Kuwait’s Burgan Bank’s net income rose 15% in full year (FY) 2022 to KD52.1 million ($170.4 million) on growth in net interest income and significant reduction in credit costs.

 

The bank posted revenue of KD232 million and operating profit of KD125 million during the period.

 

Revenue levels remained stable backed by a growth of net interest income by 15% year-on-year, due to improvement in its net interest margins by 30 bps, reaching 2.4% for 2022. This improvement was driven by rate hikes in Kuwait and improved margins in Burgan Bank Turkey.

 

Provision charges

Moreover, the bank’s provision charges saw a significant improvement of 70% for the fiscal year 2022 compared to the performance in fiscal year 2021. This improvement underlines Burgan’s prudent risk practices across the group and consequently, its credit costs for the year improved to 60 bps (as compared to 190 bps in 2021).

 

Burgan’s asset quality continues to be stable with an NPL ratio of 1.9% for 2022. Capital ratios for 2022 continued to be well above minimum regulatory ratios. The bank’s capital adequacy ratio (CAR) of 16.8% is well above the regulatory minimum of 12.5%.

 

Burgan’s Board of Directors recommended distribution of cash dividend of 8 fils per share, in addition to 5% bonus shares for fiscal year 2022, subject to shareholder approval at the Annual General Meeting.

 

The recent approval of the sale of the group’s Bank of Baghdad will avoid an increase in the bank’s NPL ratio and further strengthen the bank’s capital ratios. Moreover, the group’s active measures to mitigate risks in Turkey have led to an overall improvement in the performance of Burgan Bank Turkey, including much higher net income and improved asset quality.

 

Forward-looking strategy

Burgan Bank continues to focus on delivering sustainable, long-term growth and operational resilience, according to its Chairman, Sheikh Abdullah Nasser Sabah Al Ahmad Al-Sabah. “This year saw us make tremendous strides towards our strategic goals, whilst successfully delivering strong financial performance and solid returns to our shareholders. We are carrying substantial momentum into 2023, with clear development paths for our three core pillars of focus: sustainability, digitalisation, and human capital development.”

 

“With an ambitious strategy in place, it is vital that we strike the right balance between mitigating risk and accelerating the pace of development,” added Sheikh Abdullah.

 

Proactive ESG commitment

Commenting on the bank’s ESG commitment, Sheikh Abdullah added: “Burgan has adopted a proactive and comprehensive approach to sustainability as well as environmental, social and governance (ESG) management, since its earliest day. At the core of our ‘driven by you’ philosophy is a commitment to deliver greater value to our people and our communities – beyond simply our role as financial providers. 

 

“The goal remains simple: amplify our positive impact and minimise any negative environmental impact we may have. This year, we further expanded the scope and mandate of our ESG framework, and reaffirmed our commitment to creating better solutions for a more sustainable future.”

 

A year of evolution

According to Vice Chairman and Group CEO of Burgan Bank, Masoud M.J. Hayat, the retail evolution for the bank, with its central theme of digitalisation – saw tremendous progress in 2022.

 

“This comes as a result of our commitment to implement our long-term digital transformation strategy, which aims to focus on providing the best, safest and most convenient banking experience for our customers. In 2022, Burgan Bank launched several features and service upgrades on its mobile application, which currently stands as the highest rated banking app in Kuwait. 

 

“This included the introduction of its Electronic Know Your Customer (eKYC) form, the “Apply Now” feature for products, as well as strategic design and function upgrades, to deliver convenient and advanced virtual banking experience to our customers. Additionally, Burgan’s digital innovations were also rolled out to our corporate clients as the bank further enhanced its innovative cash management digital platform.”

 

People-centric strategy

On the human capital front, Burgan Bank’s investment in its people is holistic and long-term, according to Hayat, who added: “Our people are integral to our strategy, as we seek to drive our financial performance. Burgan’s service evolution and digitalisation journey require high-skilled, empowered and technically trained workforce. Therefore, we have dedicated considerable resources to upskill our employees and endow them with the agility needed to be able to face that transformation."-- TradeArabia News Service