09/11/2026 04:59 AST
Gulf Bank held its third quarter 2026 earnings webcast on Thursday, November 5, 2026, 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 David Challinor, Chief Financial Officer of Gulf Bank. The discussion was moderated by Dalal AlDousari, Deputy General Manager of Investor Relations at Gulf Bank.
Operating environment
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 2026. Mahfouz stated: "The regional operating environment continued to be shaped by geopolitical developments during the third quarter, which influenced market sentiment and led to greater caution in investment decisions. Although uncertainty may affect the pace of business activity, Kuwait continued to benefit from a stable financial system and progress across several national initiatives. We remain optimistic that an improvement in regional conditions would strengthen business confidence and support broader economic momentum."
Mahfouz added: "locally, one of the most significant developments was the issuance of the Decree related to real estate financing welfare. This was complemented by the qualification of 22 consortiums under the Real Estate Developer Program, an important step toward accelerating residential development and increasing private-sector participation."
He added: "Against this backdrop, Gulf Bank maintained healthy business momentum during the first nine months of the year, with lending growth primarily driven by strong corporate demand. This performance was achieved while preserving asset quality through disciplined credit management. Looking ahead, we expect government development projects and recent economic reforms to contribute to a promising financing pipeline and create opportunities across the Bank's business segments over time."
MarginsCommenting on Margins and NIM's, David Challinor, Chief Financial Officer of Gulf Bank stated: "We saw a continued sequential expansion in margin during Q3, with the margin increasing by a further 3 basis points from Q2. This follows the 8-basis-point improvement in Q2. However, funding costs were elevated in the latter part of Q3 as tighter liquidity conditions continued to affect deposit pricing, together with increased cost of funds related to the foreign currency funding. As for guidance, at the start of the year we never provided any due to the number of moving parts and the unclear outlook on future benchmark rates and liquidity conditions."
Loan growth
In regard to loan growth, Challinor noted: "Gross loans increased by 6.8 percent year to date, ahead of industry growth of 3.8 percent to the end of September 2026. This was entirely driven by corporate lending, which grew by 12.1 percent year to date, compared to a market growth of 3.5 percent. As we indicated during the half-year earnings call, we expected loan growth to moderate following the strong expansion recorded in the first six months. On the retail side, this remains an important area of focus given the attractive yields. Our approach continues to be selective, with disciplined underwriting and an emphasis on portfolio quality rather than growth. In terms of guidance, we started the year targeting high-single-digit loan growth, and we expect the full-year position to consolidate around this level."
Operating expense
On operating expense Challinor mentioned: "Operating expenses increased by 8 percent during the first nine months of 2026 compared with the same period last year, reflecting expenditure associated with our strategic projects and other non-recurring items. We expect these costs to normalize at some point next year as the projects move toward completion. Sequentially, we saw operating expenses decline by 2.5 percent, reflecting our continued focus on cost discipline. In terms of guidance, we continue to expect full-year operating expense growth to be in the high single-digit range."
Cost of risk
On Cost of Risk, Challinor, remarked: "The overall asset-quality on the book continues to be excellent. Credit costs declined by KD 8.1 million, or 30 percent, compared with the same period last year, bringing the cost of risk to 40 basis points. Asset quality remained resilient, with Stage 3 loans stable at 1.2 percent. Stage 2 loans increased modestly to 3.2 percent, mainly due to the downgrade of a few corporate accounts during the quarter, but the ratio remains among the lowest in the market, indicating the overall health of the portfolio. In terms of guidance, we lowered our full-year cost-of-risk expectation during the first half to be below 50 basis points. And based on the performance during the first nine months, we continue to expect the full-year outcome to be below that level."
Non-interest income
In regard to the decline in Non-interest income, Challinor noted: "Non-interest income reached KD 30.8 million during the first nine months of 2026, representing a slight decline of 1 percent compared with the same period last year. This follows growth of 10 percent during the first half of the year, with the change in Q3 mainly reflecting lower loan-arrangement fees due to a flat corporate loan book, and softer card-related income."
Islamic conversion
Addressing the next steps and expected timeline for Gulf Bank's conversion to an Islamic bank following the Central Bank of Kuwait's approval, Sami Mahfouz, Acting Chief Executive Officer of Gulf Bank, noted: "First, it is important to clarify that this is an interim approval, rather than the final approval to operate as a Sharia-compliant bank. It allows Gulf Bank to proceed with the conversion process and complete the necessary requirements to obtain an Islamic banking license from the relevant authorities. The next steps include obtaining shareholders' approval, amending the Bank's Articles of Association and commercial registration, completing the required corporate and administrative procedures, and finalizing the necessary arrangements with our clients. As the process involves several third parties, we are unable to provide a precise timeline at this stage. We will disclose any material developments as the process progresses."
Appreciation
Mahfouz concluded his comments: "As this is David's last earnings call as Gulf Bank's Chief Financial Officer before his conclusion of the executive phase of his career, I would like to take a moment to thank David personally for his friendship, as well as leadership, commitment and valuable contribution to the Bank over the past five years. Looking forward, I am pleased to welcome Lity Mathews as our new Acting Chief Financial Officer. Lity has been with Gulf Bank for ten years, serving as Deputy Chief Financial Officer, and brings extensive banking and finance experience as well as a deep knowledge of the Bank. I would also like to announce to everyone that Dalal will be expanding her role to take on the role of the Deputy Chief Financial Officer, and support Lity and Bank in the next phase of its journey."
. Gulf Bank obtained the Central Bank's approval for the full conversion of the Bank to operate in accordance with Islamic Sharia'a principles and to proceed with completing the remaining procedures.
We expect our operating costs to normalize at some point next year as the strategic projects move toward completion.
Kuwait Times
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