Burgan Bank of Kuwait recorded a net profit of KD 27.2 million ($88.63 million) in the first half of 2022, compared to KD 24.0 million in the corresponding period of 2021.
The bank’s income remained robust at KD 110.4 million, mainly thanks to an increase in net interest income (+8.1% year-on-year). Burgan’s net interest margin also improved to 2.1% in H1’22 from 2.0% in H1’21.
Operating expenses were slightly higher at KD 49.0 million (up by KD 4 million year-on-year) due to an increase in personnel costs and other expenses. As a result, the bank’s operating profit for the first half of 2022 amounted to KD 61.4 million.
Provisions for loan losses
Burgan’s loan loss provisions decreased quite significantly from KD 39.1 million in H1’21 to KD 10.9 million in H1’22, a 72.2% year-on-year improvement . The cost of credit fell from 1.8% in H1’21 to 0.5% in H1’22, an improvement of 130 basis points.
In addition to the above provision charges, Burgan also recorded a net monetary loss of KD 11 million in its income statement due to the accounting hyperinflation of its Turkish subsidiary. The bank’s asset quality also improved markedly in H1’22 to 2.6% from the 4.5% recorded in H1’21, representing a 190bp year-on-year improvement.
Burgan’s NPL coverage rate improved from 193% in H1’21 to 235% in H1’22.
Capital ratios remained well above the required regulatory ratios. Burgan’s common equity Tier 1 ratio was 11.1% and its capital ratio was 17.2%, compared to regulatory minimum ratios of 9.0% and 12.5% respectively. The bank’s liquidity position remained extremely strong for the H1’22 period, as evidenced by 133.1% Liquidity Coverage Ratio (vs. the regulatory minimum of 90%) and 108.1% Funding Ratio net stable (vs. the regulatory minimum of 90%). Burgan’s results for Q2’22 were also resilient with KD57.8 million in revenue, KD31.2 million in operating profit and KD15.1 million in net profit.
Burgan Bank also continued to support the “Diraya” banking awareness campaign through its social responsibility program activities and other dedicated initiatives. With the launch of its Innovation Lab, Burgan is also continuing its strategy of innovation and human capital development to build a future-ready workforce with a stronger local talent pool to lead the banking industry. .
Commenting on the positive financial results, Sheikh Abdullah Nasser Sabah Al Ahmad Al Sabah, President of Burgan Bank, pointed out that the upward progression of key financial indicators proves the effective implementation of the bank’s fundamental strategic pillars of sustainability, digitization and human capital development.
Sheikh Abdullah also noted, “Achieving such strong results indicates that Burgan is on a path of sustainable growth with consistent positive performance delivering added value to shareholders and an elevated banking experience to customers. Driven by our strong commitment to strengthen the implementation of the ESG framework with business practices and choices that amplify a positive impact on our community and our environment, I am confident that Burgan Bank will continue to make progress towards the objectives set for a development and lasting and meaningful excellence.
Masoud MJ Hayat, Group Vice President and Chief Executive Officer of Burgan Bank, pointed out that the generally more favorable economic outlook for Kuwait and the strengthening of the operating environment were a good reflection of Burgan’s results and would provide a great impetus to the bank’s strategic orientation in the domestic market. with expectations of sustained growth.
He further underlined: “Burgan relies on a solid financial core and stable asset quality to deploy a strategic course focused on diversifying the bank’s offer and expanding its portfolio by investing in the innovation, digitization and competent and experienced human resources. The positive financial performance so far in 2022 reflects the effectiveness of our strategic focus on the goals of delivering a superior banking experience to customers and preserving the financial health of the Bank in order to deliver greater value to our shareholders.
Consolidated financial statements
Burgan Bank’s consolidated financial statements include the results of the group’s operations in Kuwait, as well as its share of the results of its subsidiaries, Burgan Bank Turkey, Gulf Bank Algeria, Bank of Baghdad and Tunis International Bank.
Thanks to this regional reach, Burgan Bank has one of the largest regional branch networks in Kuwait, Turkey, Algeria, Iraq, Tunisia, Lebanon and a representative office in the United Arab Emirates.
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