Kuwait’s Gulf Bank Wins Central Bank Approval to Convert Fully to Islamic Banking
Gulf Bank has won the Central Bank of Kuwait’s approval for full conversion to Islamic banking, and can complete the procedures that lead to its registration as an Islamic bank.
For Gulf Bank’s shareholders and customers, the approval clears the stage that followed the initial approval of August 2025. What remains is to finish the conversion procedures and apply to be entered in the Register of Islamic Banks; once registered, the lender can operate under Sharia. In The Edge’s reading, the bank goes into that last stage from a position of capital strength, with a 15.7% capital adequacy ratio at the end of September.
Central bank approval moves Gulf Bank to the final stage
The approval is dated 4 November 2026. It covers the full conversion of Gulf Bank to operate in accordance with Islamic Sharia, together with the completion of the conversion procedures. The bank disclosed it on Boursa Kuwait in a filing dated 4 November and posted on 5 November.
Once those procedures are finished, the bank must apply to the central bank to be removed from the Register of Conventional Banks and entered in the Register of Islamic Banks. It may not start Islamic banking activities until that registration is made, the filing said.
The bank gave the financial effect of the approval as not applicable, as it had for the initial approval. It said it would disclose any material developments in due course.
Chairman Ahmad Mohammad Al-Bahar said the approval reflects the bank’s “commitment to meeting the aspirations of customers and shareholders”.
Gulf Bank’s path to Islamic conversion
| Date | Milestone |
|---|---|
| 11 Jun 2024 | Disclosure on studying conversion |
| 18 Aug 2025 | Initial central bank approval |
| Aug 2026 | Requirements completed, request filed |
| 4 Nov 2026 | Approval of full conversion |
| Next | Move to Register of Islamic Banks |
Dates as printed in Gulf Bank’s disclosures and on its conversion page; the initial approval was valid for one year.
Ten conditions shaped the year after the initial approval
The central bank’s board granted the initial approval on 18 August 2025. It acted under the 1968 law on currency, the central bank and the organisation of banking business, after a feasibility study by an international consultant and a series of technical and legal submissions by the bank.
That approval was valid for one year and carried 10 conditions. The first gave the bank the year to finish every regulatory and operational requirement and then seek approval to complete the conversion under the Companies Law, failing which the approval would lapse.
Others required central bank approval for the advisory bodies the bank would engage and prior approval for each Sharia-compliant product and service. Sharia advisers, approved by the central bank, had to help verify the conversion of existing products as part of the Conversion Process Steering Committee.
The bank also had to report by the end of December 2025 on which existing activities would carry over after conversion, and on the timetable to end them. From 30 September 2025 it owed the central bank detailed monthly progress reports.
The remaining conditions covered staffing and training, operating systems and policies, a bar on any Sharia-based activity before registration, and a conservative capital adequacy scenario that assumes no benefit from the “Alpha” adjustment factor.
Preparation ran on several tracks. In April 2026 the bank launched the second phase of its Islamic banking training, covering retail and corporate banking, risk, treasury and finance, with the Kuwait Institute of Banking Studies and the Bahrain Institute of Banking and Finance.
In May, Acting Deputy Chief Executive Officer Faisal Al-Adsani said two clauses had been added to financing, deposit and account contracts to include customers’ consent to converting their transactions once final approval came. He said customers would keep all their contractual rights, with identical services restructured under Sharia and no additional financial burden.
The bank completed the requirements and asked the central bank to move to the next phase in August 2026. Acting Chief Executive Officer Sami Mahfouz called that step an important milestone when the bank reported its nine-month results on 31 October.
Gulf Bank carries a 15.7% capital ratio into the switch
Total assets reached KD 7.9 billion at the end of September, up 2.4% since December. Net loans and advances rose 7.0% to KD 6.3 billion.
Deposits stood at KD 5.8 billion and shareholders’ equity at KD 860 million.
The Tier 1 ratio was 13.7%, a margin of 270 basis points over the regulatory minimum. The capital adequacy ratio of 15.7% sat 269 basis points above the regulatory minimum.
Net profit for the first nine months of 2026 rose 9.1% to KD 41.9 million. A year earlier it was KD 38.4 million.
Operating income rose 1.8% to KD 143.1 million. The bank attributed the profit gain to higher net interest income and lower provisions and impairment losses.
Net interest income rose KD 3.0 million. Provisions and impairment losses fell by KD 6.9 million, or 24%, more than twice the gain in net interest income. Against that, operating expenses rose KD 5.7 million and non-interest income fell modestly.
Third-quarter net profit was KD 14.4 million on operating income of KD 48.8 million, broadly in line with a year earlier, the bank said. The third quarter supplied 34% of the nine-month profit.
The non-performing loan ratio was 1.2% at the end of September, against a prior-year level of 1.4%, the bank said.
Coverage of those loans stood at 334%, including provisions and collateral. Total credit provisions of KD 252 million left KD 89 million above the expected credit losses required under IFRS 9.
Gulf Bank at 30 September 2026
| Measure | Value |
|---|---|
| Total assets | KD 7.9 billion |
| Net loans and advances | KD 6.3 billion |
| Total deposits | KD 5.8 billion |
| Shareholders’ equity | KD 860 million |
| Tier 1 ratio | 13.7% |
| Capital adequacy ratio | 15.7% |
| Non-performing loans | 1.2% |
| NPL coverage | 334% |
As published by Gulf Bank on 31 October 2026; the regulatory minimums are 11% for Tier 1 and 13% for capital adequacy; coverage includes total provisions and collateral; total deposits are as printed in Gulf Bank’s English release, and its Arabic release prints KD 5.7 billion.
The bank said Fitch had affirmed its long-term issuer default rating at A with a stable outlook. Moody’s affirmed its long-term deposits at A3 and Capital Intelligence its long-term foreign currency rating at A+, both with stable outlooks.
Registration would make Gulf Bank the fifth Kuwaiti Islamic bank on the central bank’s list
The central bank’s list of Kuwaiti conventional banks has five lenders: National Bank of Kuwait, Commercial Bank of Kuwait, Gulf Bank, Al Ahli Bank of Kuwait and Burgan Bank. Its list of Kuwaiti Islamic banks has four: Kuwait International Bank, Kuwait Finance House, Boubyan Bank and Warba Bank.
Once Gulf Bank is moved across, the two lists would show five Kuwaiti Islamic banks and four conventional ones. Sharia-compliant lenders would then be the majority of the nine Kuwaiti banks on the two lists.
In its May statement, the bank put its own share of Kuwait’s retail market at around 10% and its corporate share above 11%.
Founded in 1960, Gulf Bank remains a conventional bank until it is entered in the Register of Islamic Banks. It has given no date for that step; its conversion page says the timeline has not yet been finalized.
Figures are from Gulf Bank’s disclosure on Boursa Kuwait submitted 4 November 2026, which restates the initial approval of 18 August 2025, its releases of 19 August 2025, 22 April, 24 May and 31 October 2026, its conversion page, and the Central Bank of Kuwait’s lists of Kuwaiti conventional and Islamic banks as shown on 5 November 2026; percentages, counts and comparisons not attributed to a source are The Edge’s calculations.
Sources: Gulf Bank, Central Bank of Kuwait, The Edge.
