Gulf Bank loan book grew 3.8% in H1 2025 driven by its corporate portfolio
KUWAIT: Gulf Bank held its first half 2025 earnings webcast on Tuesday, July 29, 2025, to present and discuss the Bank's financial performance. The webcast was organized by EFG Hermes and presented by David Challinor, Chief Financial Officer of Gulf Bank. The discussion was moderated by Youssef Dib, from Investor Relations at Gulf Bank.
Operating environment
David Challinor, Chief Financial Officer of Gulf Bank, commenced the webcast with key updates regarding Gulf Bank's operating environment during first half 2025. Challinor stated: 'The first half of 2025 was marked by a dynamic operating environment and rising geopolitical tensions and oil price fluctuations have added volatility to regional markets and shifted governments priorities. These factors have also influenced market sentiment, creating a more cautious investment landscape. Locally, fiscal policy developments have also played a role in shaping market conditions. The most recent local government debt issuances will accelerate economic activity and enable faster participation by banks in financing national initiatives.'
Challinor added, 'Against this backdrop, and despite continued pressure on margins across the sector, our financial performance reflects strong execution and a prudent approach to managing our operations. We continued to maintain a balanced approach between credit expansion and asset quality, ensuring the resilience of our loan book. Our low non-performing loan ratio and high coverage levels underscore the effectiveness of our risk management framework and our ongoing commitment to financial stability.'
He added: 'We are also advancing our internal readiness for a potential Islamic Sharia-compliant conversion, subject to being granted with the necessary regulatory and shareholders' approvals. The essential systems, governance frameworks, and talent are currently being explored. We are carefully assessing all operational and market implications to ensure we would be well-prepared subject to obtaining the necessary approvals.
In addition, we have recently signed a Memorandum of Understanding with Warba Bank stating the basis of cooperation in assessing a proposed merger between both banks independently, ensuring the best interests of all the Bank's shareholders in line with all regulations. Following that, we announced on July 28, 2025 that we had obtained approval from the Central Bank of Kuwait to engage and appoint a group of specialized consultancy firms with the necessary qualifications and expertise to carry out the feasibility study and due diligence for the potential merger.'
Margins
In response to questions raised regarding the net interest margins and the trend during Q2 on a sequential basis, David Challinor, Chief Financial Officer of Gulf Bank remarked: 'The margin expanded very strongly by a total of 14 basis points from Q1. Now, even though we saw a fall in the cost of funds during Q2 the market has recently become very competitive which is causing the cost of new deposits to rise and if this dynamic continues to persist, then we could be faced with some margin pressure even in the absence of cuts to benchmark rates.'
Operating expenses
In terms of operating expenses Challinor mentioned: 'We've seen a 6 percent growth in total operating expenses in H1 25 versus H1 24. I think given the potential Islamic banking conversion coupled with the potential merger, we are likely to have a higher absolute level of operating expenses in the second half than the first. Now, the increase in the cost to income ratio at H1 25 has been primarily by asset repricing on the income side, coupled with an uptick in the other expenses category. However, we did see an improvement in the cost-to-income ratio in the second quarter versus the first as the margin recovered, but I think the full year outlook is that the ratio is set to increase from FY24 levels'.
Credit cost
When asked about the credit cost and the Bank's asset quality, Challinor said: 'As I've mentioned on previous investor calls, for at least a year now, the vast majority of the Bank's credit costs are coming from the retail book and this trend continued into Q2. However, the Q2 credit costs for retail were the lowest since Q3 2023 which is an encouraging sign. On the corporate side, the book continues to perform exceptionally well with insignificant new NPLs. In terms of the guidance we gave at the beginning of the year we said FY25 credit costs are likely to fall in the 60 to 70 basis point range, which was down significantly from 75 basis points for FY24. For H1 25 we are sitting at 61 basis points, so I think the full year guidance of 60 to 70 continues to be appropriate at this stage.'
Loan growth
In regard to loan growth, Challinor noted: 'In Q2 we continued to grow the loan book, and the year-to-date growth was 3.8 percent for the first half of 2025. Now, when we compare it to the second half of last year, where we saw a contraction of 1.8 percent, H1 25 has witnessed a strong rebound from H2 24. And this rebound has been driven by our corporate business, which has grown 7.2 percent year to date versus the market growth, to the end of May 25, of 5.1 percent. So, we've gained market share in corporate this year and we also gained market share last year. Now when we look at retail, this continues to be a challenge in the current environment and according to the CBK data the growth to the end of May 2025 was only 1.2 percent which is perhaps indicative of the current higher rates and future rate expectations. In terms of the outlook for total loan growth for the full year 2025, we did guide for around mid-single digit loan growth, and we are currently on track to achieve this.'
David Challinor
•We maintained a balanced approach between credit expansion and asset quality, ensuring the resilience and integrity of our loan book.
•We saw an improvement in the cost-to-income ratio in the second quarter versus the first as margins recovered.
•The most recent local government debt issuances will accelerate economic activity and enable faster participation by banks in financing national initiatives.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Kuwait Times
a day ago
- Kuwait Times
Gulf Bank transitions entire recruitment process to a fully digital experience
Shift streamlines the recruitment journey, making it more efficient and user-friendly KUWAIT: As part of its continued commitment to sustainability, Gulf Bank has fully digitized its recruitment process – transforming every stage, from application to contract signing, into a completely paperless experience. This comprehensive shift streamlines and enhances the recruitment journey, making it more efficient and user-friendly. This milestone highlights Gulf Bank's commitment to innovation and sustainability, while placing job applicants' experiences at the heart of its priorities. The initiative also reinforces Gulf Bank's position as a leading financial institution in the region, constantly striving to offer the most advanced digital solutions. The Bank highlighted that this achievement reflects its vision of offering a fully digital recruitment experience that meets the aspirations of national talents looking to become part of the Gulf Bank family. Beyond improving efficiency and reducing reliance on paper, the initiative offers a competitive advantage in attracting professionals who share the Bank's vision for a more innovative and sustainable future. The new digital recruitment platform offers a smoother and more engaging experience for applicants, speeds up the hiring process, and enhances application tracking and management. It also allows the bank to respond more efficiently to operational demands, further boosting its ability to attract top talent in the market. This achievement reaffirms Gulf Bank's pioneering role in leading innovation across the Kuwaiti job market, contributing to the development of a sustainable, digital business environment that meets the ambitions of the next generation of professionals. It also sets a benchmark that encourages other public and private sector entities to adopt effective digital practices. Gulf Bank continues to play a key role in embedding sustainability within the community by supporting initiatives that minimize environmental impact and highlight the importance of digital transformation across its operations and services. The full shift to digital recruitment stands as a clear example of this commitment, significantly reducing paper usage and emissions tied to traditional methods – contributing to Kuwait's national environmental sustainability goals.
Kuwait Times
2 days ago
- Kuwait Times
InvestGB celebrates interns on Intern Day
As part of bank's ongoing efforts to empower youth and local talent KUWAIT: Gulf Capital Investment Company, InvestGB, the investment arm of Gulf Bank, celebrated Intern Day, a global occasion recognizing the contributions of interns; highlighting the success of its Internship Program and reinforcing its ongoing commitment to empowering Kuwaiti youth, fostering local talent, and building a strong and capable workforce. During the Intern Day Event held at InvestGB's headquarters at Al-Hamra Business Tower, interns participated in a variety of impactful activities, including networking sessions with InvestGB and Gulf Bank leadership teams, and InvestGB's senior management team. These interactive sessions provided interns the opportunity to share their insights, engage in numerous discussions, and receive valuable career tips and mentorship from InvestGB and Gulf Bank employees. On this occasion, Sara Al-Muzaini, Senior Vice-President of Human Resources at InvestGB stated: 'At InvestGB, we believe that investing in young minds today is an investment in a stronger and more resilient future for Kuwait. We are proud to provide opportunities that empower the next generation and connect them to meaningful career pathways.' Interns pose for a photo. She added: 'Since its inception in 2023, InvestGB's Internship Program has benefited over 50 high school and university students, with 8 percent of participants transitioning into fulltime roles at the company. The program has established itself as a trusted talent pipeline and a key pillar of InvestGB's youth and education strategy. Interns have represented more than 20 local and international institutions, including Kuwait University, Gulf University for Science and Technology, American University of Kuwait, Babson College, Bentley University, University of California, Los Angeles (UCLA) and King's College London.' Al-Muzaini continued: 'As part of the third edition of the internship program for 2025, 33 interns between the ages of 17 and 25 were selected, with a demographic split of 48 percent female and 52 percent male. The program offers hands-on training, real-world exposure, and skill development to help students navigate an evolving job market with confidence and capability. Al-Muzaini noted that InvestGB's culture is deeply rooted in inclusion, national development, and investment in human capital, whether employees or interns. Women represent 43 percent of the company's workforce, while Kuwaitization stands at 70 percent of the total team. She emphasized InvestGB's commitment to strengthening its role in the private sector by supporting and developing national talent. Through training programs and other institutional initiatives, the company continues to contribute to the sustainable growth of the Kuwaiti economy by empowering the next generation of professionals. She concluded: 'At InvestGB, we are cultivating more than a workplace; we are building a community,' added Al-Muzaini. 'Our culture is rooted in well-being, continuous development, and shared purpose, which directly contributes to our organizational excellence.'
Kuwait Times
2 days ago
- Kuwait Times
Burgan Bank promotes Eng Saud Al-Hadbah to GM of General Services Administration
Bank reinforces its commitment to sustained human capital development and talent empowerment KUWAIT: In line with its ongoing dedication to human capital development and internal career advancement, Burgan Bank is proud to announce the promotion of Eng Saud Al-Hadbah to General Manager – General Services Administration. As part of its holistic development strategy, Burgan Bank continues to promote from within, recognizing high-performing professionals with proven leadership and operational excellence. Eng Al-Hadbah's promotion is a testament to the Bank's belief in the potential of its people and its sustained efforts to remain an employer of choice in the Kuwaiti banking sector. Commenting on the promotion, Fadel Mahmoud Abdullah, Chief Executive Officer – Kuwait at Burgan Bank, stated: 'On behalf of Burgan Bank's Board and Executive Management, I would like to extend our warmest congratulations to Eng Saud Al-Hadbah on his well-earned promotion. His leadership, deep operational knowledge, and institutional loyalty have consistently demonstrated the qualities we value most in our people. Investing in our talents is not just a goal — it's a strategic pillar that defines how we grow and how we lead.' He added: 'At Burgan Bank, we believe that cultivating internal talent and providing clear pathways for growth is central to building a sustainable, future-ready organization. Eng Al-Hadbah's elevation is not only well-deserved but symbolic of our broader mission: to enable homegrown leadership that can drive our operational excellence, customer-centric mindset and innovation-forward approach.' Eng Saud Al-Hadbah began his journey with Burgan Bank in 2010, and over the years, has held several key roles across different departments. Prior to this promotion, he served as Deputy General Manager – General Services Administration, where he played a pivotal role in enhancing the Bank's operational infrastructure and ensuring seamless service delivery across all functions and branches. His leadership in facilities management, procurement, and administrative operations has contributed significantly to the Bank's operational agility and service efficiency. With this promotion, Eng Al-Hadbah now assumes broader responsibilities in steering the Bank's General Services functions, including further integration of digital operational frameworks and supporting the Bank's evolving transformation strategy from an infrastructure standpoint. It serves to note that Burgan Bank, a certified Great Place to Work, continues to maintain a robust development framework that nurtures talent across all levels of the organization — with a dedicated focus on identifying, equipping, and advancing future leaders.
