1. Art and Diseño

Business
MENA growth to
slow amid falling oil
Page 22
Asian airlines slash fuel
surcharges but fares to rise
WEDNESDAY, JANUARY 28, 2015
Page 23
Russia attacks ‘politically
motivated’ downgrade
Toyota earns 2015 ‘Top Safety Pick’ awards
Page 26
Page 25
RICHMOND: A flag flaps in the breeze in front of a new home for sale in Richmond, Virginia. Sales of new US homes accelerated strongly in December, a sign that home-buying may improve this year after a lackluster 2014, the
Commerce Department reported yesterday. — AP
Gulf Bank posts 10% rise in net profit in 2014
Net profit up to KD 35.5m • Operating profit reaches KD 106.8m
KUWAIT: Gulf Bank yesterday announced an
operating profit before provisions of KD 106.8
million for the year ending 2014 and a net profit at KD 35.5 million, which is a 10 percent
increase over 2013. At the end of December
2014, the Bank’s total assets were KD 5,331 million. There has been a significant gain in market
share in loans, mainly attributable to the 23 percent growth in retail loans. Overall, this resulted
in a growth of 9 percent vs. the 6 percent market growth. The growth in low cost deposits
was 16 percent increasing the total deposits at
the bank to KD 4,340 million. Total shareholders’
equity increased to KD 511 million from KD 483
million in 2013.
The bank maintained its positive trend of
reducing the non-performing loan ratio which
decreased from 6.5 percent at the beginning of
the year to 3.2 percent by December 2014 and
increased the total coverage ratio of non-performing loans to 266 percent.
The Gulf Bank’s Board of Directors have recommended a stock dividend of 5 per cent (5
shares for every 100 shares held), for approval
at the Shareholders meeting.
Clear strategy
Commenting on the results, Omar Kutayba
Alghanim, Gulf Bank’s Chairman said: “Gulf Bank
is today a great and strong bank. It has overcome the difficult times in an admirable way.
The strategy is clear and the mandate of the
Board is to grow. In wholesale, we will reinforce
our advisory and products capabilities. In Retail,
products and newer channels are being
upgraded. Everything we do will be upgraded
under strict risk criteria, as per our policies that
have helped make Gulf Bank safe and sound.”
Cesar Gonzalez-Bueno, Gulf bank’s CEO said:
“I am pleased to report that we have continued
the progress of previous years, even accelerat-
rating to Baa1 from Baa2 and the Stand Alone
Financial Strength rating to D from D-, maintaining a positive outlook. Standard Poor’s also
affirmed the Bank’s long-term credit rating at
BBB+ with a positive outlook. Both agencies, in
their assessments, affirmed the Bank’s asset
quality, capitalization, solid revenue generating
capacity and sound risk management systems
and practices.
Omar Kutayba Alghanim
ed it. The Bank’s Capital Adequacy Ratio per the
new Basel III regulations is at 15.5 percent
against the regulatory requirement of 12 percent. The bank is also strongly placed with a
leverage ratio of 8.25 percent against the regulatory minimum of 3 percent. Our network has
grown to 59 branches across Kuwait, the second largest in the country and we we’re proud
to be the first bank to open a branch in the new
areas of Jaber Al-Ahmad and Qairawan. This is
another sign of our desire to be closer to our
customers. As we move through 2015, we will
maintain financial discipline and the policy of
investing in the bank’s infrastructure to ensure
we have robust internal controls in place at all
levels of the operations.”
Cesar Gonzalez-Bueno
During 2014, the Bank continued the focus
on its core competence of commercial and
retail lending within the Kuwaiti market, and on
strengthening its domestic franchise. The strategy has shifted to risk adjusted growth following a period starting in 2009 during which the
focus was on strengthening the balance sheet
and managing down a substantial portfolio of
impaired loans. The Bank continued to make
progress during 2014 in strengthening systems,
controls, enhancing risk management, corporate governance and also in improving product
offerings and delivery channels.
This progress is also being recognized by the
international credit rating agencies. During
2014, Moody’s upgraded Gulf Bank long term
Global recognition
Significant upgrades were made within the
IT department to both improve the existing
infrastructure and upgrade the technology. A
strategic plan aimed at delivering a robust
capability in terms of Infrastructure,
Governance, Solution Delivery and Security
Framework was also launched.
Gulf bank continues to invest in youth,
entrepreneurship and talent development in
the local community through its Corporate
Social responsibility initiatives by participating
in programs such as INJAZ local and regional
competitions, the Annual gathering of National
Union of Kuwaiti Students - USA branch, as well
as a wide variety of job shadowing programs.
Our annual sponsorship of the memorial journey for pearl diving continues to strengthen
our position as an integral part of the Kuwaiti
society. Gulf Bank has numerous staff volunteers working together with our youth on various development programs throughout the
year.
With our relentless focus on talent; Gulf Bank
places great value on its Human Resources and
continuously delivers exceptional initiatives
that help the progress and development of its
staff. This was culminated with the launch of
Durrat Al-Khaleej training center early 2014 and
the recent launch of a customized Graduate
Development Program in collaboration with
Gulf states may need to rethink policy: Qatar CB
DUBAI: Gulf Arab oil states may need to rethink longstanding economic policies, including their fixed
exchange rates, over the next five to 10 years as economic cycles in the region and the United States
diverge, a senior Qatar central bank official said in a
research paper.
The six nations in the Gulf Cooperation Council
(GCC) have pegged their currencies to the US dollar or in the case of Kuwait, a peg to a basket of currencies
that is believed to be dominated by the dollar - to stabilize them.
But in recent years the GCC economies have moved
more out of sync with the United States, as the pegs
press GCC policymakers to mirror the US central bank’s
decisions even if trends at home call for the contrary.
As long as they have currency pegs to the dollar, the
Gulf States could face destabilizing capital outflows or
inflows if they allow large interest rate gaps to open up
with the United States - but raising interest rates while
Gulf economies are slowing could hurt growth further.
GCC economies performed well during much of the
global financial crisis as the US economy slumped.
Now, the US economy is expanding strongly as GCC
economies risk slowing because of the plunge of oil
prices.
Markets believe the Federal Reserve may start raising interest rates this year, and this “is coming at the
wrong time for the GCC countries. There is considerable uncertainty here with the oil price and the Fed,”
Khalid Alkhater, the Qatar Central Bank’s Director of
Research and Monetary Policy, said in a research paper
seen by Reuters.
“If the low oil price persists in the medium term and
the Fed starts to raise interest rates, that might contribute to economic slowdown in the GCC. But it
depends on the pace of the tightening process, how
fast and how persistent they will be.”
Alkhater stressed in the paper, presented at the
Arab Centre for Research and Policy Studies in Doha,
that it represented his personal academic view as a
monetary policy specialist, and not the official view of
Qatar’s central bank in any way.
Rate question
The Brent oil price has tumbled nearly $70 since
June to nearly six-year lows below $50 per barrel,
clouding the outlook for the GCC states, where government income from hydrocarbon sales powers economic growth. “Low enough oil prices - below the average
break-even price for GCC budgets - for a long enough
period - spanning the medium term through 2017 or
beyond - can aggravate the status of the cycles
between the two sides i.e. widen the potential gap,”
Alkhater said.
Markets will watch the Fed’s interest rate-setting
meeting yesterday and today this week to gauge its
resolve to start raising rates mid-way through the year,
as consumer prices have dropped despite strong economic momentum.
“Qatar still has space over the short run to keep
interest rates at the current level, even after the Fed
starts to raise rates, since it kept its rate much higher
than the Fed policy rate,” Alkhater said.
Qatar’s central bank has kept its key overnight
deposit rate at 0.75 percent since August 2011, above
the Fed funds target rate of 0-0.25 percent. Alkhater
said, however, that GCC central banks would ultimately follow the Fed under any scenario, as they had
always done in the past. “ This more than fourdecades-old uni-instrument, uni-tool macropolicy
framework, in my opinion, is no longer suitable to
manage the economic c ycle in today ’s GCC
economies, because we apparently keep missing the
cycle. And it looks like the sync with the US is going to
weaken further and further.” —Reuters
the Institute of Banking Studies (IBS). The program focuses on the development of local talent and aiming at creating a pool of holistic
bankers and leaders of the future
During 2014, the bank was honored with
prestigious awards and accolades’, including
‘Bank of the Year’ award from Arabian Business,
‘Best Retail Bank in Kuwait’ award from
International Finance Magazine, the ‘Best
Domestic Payments and Cash Management
Bank in Kuwait’ by Asian Banker, ‘Best Domestic
Retail Bank’ and ‘Best Human Resources
Development’ awards for 2014 from Banker
Middle East, ‘HR Professional of the Year’ award
for the private sector at the 6th Annual MENA
HR Excellence Awards, the ‘Best Customer
Experience Overall Branch in Kuwait’ award
from Ethos Integrated Solutions (Ethos) at the
10th Annual Customer Experience
Benchmarking Index and STP Award from
Citibank.
Omar Kutayba Alghanim, Gulf Bank’s
Chairman concluded: “I can confidently say
that Gulf Bank has culminated its transition
and has started a new path after completing its
recovery. It is now time to thank our
Customers, employees, Central Bank, Board of
Directors, Shareholders and Public Authorities
for supporting this successful turnaround that
has been meticulously executed. Far seem
today the difficult times when our NPL’s
reached 30 percent. Now we have all the elements in place to grow better and faster, as we
have started to do in 2014 when we launched
significant initiatives that will mature and be
announced during the course of 2015. We have
the , governance, staff , financials, risk procedures, systems and clarity of ideas to execute.
During 2015 Gulf Bank will culminate projects
that will help us to serve our clients better, and
provide better results.”
Currency shifts eating into
fuel-cost benefits: Emirates
DUBAI: Dubai’s Emirates airline expects currency fluctuations in
Europe and Russia to limit the profitability boost from lower oil
prices, a senior executive said yesterday.
Emirates President Tim Clark was quoted this week as saying
that the drop in oil prices-down by about 60 percent since last
June-would be “a huge boost” to the airline’s 2014 earnings and
would offset disruption from runway work at its home airport
and a decline in business with Russia.
The Dubai carrier is one of the few major airlines that does
not hedge its fuel bill by buying future stocks of jet fuel to minimise the effect of price spikes, meaning that it benefits from
price falls immediately. “We don’t hedge and that’s helping us a
lot in the short term,” Sheikh Majid Al-Mualla, the airline’s divisional senior vice president of commercial operations, said at a
conference in Dubai.
However, Mualla said that the benefits will be partially offset
by currency fluctuations in the ruble and the euro over the
longer term, without offering any specific forecasts. The ruble
has almost halved against the dollar since July as oil prices fell
and the West imposed sanctions on Russia over its role in the
Ukraine crisis.
Meanwhile, the European Central Bank’s introduction of a
massive bond-buying program to stimulate the euro zone economy and worries over whether Greece’s new government will
stick to the terms of the country’s bailout, pushed the euro to an
11-year low against the dollar at $1.1098 on Monday. — Reuters