A Balanced Relationship

"The performance of the bank has been consistently solid, like most other banks in Kuwait."

How would you assess the performance of Burgan Bank over 2014 and into 2015?

The performance of the bank has been consistently solid, like most other banks in Kuwait; however, our model is different, as we are the most international Kuwaiti bank. First, we have the largest relative international presence compared to others, because in terms of our expansion strategy we decided to diversify out of Kuwait into faster growth markets. At the same time, diversification has to do with risk management. The more diversified you are, your ability to endure and keep growing becomes more solid. Second, we focus on quality earnings, and we are not based on one-off large gains or deals. Third, We are truly customer-centric. We look for long-term relationships with our customers, and offer products that are relevant and needed by the customers, allowing for a balanced relationship between the customer and the bank. Our model has proven to be successful. We have been able to outpace growth in both the market and wider region for the past four years, delivering solid returns to our shareholders and continuing to gain market share and generate profit in the core market.

How would you describe the health of Kuwait’s banking sector?

The health of the market, like many other conditions, has several variables. If you think in terms of solvency and the strength of the system, the Kuwaiti banking system is one of the strongest in the world, thanks to the players present and the support given by a strong government. This is also backed up by the fact that the Central Bank, by law, backs 100% of deposits, irrespective of the amount. It is true that Kuwait is not at the forefront of innovation; yet, that has not precluded effective performance. Kuwait focuses on fundamentals, and our customers tend not to look for complex structures. However, we could benefit from evolution as the market very heavily depends on the strength of the government, which could still safeguard the system in extreme circumstances.

“The performance of the bank has been consistently solid, like most other banks in Kuwait.”

What is your strategy when it comes to building the retail side of Burgan Bank’s operations?

The building of the retail business is like the planning of a city. You can quickly build houses and buildings and appear to be modern; however, you will eventually end up in trouble if your fundamentals are not in place. Therefore, we are redesigning channels and implementing a new core banking system. We have redefined products and pricing, and are building on that. We are here to create value, meaning that we cannot build without tangible results. We have timed this based on our ability to remain profitable; still, our strategy in Kuwait, which is a relatively small country, is about focusing on the basic needs and doing them well, quickly, and building on customer satisfaction. We are not going to fight for the largest market share or the most sophisticated product suite, but eventually our customers will be the happiest in the market. If we can achieve that, then results and profitability comes and there is nothing more effective in marketing for growth in retail than happy customers.

What are you doing to facilitate international banking in Kuwait?

In reality, being customer-centric means that we are building around the success of our customers. We are helping customers do things outside of their environments, as well as serving customers in other jurisdictions. In order to help Kuwait to grow—and this is a country that has unbelievable possibilities due to some competitive advantages—someone has to occupy the space of being the conduit of helping our customers here to be successful elsewhere in the world. We are not the only ones, but right now we have the largest footprint out of Kuwait; therefore, we have a competitive edge to build on. Our code of behavior is also solid. A long-term relationship means that when our good customers have problems, we help them. We have been one of the most loyal banks to our customers, as well as one of the most active in letting go of customers that we don’t feel are compatible with our way of doing business.

What growth opportunities are you looking into beyond Kuwait?

There are three markets in the region that are interesting to us as we have publically announced, that we will eventually extend our footprint to. These are Egypt, Saudi Arabia and the UAE. I look at the Emirates with enormous respect. It has been successful and has registered a number of successes. Our customers are interested in doing business there, and we are helping them with this. We have recently obtained licenses to operate in the Dubai International Finance Center (DIFC). I don’t believe we will enter the retail-banking sphere in the UAE, as it is an over-banked environment; however, you cannot be successful in this part of the world if you lack a successful operation there. We do not always require a physical presence to be operational, but if we have a presence in over 15 countries it provides us with a platform. It is important that we keep growing organically and remain profitable, acquiring good quality customers, manage risks well, and focusing on our strengths.

What are your expectations for Burgan Bank in 2016?

The penetration of Basel III has significantly affected the banking system around the world, particularly in Kuwait, which has been conservative. It has implications in terms of returns, for example, that have to be considered. Basel III was implemented in 2014, and we had to adjust our capital structure to comply with the new requirements. We did so by issuing some of the first instruments in Kuwait and the region. Today, it is a case of continuing our buildup, while consolidating our recent acquisitions. We have several projects in the pipeline, and need to manage our risk profile carefully. We are profitable because we know how to operate in this environment. Sudden moves happen, as in Iraq; however, we are able to react quickly to remain profitable, and are happy with ourselves for being able to cope. We have to preserve our ability to adjust and evolve. That is absolutely critical. Ultimately we cannot be successful in environments such as this if we only performing well in expansionary cycles. We also perform well during recessions, and periods of stagnation, because our model is agile and resilient. And being agile regardless of the environment, it is a model that we intend to maintain.