the lowest cost growth the bank has seen since 2020. This was achieved despite additional costs related to both the Islamic banking transformation and the potential merger, along with an 8% increase in depreciation costs associated with the completion of the bank’s digital transformation project in previous years. Looking at the cost-to-income ratio for the fourth quarter, it was 47.1%, the lowest recorded for interim periods during 2025. However, on an annual basis, it reached 49.9%, an increase of 3.5% compared to 2024. This increase is largely attributable to a 5% decrease in operating income, primarily driven by asset repricing. Looking ahead, I expect continued improvement in normal operating costs and their manageability, and I also anticipate a gradual increase in the costs of the Islamic banking transformation and the potential merger.”

cadre

Converting to an Islamic bank

When asked about the latest developments regarding the transition to a Sharia-compliant bank, Mr. Mahfouz stated: "We have continued to move forward with our strategic transformation to become a Sharia-compliant institution. Following the recent preliminary approval from the Central Bank of Kuwait to commence Sharia-compliant transformation activities, we have established a governance framework for the transformation and formed joint interdepartmental working groups for practical implementation, encompassing operations, legal affairs, and product-related areas. We are also investing in employee training to build the required skills and are working closely with our technology partners to ensure that systems are ready in accordance with the Central Bank of Kuwait's directives."

cadre

potential merger

Commenting on the potential merger with Warba Bank, Mr. Sami Mahfouz, Acting CEO of Gulf Bank, stated: “We have already commenced the due diligence process and are continuing to evaluate the potential merger with Warba Bank. Independent financial and legal advisors are currently conducting a comprehensive assessment under the supervision of the Board of Directors and relevant regulatory authorities. Any future developments will be announced in accordance with disclosure requirements.”

-I finish-

#Company Data

Disclaimer regarding the content of press releases
The content of this press release is provided by a third-party provider. We do not assume any responsibility for, nor do we have any control over, such content. This content is provided on an "as is" and "as available" basis and is not edited in any way. Neither we, nor our affiliates, will be liable for the accuracy, endorsement, or completeness of any opinions, views, information, or materials contained in this content.
This press release is provided for informational purposes only; the content does not constitute legal, investment, or tax advice, nor does it offer any opinion on the suitability, value, or profitability of any particular portfolio or investment strategy. Neither we nor our affiliates will be liable for any errors or inaccuracies in the content, or for any actions you take based on that content. You expressly agree and acknowledge full responsibility for your use of the information contained in this press release.
To the extent permitted by applicable law, Refinitiv, its parent company, subsidiaries, affiliates, relevant shareholders, directors, officers, employees, agents, advertisers, content providers, and licensors (collectively, the 'Refinitiv Parties') shall not be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive, or exemplary damages; This includes, but is not limited to, losses of profits, savings, or revenues, whether due to negligence, tort, contract, or other theories of liability, even if the parties to Refinitiv were advised of the possibility of any such damages or losses occurring or actually anticipated them.