Gulf Bank reports half year results

In line with its conservative policy of enhancing its provisions for potential risk to the credit facilities portfolio, Gulf Bank has decided to increase these provisions by KD58.6m.

This implies a book loss of KD7.5m (loss of three fils per share) for the first half of 2009, reflecting the Bank's cautious policy towards the evaluation and support of the loans and credit facilities portfolio.

Gulf Bank stated that the second quarter's operations witnessed further implications from the global financial crisis, which has adversely affected the local and regional economies, as well as the institutions operating in these markets. Values of general collaterals receded and the credit portfolio was affected by the default of certain customers in Saudi Arabia; necessitating enhancement of the provisions in accordance with the Bank's conservative policy and the provisions requirements specified by the Central Bank of Kuwait.

Ali Al-Rashaid Al-Bader, Gulf Bank's Chairman, stated:

"Despite the exceptional conditions of the local and regional economies, reflecting decreased business and banking transactions and lower values of financial and real estate assets, in addition to the increasing cost of provisions, Gulf Bank has continued to exert efforts to upgrade the quality of, and develop, its loan and investment portfolio. The Bank has also continued to treat the defaulting loans and investment, thus promoting confidence in the Bank's ability to generate future profit and deal with the outcome of these circumstances."

The Bank has increased its loan provisions to a comfortable level in keeping with the current financial situation and in accordance with levels set by the Central Bank of Kuwait. Gulf Bank has a very strong capital adequacy ratio in excess of 15% to meet the challenges that may arise in the future.

Al-Bader concluded: "Despite the difficulties facing the recovery of the economy, Gulf Bank is still cautiously optimistic about the future business opportunities, and the improvement of economic conditions. However, more efforts should be made towards reforming and developing the national economy, including the approval of the new five-year plan, marking the required strategic objectives, and proper implementation."