Burgan Bank Annual Report 2002. Sheikh Jaber Al-Ahmad Al-Jaber Al-Sabah Amir of the State of Kuwait H.E. Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah First Deputy Prime Minister and Minister

Burgan BankAnnual Report 2002

A Member of KIPCO Group

A Memberof KIPCO Group

Kuwait Projects Company (Holding) (KIPCO) is one of the premier investment holdingcompanies in the Middle East. KIPCO has substantial ownership interests in a diversifiedportfolio of companies operating throughout the region and internationally in the three majorbusiness sectors. Subsidiaries and affiliated companies of the Group have interests in theindustrial and real estate sub-sectors. KIPCO continually seeks to improve the performance ofits portfolio companies by encouraging the adoption of global best practice in managing theirbusinesses. Our Group companies utilize the synergies that exist within each sector as well asacross sectors and act as responsible corporate citizens in each of their markets.

Financial KIPCO’s holdings in this sector include investments in commercial and investment banking,asset management, and insurance. These institutions meet the needs of both individual andcorporate customers by developing new products and maintaining an emphasis on serviceexcellence. Technology advances are being used wherever possible to broaden distributionchannels and to enhance the customer experience.

Industrial Building up the region’s industrial infrastructure and manufacturing base is widely regarded aspriority among the governments of the Gulf Co-Operation Council (GCC) countries. Achievingself-sufficiency in key goods and services is a major objective of this initiative. The KIPCOGroup is playing its part in responding to these challenges through its sizeable investments inthe dairy, food service, fisheries and industrial coatings businesses.

Real Estate The KIPCO Group has sizeable real estate investments in both the Arab world and in theUnited States of America. In selecting its real estate investments, the Group seeks to identifyquality properties with an attractive potential for gain in the medium term. Group entities arealso involved in property development as well as property management.

Media and Information Technology

The rapid convergence of the telecommunications, broadcasting and computer industries inrecent years has led to the emergence of many opportunities in the commercial, educationaland entertainment fields. With its strategic portfolio of investments in the media andinformation technology sector, the KIPCO Group is already capitalizing on these excitingopportunities. Its objective is to bring the most advanced information and technology into thehome and workplace, and to do so efficiently and cost effectively.

Management and Advisory

Management and advisory services are provided by the KIPCO Group’s American and Britishbased operations and encompass direct investment, finance, private placement, mergers andacquisitions, derivatives and corporate restructuring. These services are solicited by bothGroup entities and external clients. The management and advisory operations also provide theGroup with representation and support in the key markets of North America and Europe, anessential factor for success as globalization and technology continue to fosterinterdependence between markets.

Contents02 Chairman’s Statement 05 Board of Directors 06 General Management 10 Review of the Year 19 Financial Statements 45 Contact Directory

H.H. Sheikh Jaber Al-Ahmad Al-Jaber Al-Sabah

Amir of the State of Kuwait

H.E. Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah

First Deputy Prime Ministerand Minister of Foreign Affairsof the State of Kuwait

H.H. Sheikh Saad Al-AbdullahAl-Salem Al-Sabah

Crown Prince and PrimeMinister of the State of Kuwait

Our VisionTo be the best financialservices provider wih themost efficient distributionchannels

Our Mission“Quality in all we do”

Our GoalsTo maximise shareholdervalue, deliver services andproduct excellence tocustomers and play acaring role in the societieswe serve.

All employees will beencouraged to be sincere, loyal and toachieve their true potential with superiortraining, technology andopportunity.

Burgan Bank is totally committed to quality ineverything it undertakes. The Bank aims to be dynamicand pro-active. It seeks to maximise asset value andsatisfy customer needs whilst ensuring the highestvalue for its shareholders. The Bank’s successdepends upon training and development to empowerits employees, as well as investment in the mostadvanced and applicable technology. This powerfulcombination ensures we meet the needs andaspirations of the State of Kuwait and its people.

02 03Burgan Bank S.A.K. - Annual Report 2002 Chairman’s Statement

Chairman’s Statement

Burgan Bank looks forward to maintaining its consistent growthin the domestic market by leveraging its strength andcompetitive advantages, particularly in the area of electronicbanking. The Bank will also seek to conclude more strategicalliances with major local, regional and international financialinstitutions, aimed at enhancing its presence in various markets.

Dear Shareholders,

It gives me pleasure to present to you on behalf of the Board of Directors the Twenty Fifth Annual Report with thefinancial statements of Burgan Bank for the year ended 31 December 2002.

On this occasion, I am also pleased to announce that in 2002, Burgan Bank posted total profits of KD 28 millionbefore the provisions of KD 14.7 million. Net profit after the provisions, the share of Kuwait Foundation for theAdvancement of Sciences and the National Manpower Support tax, stood at KD 12.8 million. Balance sheet sizeincreased by KD 265 million or 18% over the 2001 total of KD 1,487 million to reach KD 1,752 million, whileShareholders’ Equity amounted to KD 175.97 million.

The Board of Directors has recommended to the shareholders’ annual general meeting the distribution of cash dividendsof 8 fils per share, and bonus shares of 5%. Whilst these figures reflect a decline of the Bank’s net profits and profitdistributions compared to the previous year, we would like to clarify to our shareholders that the Bank adopts a prudentpolicy in making the appropriate level of provisions that best preserve the shareholders’ rights and provide the Bank with a solid capital base, even at the expense of net profits and profit distributions announced for the year 2002. In pursuit of one of the primary objectives of its strategic plan, the Bank will continue its efforts to maximize value for shareholdersand to grow their investment in the Bank.

During the third quarter of 2002, certain officers of the bank fabricated unrealized investment valuation losses of some KD 5 million in order to create a false charge against equity; this was used to offset a realized loan loss chargeable against profits. The officers involved were suspended and the Board is satisfied that the correct charge against loan losses has now been made against the results of the year.

In this respect, we would also like to confirm that the Board of Directors have taken all necessary measures for preventingthe recurrence of such errors. The leadership of the Bank has been entrusted to one of the Board Members to ensure thatthe Board of Directors’ instructions in this regard are strictly implemented. We would like to emphasize that more rigorouscontrols are now in place to ensure effective protection of the shareholders’ rights and interests in future. This incidentshould not colour our appreciation of those staff members whose dedicated efforts were instrumental in achieving thegood operating results for the year.

Notwithstanding the above, Burgan Bank posted good operating results this year. The operating income for 2002 stood at KD 47.5 million against KD 43 million for 2001 up 10.5%. The major component of this increase comprised an increasein fees and commissions earned by the bank. Total fees and commission earned during 2002 amounted to KD 16.8million compared to KD 10.2 million for 2001 an improvement of KD 6.6 million or 31% over 2001. Operating expenseshave increased by KD 3.9 million (24.7%) to KD 19.5 million, mainly as a result of continuing technology investments andstaff training.

Burgan has been successful in creating a stable and diversified fee income base. The stability of this income stream has been achieved by launching and managing successful liquid, money market and equity funds for its customer. For example, Burgan equity fund continues to do well in line with the rising stock market, while Burgan financial fundcontinues to offer competitive yields to our investors. Fund management income has increased by 72% in line withsubscriptions growth.

The Bank continued to selectively expand the geographic coverage of its branch network. During the year, two newbranches were opened in prominent locations, one at Kuwait International Airport, which operates round-the-clock, and the other in Marina Mall - a major commercial complex in Kuwait. This brought the number of the Bank’s branches up to 17. The Bank also furthered the activity of Mobile ATMs “B everywhere”, carrying the Bank’s services to customersanywhere in Kuwait.

In another “first-of–its-kind” in Kuwait, the Bank launched the Smart Cash Deposit Service, where highly advancedmachines were installed in all Bank branches and some commercial complexes, enabling customers to deposit cashround-the-clock.

In order to provide greater convenience to customer, the Bank started to install banking kiosks, to enable customers of Burgan Bank and other local banks to conduct a variety of banking transactions via these machines. These kiosks are now available for customers as technological mini banks to be used at any time, as they are available in majorcommercial complexes, the faculties of Kuwait University and in hotels.

The Bank continued to upgrade its Electronic Payment Gateway Service. This is becoming the preferred payment method for customers, giving them the option of paying for their purchases in various major currencies, using the ATMcard or the credit card in the Kuwait banking market.

Abdulaziz Ibrahim AlNabhanChairman & Managing Director


Chairman’s Statement (continued)

With “Beeebank” attracting a major portion of individual and corporate customers’ transactions, Burgan Bank re-affirmedits position as a leading technological bank and a pioneer in electronic banking services. During the year, our electronicbanking services launched “Bee trader” an online trading system for FX trading and online investing in major stockmarkets. We also pioneered the launching of online-prepaid cards.

Burgan Bank’s accomplishments as a leader in technology driven banking was recognized by the awards from thereputable magazine Global Finance for being the Best Internet Bank for Corporate and Consumer clients in Kuwait, and for having the Best Website Design in the Middle East.

Strong growth in retail, corporate and private banking has increased the net loans and advances by KD 151 million or 26% to KD 724 million. The Bank expanded its customer base in the corporate and consumer banking areas, resulting in increased share in the domestic banking market. The Consumer Banking Group significantly grew the size of the retailloans portfolio, while the Corporate Banking Group broadened its customer’s base and launched new interest-incomegenerating products. The Corporate Banking Group also financed a number of major construction projects in Kuwait. At the same time the balance of non-performing loans dropped to KD 48.5 million in 2002 from KD 72 million in 2001 a drop of 33%.

Revenue from credit cards posted solid growth re-affirming its role as an important source of earnings, supporting theoperating income and positively reflecting on the Bank’s overall profitability.

The Treasury Group effectively managed the Bank’s balance sheet, creating a greater balance between the maturity datesof the Bank’s assets and liabilities. This was achieved by prudently managing exchange rates and interest rates risks, andby utilizing appropriate hedging instruments the Bank minimized its exposure to such risks. The Group also endeavored to secure adequate liquidity supply, spreading the sources of funds over a wide and diversified range of instruments andemploying effective funding strategies. Customer deposits have increased by KD 41 million or 5% to KD 831.6 million.Core deposits continue to grow while dependence on high cost funds is being reduced progressively. During the year, the bank issued KD 30 million in bonds. The bank now has KD 90 million of medium term borrowings.

During the year, the Treasury Group established a meaningful presence in the foreign exchange market, Government debtbonds and money market. It also actively participated in Kuwaiti Government Treasury Bills and Bonds programs. In orderto ensure greater customer satisfaction, the Group widened the portfolio of its products and services that meet customer’sexpectations and satisfy their needs. The low yield Government debt bonds has reduced by KD 37.5 million to KD 162.6million. Government Debt Bonds now constitute 9.3% of the balance sheet size as compared to 13% last year.

The Private & International Banking Group successfully launched the new “Burgan Man plus Fund”, and acted as the mainselling agent in the privatization of Bank of Kuwait and the Middle East. In order to provide the widest range of services toits customers, the Private & International Banking Group signed a strategic alliance agreement with a major Swiss bank toprovide investment advisory services to the Bank’s clients.

Board of Directors

Abdulaziz Al-NabhanChairman & Managing Director

Sheikh/Mohammed Abdul AzizAl-Jarrah Al-SabahDeputy Chairman

Ghanem Hamad Al DabbousBoard Member

Abdul Aziz Dekheel Al DekheelBoard Member

Sami Mohammed Abdul WahabAl-JuawanBoard Member

Faisal Mohd. Al RadwanBoard Member

Majed Essa Ahmed Al-AjeelBoard Member

06 07Burgan Bank S.A.K. - Annual Report 2002 General Management

General Management

Rod GoomChief General Manager

Eyad Al-SerriConsumer Banking Group

Sami Al AliElectronic Banking Services Group

Ziad SarawanTreasury Group

Ghassan Al-SalehPrivate Banking Group

Amina Al ShattiCorporate Banking Group

Abdulla Al QassarInvestment Banking Group

Khalid AhmadFinancial Control Group

Sahar Al NaqeebHuman Resources and Development Group

Lamia Al TabtabaeOperations & InformationTechnology Group

Advisors

Abdulla Al DakhilAdivsor to the Chairman

Mohammed MobasharLegal Advisor to Chairman’s office

Ahmad Al BaghliChief internal audit

In a bid to maximize customer’s satisfaction, the Private Banking Group endeavored to introduce a wide variety of privatebanking services, keeping an eye on investment benchmarks and criteria preferred by customers, while observing theirdifferent objectives and appetite for risk and return. In doing so, the Group prudently sought to grow clients’ investmentsto generate the best returns consistent with their risk tolerance. The International Banking Group increased the Bank’s profile in financing international trade. It continued strengthening

its long-established relations with international correspondent banks. It proactively participated in financing multi-nationalcompanies executing vital projects in Kuwait.

The Investment Banking Group grew the size of its business. Both Burgan Financial Fund and Burgan Equity Fund postedgood results during the year. The Bank also participated as the Lead Manager for two new major issues during the year,one for Industrial and Financial Investment Company and the other for KIPCO (Holding). The Bank maintained its policy of furthering its relations with Islamic financial institutions, meeting customers increasing demand for this type of banking.

For the fourth consecutive year, the Bank won the Quality Recognition Award for the Excellent Quality of US Dollar FundsTransfers from JP Morgan Chase Bank- New York. This year, the Bank was also selected for JP Morgan Chase Bank’sFive-Year (1997-2001) Quality Recognition Award for the service excellence in the areas of funds transfers and tradefinance processing.

Viewing investment in its human resources as one of the most rewarding investments, Burgan Bank continued to offer itsemployees career development opportunities through regular training courses organized locally, regionally and globally.Special focus was given to Kuwaiti staff to train them for higher positions through a well worked-out career developmentplan. Burgan Bank is proud to be the first local bank to raise national manpower ratio to 47% of its total employees,substantially exceeding the percentage targeted for the domestic banking sector.




Burgan Bank remains committed to its active civic role, supporting the activities of charities, humanitarian organizationsand non-profit societies, to enable them to fulfill their mission. This commitment was manifested in many ways, the AlMassAnnual Award in collaboration with Mashari AlKhair Charity Organization provides the forum to support the activities ofcaring for people with special needs, while rewarding those distinguished performance. Additionally, the Bank participatedin sponsoring several economic conferences and events, domestically and overseas.

Future Outlook

Burgan Bank looks forward to maintaining its consistent growth in the domestic market by leveraging its strength andcompetitive advantages, particularly in the area of electronic banking. The Bank will also seek to conclude more strategicalliances with major local, regional and international financial institutions, aimed at enhancing its presence in variousmarkets.

Islamic Banking licenses are likely to be issued in the coming year. This will perhaps create a level playing field in theKuwait banking market. The Bank is evaluating its options in this area.

Consistent with its motto of “Quality in all we do”, the Bank will remain committed to upgrading service standards andoperational efficiency, aspiring to “ISO 9001” certification in all areas of business.

In conclusion, we would like to extend, on behalf of the Board of Directors, our sincere gratitude to H.H. Sheikh Jaber Al-Ahmed Al-Jaber Al-Sabah The Amir of Kuwait, and H.H. The Crown Prince and Prime Minister Sheikh Saad Al-AbdullaAl-Salem Al-Sabah, May God guard and protect them, for their prudent guidance and direction. We ask Almighty God tosupport them in leading the State of Kuwait to further prosperity and progress.

We would also like to thank the Central Bank of Kuwait and other official authorities for their continued support of theBank, as well as our customers and shareholders for their firm confidence in the Bank.

We ask Almighty God to guide us all to the path of advancement and success.

Abdulaziz Ibrahim Al Nabhan Chairman & Managing Director

Looking ahead, theTreasury Group’s strategicinformation systemcovering foreign exchangeand money market, will befurther enhanced byintroducing a new modelfor measuring andanalyzing value-at-risk.

During the year, theInvestment Banking Group continued to growthe size of its business,offering innovativefinancial solutions thatsatisfy the ever-changingneeds of customers.

10 11Burgan Bank S.A.K. - Annual Report 2002 Review of the Year

A New Move into the Future

For Burgan Bank, the year 2002 was a year of success in various areas of business, which jointly contributed to improvingthe Bank’s performance and to reinforcing its competitive advantages in the banking market.

The Consumer Banking Group achieved several accomplishments during the year. In line with its strategy to selectivelyexpand the branch network, two new branches were opened at prestigious locations, one at Kuwait International Airportproviding customers with a variety of banking services round-the-clock 7days aweek, and the other in Marina Mall in themiddle of Salmiah Area, offering a combination of traditional and electronic-banking services, in addition to Drive-throughATM Service. Furthermore, this Group posted remarkable growth of 47% in the size of consumer and other installmentloans portfolio, and managed to increase the Bank’s non-interest income by 77% compared to previous year. The Bank’scredit card business substantially grew, with the number of credit cards issued during the year increasing by 70%compared to 2001, in addition to noticeable growth in the use of these cards, consequently constituting a significantstream of revenues supporting the Bank’s overall profitability.

In line with its strategic plan aiming at offering a wide range of banking and financial services and products that satisfy the needs of various segments of the Kuwaiti society, the Consumer Banking Group launched several first-of-kindproducts, such as the Low Salary Cheques and the Petronet Cards. Keen to maintain its leading role in technologicalapplications, and in order to provide more convenience for its customers, Burgan Bank started to install the Smart CashDeposit machines in all of its branches and some major commercial complexes. This service is the only and first of kind in Kuwait, enabling customers to make their cash deposits in their accounts easily, any time round-the-clock.Another success for this Group during the year was the reduction of loans provisions to only 1.36% of the portfolio size, in line with the international standards. Despite the growth of the loans portfolio, the Group managed to reduce itsoperating expenses by 12.3%.

In the course of the Group’s endeavor to increase the Bank’s share in domestic banking market, the Group established anew Marketing & Sales Unit, which successfully started its functioning. This unit helped Burgan Bank penetrate the marketat grass-root level, and conducted continuous post-service survey, assisting the Bank to better understand customersneeds and accordingly improve customer service. Upon the request of the Consumer Banking Group, an independentspecialized firm performed a market study which results indicated that customers satisfaction with Burgan Bank stood at83% during the year, scoring the highest level in local banking sector.

The Corporate Banking Group significantly expanded its customers base with a view to diversifying credit risks anddistributing them over a wide range of companies belonging to different economic sectors. The Group also providedadditional services to its commercial business clients, thus increasing non-interest income for the Bank, while continuingits efforts to reduce the size of non-performing loans.

Review of the Year

The Corporate Banking Group significantly expanded itscustomers base with a view to diversifying credit risks anddistributing them over a wide range of companies belongingto different economic sectors.


Consistently with its commitment to finance various sectors of the economy, the Corporate Banking Group financed anumber of vital projects during the year, such as Kuwait Commercial Market, the parking and shopping mall at KuwaitInternational Airport and the Marina Mall in Salmiah.

During the year, the Investment Banking Group continued to grow the size of its business, offering innovative financialsolutions that satisfy the ever-changing needs of customers. This was manifested in the Bank’s participation as the LeadManager for two new bonds issues, one for KD 15 million to the favor of Industrial & Financial Investment Company due in 2007, and the other for KD 15 million to the favor of KIPCO (Holding) maturing in 2008.

The Bank maintained its leadership in management and marketing of funds. Burgan Financial Fund, launched in 2000,posted substantial growth with the assets under its management reaching KD 174 million by the end of December 2002.While Burgan Equity Fund continues to generate good results.

The year 2002 proved to be a year of success for the Private & International Banking Group. The Group launched the new fund “Burgan Man Plus Fund” with a paid-up capital of KD 25 million to invest in long and short term securities.

The Group also acted as the largest selling agent in the privatization of Bank Of Kuwait & The Middle East. Keen to expandthe scope of its activities, the Group launched new services such as the formation of trust and offshore companies throughits alliances with close trustees in Guernsey. The Private & International Banking Group also executed a strategic alliancewith Cramer & Co, a Geneva - based assets management company, to provide investment advisory services to theGroup’s clients.

In its turn, the International Banking significantly contributed to bolstering the Bank’s active role in financing internationaltrade, while concurrently strengthening its long-established relations with international correspondent banks andenhancing its proactive participation in financing multinational companies executing vital projects in Kuwait.

On another front, the Treasury Group, in coordination with the Assets and Liabilities Committee (ALCO), is responsible for the management of the balance sheet with particular regard to liquidity, leverage and effective FX and interest rate riskmanagement for the Bank.

The Treasury Group traded actively in the foreign exchange market, money market and government debt market, playingan active part in the Kuwaiti Government Treasury Bills and Bonds, and also acting as a market maker in the secondarymarket. The Group’s goal is to maximize return from all transactions and to profit from short-term and long-termmovements in prices and rates.

The Group tries, where possible, to match-up the Bank’s assets and liabilities by maturity and size, using derivatives if it is not possible (or less profitable) to hedge positions in cash markets. Sensitivity limits are used to control the sizes ofunmatched assets/liabilities in the Bank’s non-trading books.

Review of the Year (continued)

The Bank’s exposure to liquidity risk is constantly monitored to ensure that the Bank has a more than sufficient supply of liquid assets. To ensure adequate liability supply, the Bank ensures that its sources of funds are spread over a wide and well-diversified range. To achieve this, the Bank attaches great importance to maintaining reciprocal relationships with other banks and financial instituations worldwide. The Treausry Group also ensures that its cash management and the Bank’s ongoing funding requirements, both adhere to all regulatory requirments.

Limits for positions and gaps have been set, according to the Bank’s risk profile, with each exposure controlled by a ratioof risk to reward. All exposures to interest rate movements are overseen by ALCO who are also provided with results fromstress tests under “what if” scenarios to enable a balanced view of the portfolio.

The Sales and Marketing team has expanded the product range and the services offered this year, to ensure greatercustomer satisfaction. The group also offers 24-hour trading, a service that benefits both customers and the Bank.

The Bank has reviewed and revised the trading procedures that it uses to manage its own interest rate risks, with a view to lowering the cost of funds. This proved to be of particularly high value in a year in which financial markets were extremly volatile.

During the year, the Bank’s exposure to foreign exchange risks and to interet rate risks have been substantially reducedand its assets and liabilities have been more closely matched. This has been achieved by the use of effective strategies for funding and the use of appropriate instruments for hedging.

Looking ahead, the Treasury Group’s strategic information system covering foreign exchange and money market, will befurther enhanced by introducing a new model for measuring and analyzing value-at-risk.

The IT & Operations Group made several accomplishments during the year, at the forefront of which was the winning forthe fourth consecutive year of the Recognition Award for the Excellent Quality of US Dollar Funds Transfer from JP MorganChase Bank, New York. This award came as an appreciation of the Bank’s fast funds transfer service throughstraightforward and simplified processes, ensuring not only lower cost per transaction for participating banks, but also an almost instantaneous disbursal of funds to beneficiaries accounts in US Dollar, anywhere in the world. Burgan Bank is the only bank to receive this award and one among the elite group of clients of this global bank.

Burgan Bank was also selected in 2002 for JP Chase Morgan Bank’s Five-Year (1997-2001) Quality Recognition Award forservice excellence achieved by the IT & Operations Group in areas of operational efficiency of funds transfers and tradefinance processing.

The IT & Operations Group exerted steady efforts to provide efficient back office systems, and actively participated incorporate initiatives of implementing exemplary industry standards like Quality Management Systems and Balanced Score Card, which is an instrument for strategic planning and measurement of performance.

Within the framework of internal technological achievements, the IT & Operations Group executed a number of initiatives to simplify and accelerate transactions procedures, thus reducing the operational cost and saving more time for staff tofocus on their customers. This resulted in improving customer service in line with the Bank’s motto “ Quality in all we do”.One of these achievements was the successful migration to a state of the art authorization system for all kinds of onlineauthorizations, including the visa card transactions. With this new system, Burgan Bank’s Touch Screen ATM machineswere enabled to provide visa cash advances to all visa cardholders. Another accomplishment was the launching of the first and only remote copy facility in Kuwait, whereby all Bank’s data get mirrored online to the Bank’s disaster recoverysite, ensuring 100% data availability and operations continuity.

The Bank continued to upgrade its Electronic PaymentGateway Service, which is becoming the preferred paymentmethod for customers, giving them the option of paying fortheir purchases in various major currencies, using the ATMcard or the credit card.




In order to safeguard the confidentiality and safety of customers and Bank’s data, the IT & Operations Group introducedencryption on all branches links to secure data travelling between the bank and its branches. Furthermore, the Groupmade the necessary arrangements to provide Bank staff with web access to the Bank’s email facility.

With a view to ensuring fast processing of loans applications, the Group introduced the Workflow System to automateconsumer loans cycle and corporate credit approval cycle. This will favorably reflect on the Bank’s image and oncustomers satisfaction with the level of service. The Group also rendered full support to all new products. This wasensured through developing and implementing the appropriate systems that secure the integration of the new productswith the systems of the Bank.

On another technological front, the Electronic Banking Services Group remained dedicated to strengthening the exclusivecompetitive advantages of the Bank, and committed to increasing such advantages through further technologicalinitiatives, enhancing the Bank’s position as a pioneer technological bank. The Group broadened the geographicalcoverage of the Mobile ATM machines “Beverywhere”, which is the first of kind in Kuwait and the Middle East, carrying theBank’s services to customers in various areas of the State of Kuwait. The Electronic Banking Services Group also widenedthe range of services offered through Burgan Bank’s site on the Internet “ www.beeebank.com”, providing the “Beee-Trader Service for trading in global securities, foreign exchange, financial transfers, securities margin trading, commoditiesforward contracts and options round-the-clock, in a fully secured and safe environment. This service is the first of kind inKuwait and an effective initiative for promoting e-commerce via the Internet.


In another first, Burgan Bank provided more ease and convenience for execution of customers banking transactionsthrough the Internet, installing banking Kiosks in major commercial complexes, faculties of Kuwait University and majorhotels, thus promoting the Internet culture in the Kuwaiti society.

The Bank continued to upgrade its Electronic Payment Gateway Service, which is becoming the preferred paymentmethod for customers, giving them the option of paying for their purchases in various major currencies, using the ATMcard or the credit card.

Burgan Bank’s accomplishments during the year were augmented by the three awards won from the reputable magazineGlobal Finance for being the Best Corporate and Consumer Internet Bank in Kuwait, and for having the Best Web SiteDesign in the Middle East. Africa.

Another unprecedented achievement during the year was the Bank’s success in raising the ratio of national manpower at the Bank from 27% to 47 % during a period not exceeding four years. This places Burgan Bank at the forefront of thosebanks where Kuwaiti staff members constitute a high ratio of total jobs and occupy senior positions. This accomplishmentcomes in line with the Government’s plans and directives to provide more job opportunities for the Kuwaitis in the privatesector.

The Bank will continue its efforts in this direction, aspiring to further increase the number of Kuwaiti staff , while remainingcommitted to Kuwaitizing executive management and senior positions, particularly that highly qualified Kuwaitis are readilyavailable to efficiently assume such positions. In this regard, the Bank adopts a well worked-out replacement andsuccession plan. This plan seeks to qualify and train Kuwaiti staff members with a view to enabling them to meet therequirements of any position in the bank. Training and succession plans are always designed in accordance with therequirements of Bank’s strategy, significantly contributing in the pursuit of short-term and long-term strategic objectives.Within this context, the Bank continued its initiatives aiming at enhancing the skills and efficiency of our staff. During theyear, 30 Burgan Bank employees obtained internationally accredited professional certificates in various areas of bankingprofession.

Relevant to this was the full automation of the Human Resources Group’s processes during the year, enabling the Group to better plan for its activities, properly manage employeees relations and better organize training and careerdevelopment plans.

Honoring its commitment to serve the society of Kuwait, Burgan Bank continues to support social and cultural activitiesthat assist in furthering social communication. These efforts fall within the Bank’s comprehensive social mission calling for greater attention to various social segments, as well as for a more active role for financial institutions in this respect.

Within the context of its active civic role that complements its financial and banking role in the service of the Kuwaitisociety, Burgan Bank extended for the third year in a row financial support to the children of Kuwait. This contribution was made through the Kuwaiti Activity for Children Care in Hospital.

Affirming Burgan Bank’s social commitment and care for people of special needs, the Bank sponsored many activities of this segment of the Kuwaiti society, in addition to several social and cultural events. This interactive attitudeconspicuously manifests the Bank’s pursuit of its civic mission, urging financial institutions to more actively participate in serving the Kuwaiti society. Additionally, the Bank participated in sponsoring several economic conferences and events,domestically and abroad.



Contents

Financial Statements

20 Auditors’ Report 21 Balance Sheet 22 Income Statement 23 Cash Flow Statement 24 Statement of Changes in Equity 25 Notes to the Financial Statements 45 Contact Directory

Burgan Bank Annual Report 2002. Sheikh Jaber Al-Ahmad Al-Jaber Al-Sabah Amir of the State of Kuwait H.E. Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah First Deputy Prime Minister and Minister

Documents