Gulf Bank Financial Results – First Half 2019

Gulf Bank announced its results for the first half of the current year which indicate that the bank achieved profits (after tax deductions) of KD 23.98 million, a decrease by KD 2.84 million or by 10.6% compared with KD 26.81 million in June 2018. This decline in the bank profits is due to the decrease in total operating income against a rise in total operating expenses. Therefore, the operating profit decreased by KD 9.41 million and scored KD 55.65 million versus KD 65.07 million. This drop in the net income occurred despite the decrease in total provisions by KD 6.44 million.

In details, total operating income scored KD 95.58 million indicating a decline by KD 1.52 million or by 1.6%, compared with KD 97.10 million. This was achieved due to the drop in the item of net interest income by KD 2.38 million or by 3.1%, reaching KD 74.49 million versus KD 76.87 million. While item of other income increased by KD 1.63 million reaching KD 2.04 million versus KD 414 thousand in the previous year.

Total operating expenses of the bank rose by KD 7.90 million or by 24.6%, and scored KD 39.93 million compared with KD 32.03 million in the first half of 2018, due to the rise in all items of operating expenses except item of occupancy costs that decreased by KD 865 thousand. Percentage of total operating expenses to total operating income scored 41.8%, compared to 33% in the same period of last year. Total provisions decreased by KD 6.44 million i.e. 17.4% as mentioned previously, and scored KD 30.55 million versus KD 36.99 million. Therefore, the bank’s net profit margin dropped to 25.1% of total operating income compared to 27.6% in the first half of 2018.  

Financial statements show that the bank’s total assets decreased by KD 5.5 million or by 0.1%, to KD 6.011 billion versus KD 6.016 billion in the end of 2018. While total assets increased by KD 169.7 million or by 2.9%, when compared with the same period of 2018 at KD 5.841 billion. Item of treasury bills and bonds decreased by KD 69.2 million or by 17.5%, and scored KD 326.5 million (5.4% of total assets) versus KD 395.7 million (6.6% of total assets) at the end of 2018. When compared with the same period of 2018, the item declined by KD 154.2 million or by 32%, versus KD 480.7 million (8.2% of total assets). While, item of loans and advances to customers increased by KD 5.3 million or by 0.1%, and scored KD 3.955 billion (65.8% of total assets) versus KD 3.950 billion (65.7% of total assets) in the end of 2018.  It rose by KD 76.5 million or by 2%, when compared with the same period of 2018 when it scored KD 3.879 billion (66.4% of total assets). Percentage of total loans and advances to customers to total deposits and other balances scored 76.8% versus 77%.  

Figures indicate that the Bank’s liabilities (excluding total equity) decreased by KD 1.7 million or by 0.03%, to about KD 5.386 billion compared with the end of 2018 when it reached KD 5.388 billion. However, it increased by KD 144.5 million at a 2.8% growth rate, when compared with the first half of 2018. Percentage of total liabilities to total assets scored 89.6% versus 89.7% during the same period of the previous year.

Results of analyzing financial statements calculated on annual basis indicate that all bank profitability indexes decreased compared with the same period of 2018. Average return on assets (ROA) dropped to 0.8% versus 0.9%. Average return on capital (ROC) decreased to 15.7% versus 17.6%. Average return on equities (ROE) also declined to 7.6% versus 9.1%. The bank’s earnings per share (EPS) declined to 8 Fils versus 9 Fils. (P/E) scored 18.9 times versus 13.2 times, as a result of the decreased EPS by 11.1% against a rise in the market share price by 27.8%. (P/B) scored 1.5 times compared to 1.2 times for the same period of 2018.