Sami Mahfouz:

• Gulf Bank’s results over the first nine months of the year reflect the resilience of our business model, the strength of our franchise, and the prudence of our credit risk management.
• Gulf Bank continues to advance its strategic transformation toward becoming a fully Sharia-compliant institution.

David Challinor:

• The NPL ratio remains very low at 1.4%, and we continue to have significant total coverage including collaterals of 324%.
• There was a strong performance in fee income, which is a strategic area for the Bank.

Gulf Bank held its third quarter 2025 earnings webcast on Wednesday 29th October 2025, to present and discuss the Bank's financial performance. The webcast was organized by EFG Hermes and presented by Sami Mahfouz, Acting Chief Executive Officer of Gulf Bank, and Mr. David Challinor, Chief Financial Officer of Gulf Bank. The discussion was moderated by Ms. Dalal AlDousari, Head of Investor Relations at Gulf Bank.

Operating Environment

Mr. Sami Mahfouz, Acting Chief Executive Officer of Gulf Bank, commenced the webcast with key updates regarding Gulf Bank’s operating environment during the third quarter of 2024. Mahfouz stated: “Gulf Bank’s performance over the first nine months of the year demonstrates continued progress in strengthening the Bank’s financial position. This was driven by steady loan growth, stable asset quality, and a robust capital base. These results reflect the resilience of our business model, the strength of our franchise, and the prudence of our credit risk management.”

Mr. Mahfouz added “The broader operating environment in Kuwait is gradually becoming more favorable. The Central Bank of Kuwait’s recent decision to lower the discount rate to 3.75%, in line with the Federal Reserve’s recent 25-basis-point interest rate cut, is expected to foster a more supportive climate for credit expansion and stimulate business activity. Furthermore, Kuwait’s successful return to debt markets both locally with regular issuances and globally with an issuance of a US $11.25 billion sovereign bond which has been met with a very strong investor demand and priced at one of the lowest spreads recorded for an emerging market sovereign issuance.”

He added: “Gulf Bank continues to advance its strategic transformation toward becoming a fully Sharia-compliant institution. Following the most recent Central Bank of Kuwait’s preliminary approval to begin Sharia compliant conversion activity. The Bank has established dedicated governance structures and cross-functional teams to manage the conversion process across all operational, legal, and product-related areas. At the same time, the Bank continues to evaluate the potential merger with Warba Bank. Independent financial and legal advisors have been appointed to conduct a comprehensive assessment under the supervision of the Board of Directors and the relevant regulatory authorities. Any future developments will be communicated in accordance with disclosure requirements.”

Asset Yields

In terms of the shift from CBK bonds to Kuwait government bonds and its effect on asset yields Mr. Mahfouz, mentioned: “We are seeing a migration in issuances from the CBK to the Kuwait government and the government takes back this task. As far as the effect on asset yield, it’s very marginal because the issuances are small in nature and as I said it’s a migration, so it’s not an additional supply to have an impact on asset yield so far. This may change in the future but so far it’s a pure migration.”

Asset Quality

During the financial commentary on the Bank’s asset quality for the third quarter of 2025 Mr. David Challinor, Chief Financial Officer of Gulf Bank stated: “Year to date credit costs were down 22% versus last year. And this continues to reflect the excellent asset quality of our loan book and compares very favorably both historically and to other banks in the system. Overall, the NPL percentage remains very low at 1.4% which was the same as H1, and broadly similar to the levels this time last year. And we continue to have significant total coverage including collaterals of 324%.”

Margins

In response to questions raised regarding the net interest margins and the trend during Q3, Mr. Challinor remarked: “In Q3, we saw the overall net interest margin fall from Q2 by 9 basis points although we still remain 5 points above Q1 levels. Now, the income yields were flat from Q2 to Q3, so the margin compression in the quarter was entirely driven by the cost of fund increase. As we know, we had a 25-point rate cut in both KD and USD in mid-September but the impact in Q3 on both income yields, and cost of funds was negligible. But we’ll see larger impacts flow through the full quarter in Q4.”

Loan Growth

In regard to loan growth, Mr. Challinor noted: “Our loan book was basically flat for Q3, with both the corporate and retail books being around the same levels as at H1. But in total we have a 4% growth year to date. Now, in terms of corporate, we do have a significant pipeline in this space and would expect Q4 to be a strong quarter in terms of corporate loan growth. And even though we had a flat quarter in terms of corporate loan growth there was a strong performance in fee income, which is a strategic focus area for the bank. When we look at retail, even though Q3 was flat it was a relative turnaround from the prior quarters where we saw degrowth. Looking ahead, we gave guidance at the beginning of the year that full year loan growth would be around mid-single digit, but we could expect to exceed this if the strong corporate pipeline converts.”