Burgan Bank posted a net income of KD21 million ($68.7 million) with a very healthy growth of 17% y-o-y, in the first half of 2024 propelled by KD111 million, an impressive growth of 19% year-on-year (y-o-y). 

 

The increase in revenues was primarily driven by higher Net-Interest Income of KD71 million, up 17% y-o-y and robust Non-Interest income of KD39 million, up 24% y-o-y. Burgan’s Net interest margin also increased to 2.1% in H1’24 as compared to 1.9% during H1’23 – an improvement of 20bps y-o-y.

 

Driven by higher revenues, the bank reported a strong Operating Profit of KD48 million, up 24% y-o-y. The bank’s cost-to-income ratio also improved by 170bps from 58.3% in H1’23 to 56.6% in H1’24. Its cost of credit – net of recoveries – also remained very low at mere 30bps during H1’24 despite proactive provisioning. 

 

Strong asset growth

The bank delivered strong asset growth of 8% y-o-y, reaching KD7.6 billion by the end of the period. The group’s loan book grew by 10% y-o-y and stood at KD4.4 billion; primarily driven by its Kuwait operations, which increased by 8% y-o-y. Burgan’s deposit base also expanded by 7% y-o-y and stood at KD4.6 billion by the end of H1’24.

 

It maintained solid and healthy capital levels. Burgan reported Common Equity Tier 1 ratio (CET1) of 13.0%, Tier I capital ratio of 15.4% and Capital Adequacy Ratio (CAR) of 19.3%, well above the regulatory requirements and demonstrating sufficient capital buffers to support future growth.

 

The bank’s Chairman, Sheikh Abdullah Nasser Al-Sabah, said: “Burgan Bank has continued to accelerate its forward-moving momentum on the heels of a transformational year in 2023. We have maintained a stable financial core and delivered solid financial results, as we continue to be steadfast in our commitment to positioning ourselves as the most modern and progressive bank in Kuwait. Looking ahead, we aim to bolster this momentum by continuing to deliver on key strategic goals. That includes ongoing efforts to elevate, innovate and streamline our overall customer experience. It also includes building on a robust business model that prioritizes enhancing operations by investing in technology and digitalization, elevating our innovation capabilities, developing our human capital, and fulfilling our environmental, social and governance (ESG) commitments.” 

 

Positioned for growth

He added: “As the year progresses, we are well-positioned for further growth and development, as we maintain an effective risk management approach to capitalize on promising growth opportunities. On that account, we are confident in our ability to advance our strategic priorities and objectives, enhance our performance, boost our competitiveness, and maximize shareholder value.” 

Meeting the parameters of financial strength and stability 

 

Affirming Burgan Bank’s strong financial core and stable standing, the chairman highlighted that the bank has maintained high international standards in terms of its creditworthiness. This is evidenced by Capital Intelligence Ratings (CI Ratings) affirming the Bank’s Long-Term Foreign Currency Rating and Short-Term Foreign Currency Rating at ‘A+’ and ‘A1’, respectively, with a stable outlook. Meanwhile, Moody’s Ratings (Moody’s) affirmed the Bank’s long-term foreign currency bank deposit ratings at “Baa1” with a stable outlook. 

 

Moreover, the bank completed its issuance of KD150 million Perpetual Additional Tier 1 Capital Bonds, with demand exceeding expectations and bonds being oversubscribed. The transaction, lauded as a landmark achievement, is the first Perpetual Additional Tier 1 Capital Bond issuance denominated in Kuwaiti Dinar by a bank and ranks among the largest Kuwaiti Dinar issuances. 

 

Commenting on the issuance, the Chairman said: “Today, we stand proud to have set a new benchmark on the local level after successfully completing the largest Kuwaiti Dinar Perpetual Additional Tier 1 Capital Bond issuance in Kuwait. This notable transaction attracted high investor interest, reaffirming our robust financial standing and demonstrating confidence in our strategic vision.”   

 

Sharpened focus on digital transformation journey

The second quarter of 2024 was shaped by the bank’s efforts to continue accelerating its dedicated technology evolution and digital transformation strategy. Of particular significance was Burgan becoming one of the earliest Kuwaiti banks to join the GCC cross-border payments system AFAQ, in adherence to the national digital transformation plan guided by the government and the Central Bank of Kuwait (CBK). Another notable move was the Bank signing a monumental deal with Tata Consultancy Services to upgrade its core banking system by implementing the TCS BaNCS suite of products. 

 

Tony Daher, Group Chief Executive Officer at Burgan Bank, said: “The decision to join AFAQ and sign the new deal comes in response to the market’s evolving needs and falls in line with our relentless efforts to adopt the latest state-of-the-art financial technology solutions with the ultimate goal of elevating our customers’ overall banking experience to new heights.”  

 

As delivering digital transformation goes hand in hand with enhancing customer experience through new and upgraded products, Burgan Bank launched its interest-bearing savings account “awal” in Q2’24. Tailored specifically for children up to the age of 14, the account builds on the success of its predecessor, “BuBa” savings account, and aims to instill a savings culture in young customers. 

 

The latest launch attests to Burgan’s steadfast efforts to meet the varying banking needs of all its customer segments. Building on this strength point, the bank was voted the Best Domestic Bank in Kuwait in the “Best Service” category in the 2024 Euromoney Trade Finance Survey, recognizing its unwavering commitment to service excellence and an elevated customer journey. --TradeArabia News Service