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Kuwait: NBK... 68 Years of Leadership and Growth
16.11.2020There is no doubt that the history of National Bank of Kuwait, which was established in 1952, not only represents a unique and inspiring success story of a bank that rose to success and leadership in the banking business consolidating its position as one of the leading banks in the region today, but also documents the key historical milestones of Kuwait and how the bank contributed to achieving economic and financial independence for Kuwait even before full political independence was attained, and the instrumental role it played in supporting the national economy during critical stages of the country's history.
Today, NBK celebrates the anniversary of opening its doors to the public for the first time in 1952, as the first national bank in Kuwait and the first joint stock company in Kuwait and the Arabian Gulf region.
This year, the celebration is particularly significant as it marks the 68th anniversary of the bank’s actual operation and service provision to customers, which represents a culmination and a continuation of a success journey during which NBK transformed from a small bank that started with a 3-store area and a few employees using rudimentary manual work, to one of the largest, most profitable, leading and innovative banks in the entire Arabian Gulf region.
Everyone knows well the history of Kuwait’s political independence in 1960. However, most people do not know is that 1952 saw another kind of independence that is no less important than political independence, which is the economic independence of Kuwait, by launching the operations of National Bank of Kuwait as the first wholly-owned national bank in Kuwait.
National Bank
In 1952, a small joint stock company with a capital not exceeding one million Kuwaiti Dinar only emerged under the name of “National Bank of Kuwait Limited”, marking the beginning of a new era of economic freedom and independence for Kuwait, which was under British mandate for a long period, and declaring the independence of the region as a whole, which did not have a single national financial institution at that difficult time in its history, since before 1952, there was only one foreign bank in Kuwait, the British Bank of the Middle East in Kuwait, which was officially inaugurated in February 1942 during World War II.
Since 1949, those in charge of the British Bank in Kuwait have felt that Kuwaiti citizens are not satisfied with its activities and services, and they have also learned that some Kuwaiti merchants have thoughts and a tendency to establish their own bank.
Recently, a number of secret letters written by the British Commissioner in Kuwait to the British Foreign Office, in which he expressed his concern and fear about establishing the national bank and the attempts that were made to hinder its incorporation and continuation of its operation.
Incorporation Idea
The idea of establishing a Kuwaiti national bank that basically serves national interests, takes upon itself developing the Kuwaiti economy, boosting the commercial market, and preserving and growing depositors’ savings emerged for the first time in 1952.
To materialize the idea, a group including the following founders: Ahmed Saud Al-Khaled, Khalid Zaid Al-Khalid, Khaled Abdullatif Al-Hamad, Khalifa Khalid Al-Ghunaim, , Sayed Ali Sayed Sulieman Al-Rifai, Abdulaziz Hamad Al-Sager, Mohamed, Abdulmohsen Al-Khorafi, Yousef Ahmed Al-Ghanim and Yousef Abdulziz Al-Fulaij, held a meeting with the late Sheikh Abdullah Al-Salem Al-Sabah, who endorsed their idea and promised them support.
Under the memorandum of association of the British Bank branch in Kuwait with the government of Kuwait, it was not allowed to incorporate other banks in Kuwait, and the opinion of the Amir of Kuwait Sheikh Abdullah Al-Salem at the time was that this does not apply to the incorporating Kuwaiti banks inside the country.
Amiri Decree Law
Accordingly, the incorporation of National Bank of Kuwait was permitted on 19 May 1952, by virtue of an Amiri Decree Law to this effect. On 15 November 1952, NBK started official operation as a Kuwaiti shareholding company conducting banking business.
National Bank of Kuwait is the first ever national bank in Kuwait and the Gulf, with all board members and founders from Kuwaitis who have a long-standing business activity inside and outside Kuwait.
The bank was incorporated with a capital of 13.1 million rupees, equivalent to only one million Kuwaiti Dinars, divided into 13.1 thousand shares of one thousand rupees each.
In a small building located on the new street, NBK started operation with a small number of people, not exceeding the number of fingers, and with an area not exceeding 3 stores, and at the beginning, it conducted simple and basic banking activities including LCs, currency exchange, simple bank transfers, deposits and withdrawals.
This was how the beginning was, but as time went by, NBK proved its efficiency and worthiness as a participant and supporter of the renaissance movement in Kuwait, providing all kinds of support to individuals and institutions to finance the construction of infrastructure projects in Kuwait of the 50’s, where it was the only Kuwaiti bank at that time.
Replacement of Currency
NBK played a key role in replacing the local currency twice, first in May 1959 when the Indian Rupee notes were replaced by new rupee notes called the Gulf rupees.
As for the second replacement, it was in April and May 1961 when the Kuwait Currency Board issued Kuwaiti Dinars instead of Gulf rupees banknotes. This replacement was a necessity for independence giving Kuwait an independent character and manifesting the country’s sovereignty over its economy and currency.
Financing Development
NBK is the largest major financier of all government development projects as well as the private sector. The bank also has a dominant share in trade finance and financing of foreign companies working in these projects. This represents an extension of a long record of supporting economic development and contributing to building modern Kuwait.
In the 1970s, NBK continued to finance infrastructure and development projects in modern Kuwait. These projects comprised water desalination plants, power stations, road networks, construction and development of oil fields, refineries and support services, import services, construction of hospitals and schools, and support for urban expansion in the country, thus opening vistas for the future of Kuwait.
The bank began to develop its real corporate character through development, restructuring and re-organization plans, the period which acted as the basis for NBK’s progress and booming.
A Safe Haven
During the 80’s, NBK went through a tough test, when the stock market crashed in the so-called "Souk A;-Manakh Crash” in 1982. However, thanks to the balanced and conservative banking methodology of adopted by NBK during this period, it was the only bank that was not adversely impacted by the crisis.
As a result, it was called "The Sole Surplus Bank". NBK also warned several times in its economic reports and publications from the risk of this crash before it occurred and impacted many institutions.
Then came the crisis of the Iraqi invasion of Kuwait in 1990, which was a hard test for the solidity of the bank’s position, as it continued to perform its business from outside Kuwait and meet all its obligations towards its customers and banks abroad, and it also had an instrumental role in financing Kuwait's reconstruction projects.
This outstanding performance of NBK during these two crises has promoted the support and continued trust provided by the bank’s customers as well as strengthened international banks’ trust in it.
Continuous Development
During the 90’s and after the liberation of Kuwait, NBK played a leading and essential role in serving the Kuwaiti economy by arranging mega loans, including the loan arranged in favor of the government after the liberation of Kuwait in 1991 amounting USD 5.5 billion, which is the largest loan the Arab region has ever known by that time.
It can be said that the 90’s and the end of the 20th century was the golden era of the bank, during which it showed the signs of maturity and banking prosperity and regional as well as international expansion. Today, the bank has dozens of branches in Kuwait, as well as branches and representative offices and overseas companies in New York, London, Paris, Geneva, Singapore, Vietnam, Turkey and China, in addition to Lebanon, Bahrain Jordan, Qatar, UAE, Iraq and Saudi Arabia.
With the beginning of the 21st century, NBK succeeded in developing into an integrated financial market for advanced banking and financial services and for all customer segments, including individuals, companies and large institutions. It also consolidated its position as a comprehensive investment and financing bank through many deals in the Middle East region.
Digital Transformation
The COVID-19 pandemic has highlighted the importance of digital banking and electronic payment methods for the future of the banking sector. This proves the success of NBK's insightful and forward-looking vision in its implementation of Digital Transformation Strategy and the development of its digital banking services over the last years, which added greater flexibility to the bank’s methodology and contributed to enriching customers’ banking experience and meeting their various banking needs.
Among all regional banks, NBK was the first to launch a digital transformation map, which contributed to consolidating its leadership in providing the latest digital banking services and electronic payment methods, as the digital culture has become part of the fabric of the bank’s system that is spread across all the group’s business units and different markets in which it operates.
In recognition of these efforts, NBK was awarded the Best Consumer Digital Bank as well as the Best in Mobile Banking in Kuwait for 2019 by the international Global Finance magazine.
Expansion and Diversification
Thanks to its founders, employees, customers and all stakeholders, NBK has become a leading Kuwaiti brand that crosses borders and spans 4 continents.
Although the main operations of NBK are concentrated in the Middle East and North Africa region, it seeks to preserve its international character and its presence in many countries which is best manifested in the group's international footprint comprising China, France, Singapore, Switzerland, Turkey, UK and USA.
The bank’s operations also range from consumer and private banking, corporate banking, Islamic banking through the group’s subsidiary Boubyan Bank, as well as investment banking and asset management through the group’s subsidiary NBK Capital Investment Company.
The diversification of income sources, both geographically and sectorally, represents a key pillar of NBK's strategy to achieve sustainable growth, as international operations have contributed to increasing the volume of the group's business, while focusing on growth in the main markets in Saudi Arabia and Egypt, in addition to continuing growth in the Kuwaiti market.
As part of the bank’s efforts to expand in the main markets in which it operates, NBK supports the activities of the wealth management company in KSA and links it to the bank’s global wealth management platform, while striving to increase commercial banking products and services to sell the group’s products and services to the bank’s customers in KSA. In Egypt, the bank aims to expand in the retail market, by focusing on enhancing customer acquisition, facilitating their transactions, and investing in digital banking services.
Sustainable Development
NBK has an unwavering commitment to the community to which it belongs, which made it one of the largest contributors to the development of Kuwaiti society, with contributions exceeding half a billion US Dollars over the past decades, with a rich record of social initiatives in all fields and activities.
NBK Children’s Hospital remains an icon of NBK's social contributions, as the bank continued its endeavor to develop this hospital by opening a "Stem Cell Therapy Unit" in Al-Sabah Medical Area three years ago, which is the first of its kind in Kuwait that us specialized in spinal cord transplants for children under 16 years of age free of any charge, for which the bank engaged international consultants specialized in designing children's specialized hospitals.
In appreciation of its achievements in the area of sustainable development, environmental conservation and social responsibility, NBK continues to receive international recognitions, the latest of which was the bank’s inclusion in Refinitiv AFE Low Carbon Select Index for MENA region, which was launched by Refinitiv this October in cooperation with Arab Federation of Stock Exchanges (AFE).
Strength and Growth
NBK enjoys a solid financial position based on a diversified and stable deposit base, strong capitalization ratios, high assets quality and comfortable liquidity levels, which reflect on the bank’s solid financial position and the continuous growth of its balance sheet as the growth of the bank’s assets reached about USD 100 billion by the end of last September, supported by the continuous growth in loan portfolio that reached USD 57.6 billion.
NBK is the largest financial institution in Kuwait and has de facto dominance in the commercial banking sector. NBK maintained the highest credit ratings among all banks in the region, from all global credit rating agencies: Moody's, Standard & Poor's and Fitch. NBK is also distinguished by its large local and global network.
Despite the COVID-19 pandemic, the bank has shown its ability to overcome crises and maintain its assets growth and financial strength. When the global financial crisis in 2008 proved the validity of NBK's strategic and investment choices and its ability to deal with unfavorable economic conditions, representing an example to follow at a time when a wide range of financial sector institutions in Kuwait and the region badly suffered.
Pride and Leadership
Skyscrapers usually cry for attention. However, in the new NBK headquarters, the bank did not aim at all to construct a building that competes as an ordinary building, but rather wanted to present an architectural icon that reflects NBK’s pride and leadership.
NBK has succeeded in providing an example for green modern architecture through its new headquarters building, which will be an inspiration for all remarkable engineering works for many years to come.
Additionally, the bank’s new headquarters represents an example of a workplace that takes into consideration all environmental and other sides, as it is a green building conforming to the standards of Leadership in Energy and Environmental Design (LEED) Gold certification, and all the building’s interior details make it not only a workplace but an integrated environment in which the employees feel themselves and their ability for self-realization.
Kuwait: NBK’s AGM Approves All Motions Proposed by the Board of Directors
24.03.2024National Bank of Kuwait (NBK) held its Annual General Meeting (AGM) for 2023 on Saturday, March 23, 2024, with a quorum of 71.87%. The AGM approved the Board of Directors’ recommendation to distribute 25% cash dividend to shareholders (25 fils per share) for the second half of the financial year, bringing the total cash dividend distributions for the year to 35%, in addition to the distribution of 5% bonus shares (5 shares for every 100 shares owned).
Consistent Progress
In his speech to the AGM attendees, Mr. Hamad Al-Bahar, NBK Group Chairman, emphasized that the strong financial results achieved by the bank in 2023 highlight its unique business model and strong financial position. This performance reaffirms NBK’s dedication to providing the highest returns for shareholders and promoting sustainable growth.
Al-Bahar highlighted the multitude of successes attained by the bank in 2023, further solidifying its track record of accomplishments and leadership both domestically and internationally. These endeavors were acknowledged with numerous prestigious awards, further affirming NBK’s position of excellence.
"Our sustained achievements stem from our core strategy of diversification, which lies at the foundation of our operations. By strategically expanding our portfolio and services across various geographical locations, we mitigate risks, capitalize on potential opportunities, and reinforce our dedication to adaptability, resilience, and long-term stability."
"We remain committed to making substantial strides in executing our strategic agenda, and we are optimistic that our accomplishments over the past year will serve as a catalyst for enhanced performance in the future." Al-Bahar emphasized. He also underscored NBK's robust balance sheet and stable capital foundation, highlighting their role in meeting the evolving demands of customers and delivering optimal returns for shareholders.
Al-Bahar further stated, "Our endeavors yielded improvements across all key performance indicators compared to the previous year. This underscores the effectiveness and adaptability of our long-standing strategy, solidifying our position as a safe haven for investors, depositors, wealth management clients, individuals, and businesses alike. Moreover, we remain committed to leveraging the potential of digital transformation and sustainability initiatives, while fostering collaboration with communities, corporations, and individuals to foster a brighter and more inclusive future."
Social Responsibility
Al-Bahar highlighted the bank's prominent role in social responsibility over the past year, establishing itself as a leader in Kuwait. The bank contributed over KD 28 million across various sectors including healthcare, childcare, societal initiatives, environmental causes, sports, and education.
Expanding our Footprint
Discussing the bank's prospects for the current year, Al-Bahar remarked, "Regarding our outlook for 2024, our expansion efforts will primarily focus on Kuwait as our core market, with strategic initiatives in the GCC markets. We intend to further strengthen our presence in current markets through strategic investments. Additionally, the bank aims to introduce its proven digital banking solutions in other markets, while enhancing its footprint across MENA region."
Unwavering commitment
Al-Bahar emphasized NBK's unwavering dedication to upholding the highest ethical standards and governance principles. He highlighted the bank's dynamic and proactive governance framework, which fosters transparency, accountability, and ethical conduct across all levels. Al-Bahar noted that the Board of Directors, in collaboration with the dedicated executive management team, prioritizes aligning strategic decisions with the bank's core values to effectively serve the interests of its shareholders.
Historical Earnings
Meanwhile, Mr. Isam J. Al-Sager, NBK Group Vice Chairman and CEO, outlined in his speech that the bank reached its highest annual profit on record in 2023 and maintained strong profit trends. This accomplishment was supported by its diversified business model, strategic investments, and resilience in the face of various economic conditions.
Al-Sager highlighted that despite the challenging operating environment and geopolitical tensions experienced last year, the bank achieved a record profit of KD 560.6 million, marking a year-on-year growth of 10.1%. Additionally, the operating profit surged to KD 1.2 billion, reflecting a substantial increase of 15.6%.
Al-Sager further stated, "Our core segments exhibited strong performance and sustained operational momentum, particularly in our international operations and wealth management divisions. Additionally, Boubyan Bank further supported our competitive edge in the local market as the sole banking group offering both Islamic and conventional banking services in Kuwait."
He explained that the bank maintained consistent dividend rates of 35 fils per share by the end of the year, highlighting the strong financial position of the Group and its commitment to providing shareholders with optimal returns.
He highlighted that as of December 31, 2023, total assets stood at KD 37.7 billion, marking a 3.7% year-on-year increase. He attributed this growth primarily to the expanding volume of the Group's business across diverse sectors and activities.
Al-Sager also indicated that shareholders' equity reached KD 3.7 billion, reflecting a notable annual growth of about 7.3%. Return on average shareholders' equity stood at 15.0%, while return on average assets demonstrated strong rates, reaching 1.53% in 2023. Moreover, customer deposits surged to KD 21.9 billion by year end, marking an 8.8% increase compared to 2022. Concurrently, loans and advances experienced a growth of 6.1%, reaching KD 22.3 billion. Additionally, the capital adequacy ratio surpassed the minimum required levels, reaching 17.3%.
Challenges and Opportunities
Al-Sager remarked that Kuwait encountered challenges akin to those experienced globally in 2023. However, he highlighted several opportunities seized upon during the past year. These included the sustained increase in oil prices, the flexibility observed in consumer spending, accelerated growth in the projects market compared to previous years, positive trends in employment and population growth, advancements in the refining sector, and a less hawkish monetary policy approach. These factors collectively contributed to shaping a favorable economic environment in Kuwait.
He highlighted that the remarkable achievements of the bank in the previous year were attributable to several factors, including leveraging its geographical footprint, advancing the digital transformation initiative, and maintaining a robust financial position. These aspects strengthened revenue streams while maintaining the bank's prudent policies over the years. Consequently, this positively impacted asset quality and boosted capitalization.
Centre of Attention
Al-Sager emphasized that in 2023, NBK continued its commitment to prioritizing customers by offering innovative digital services and products to support their financial objectives.
Wealth Management
Al-Sager highlighted that in the previous year, NBK Wealth was introduced as a premier destination for pioneering and sophisticated wealth management solutions. It offers an extensive array of comprehensive services in private banking and advanced asset management through a global network spanning 9 cities across 5 countries.
In the domain of digital transformation, Al-Sager emphasized that the bank leads among financial institutions in digital innovation, prioritizing a banking experience tailored to the actual needs and aspirations of its customers. He noted that the bank's unwavering dedication to addressing customer needs has played a pivotal role in reshaping the lifestyles of its customers through a meticulously crafted range of digital services and products.
Sustainability Momentum
Al-Sager elaborated that the bank sustained its progress in sustainability by embarking on a new trajectory for its environmental, social, and corporate governance (ESG) strategy. This involved the adoption of a formal ESG governance framework and the integration of these standards across its services and products. For instance, it introduced green mortgage loans, consumer loans for electric vehicles, financing options related to sustainability, and low-emission housing loans.
“Recently, we have been recognized as the Best Bank in the Middle East for ESG-related loans. Furthermore, we have successfully finalized and approved the ESG framework, clearly defining responsibilities among members of the executive management. We have also established the Sustainability and Climate Change Committee, which operates under the direct oversight of the Board of Directors.
Al-Sager highlighted that NBK has maintained a high score by CDP, distinguishing itself as the sole bank in Kuwait to receive this recognition. Furthermore, NBK ranks among the highest-rated GCC financial institutions engaged in this initiative. Additionally, the bank has committed to reducing total operating emissions by 25% by 2025 and aims to achieve zero emissions operationally by 2035. These initiatives are integral to the bank's overarching plans to attain carbon neutrality by 2060. Consequently, these efforts led to an upgrade in the Bank's MSCI ESG Governance rating to BBB as per the 2023 review.
A Sustainable Future
"Our agile strategy and resilient business model will persist in steering us towards delivering utmost value to our stakeholders, serving as a cornerstone in our journey towards a digital and sustainable future. We remain steadfast in our commitment to sustaining revenue growth through responsible banking practices, strategic investment in our future, innovative products and services, enhancement of our digital capabilities, fostering holistic community development, and playing a significant role in fostering economic growth in Kuwait and beyond." Al-Sager said.
Focus on profitability
"As we navigate the opportunities and challenges of 2024, our dedication to prioritizing profitability, capital resilience, and sustainable growth remains unwavering. However, we recognize the need to closely monitor several challenges, with geopolitical tensions in the region standing out as particularly significant." Al-Sager concluded.
Diverse Mix
On the sidelines of the AGM, Ms. Shaikha K. Al-Bahar, NBK Deputy Group CEO highlighted that NBK has witnessed positive growth trends in the previous year, demonstrating continued success in executing its strategic plans, confirming that the primary sources of profitability in 2023 were centered around core banking operations.
Al-Bahar explained that NBK's performance in 2023 showcased the effectiveness of its diverse business portfolio and prudent risk management practices. She highlighted the substantial strides made in executing its customer-centric strategy, underscoring NBK's sustained momentum across various fronts. This encompassed achieving robust levels of capitalization, maintaining high credit quality, and strengthening customer relationships, all of which led to an expansion in business volume.
She emphasized that these factors were pivotal in driving last year’s strong performance and will play a significant role in generating sustainable value for shareholders in the long term. She also highlighted the bank's ongoing commitment to expanding its business operations while enhancing the quality of its services.
"2023 served as a testament to the resilience of our investment philosophy in driving growth initiatives and the importance of customer-centricity. These factors propelled the ongoing expansion across our diverse business sectors. Throughout the year, we remained committed to investing in the future, enhancing our digital capabilities to improve customer service, and introducing innovative products and solutions aimed at facilitating our customers' banking needs." Al-Bahar said.
Al-Bahar emphasized that the International Banking Group (IBG) maintained robust performance and supported the balance sheet, accounting for 24% of operating income and 23% of the Group's profits. This underscores their significant contribution to the overall performance of the Group.
She highlighted that in 2024, IBG will strengthen the bank's footprint in key regional markets, particularly in Saudi Arabia and the UAE. This will involve targeting Government Related Entities and Top-Tier Corporations. Additionally, strategic expansion efforts will focus on the European Union, particularly in corporate lending, trade finance, Commercial Real Estate, and residential mortgages. The Group also aims to strengthen its footprint in Asia through its regional hub in Singapore while diversifying its Commercial Real Estate portfolio.
Al-Bahar further emphasized that IBG are committed to diversifying the Group's commercial real estate portfolio. Additionally, they aim to integrate ESG standards into credit management processes while promoting digital and technological investments across the business network.
She emphasized that throughout 2023, the bank remained focused on maintaining high asset quality and strong capitalization. Highlighting the significance of the Saudi market, she noted that it is a key priority for the NBK Group due to the numerous emerging opportunities aligning with the bank's strategic goals. Additionally, she highlighted the profitability of the bank's operations in Egypt, which continue to be among the most lucrative within the Group, boasting the highest returns on both shareholders' equity and assets.
Wealth Management
Al-Bahar highlighted that NBK Wealth Group played a significant role in 2023, contributing 10% to operating income and approximately 11% to the Group's profits. She noted that the previous year marked the official announcement of the launch of its brand, solidifying its position as one of the largest regional groups in comprehensive wealth management. The group caters to high-net-worth individuals and corporations, offering tailored financial advisory services aimed at protecting and growing the wealth of its customers, through offering innovative and comprehensive banking and investment solutions.
She further mentioned that NBK Wealth, with approximately US$37.6 billion in personal financial assets by the end of 2023, boasts an elite team comprising over 100 investment experts and brokers with extensive experience in the field.
Revolutionary Change
Al-Bahar emphasized that the bank has made significant progress in its digital transformation journey by introducing notable updates and enhancements to the NBK Mobile Banking App. These updates represent a revolutionary shift in how customers engage with their everyday banking requirements through a highly efficient and user-friendly interface. This contributes to enhancing and refining the overall customer experience.
The Best Experience
Al-Bahar highlighted that NBK's efforts persist in delivering top-tier banking experiences, operating with the utmost efficiency, and securing a significant market share by offering customers a broader array of options and numerous value-added services. She underscored the bank's consistent commitment to delivering added value for all stakeholders, employing a balanced approach to boost revenues from diverse sources, and enhancing the Group's profitability. This entails maintaining the bank's prominent position in its core business while fostering growth through expansion into sectors beyond its key business activities.
Digital Offerings
She emphasized that NBK remains dedicated to investing in its digital offerings to furnish customers with a unique and unparalleled banking experience. This commitment encompasses the implementation of cutting-edge financial tools and unique banking services, along with regular updates to the NBK Mobile Banking App, acclaimed as one of the premier banking applications in the sector. Moreover, NBK leverages data analysis and artificial intelligence across many of its services, employing machine learning techniques to deliver a personalized experience that surpasses customer expectations.
Social Initiatives
Al-Bahar confirmed that the bank's social initiatives persisted throughout the past year, marked notably by the official introduction of the "Bankee" program. This initiative aims to enhance financial inclusion, particularly among school students, fostering sustainable improvement in financial literacy levels within society. In collaboration with the Ministry of Education and Kuwait Authority for Anti-Corruption "Nazaha,", the program engaged 150 schools and over 16,000 students, supported by the participation of 3,000 teachers. Additionally, the program also included a special needs school for learning difficulties.
She highlighted that the bank's endeavors to support and empower women saw significant recognition with the NBK Rise program receiving the prestigious Best Initiative for Women in Business accolade at the MEED MENA Banking Excellence 2023. This notable achievement reflects the culmination of the bank's dedicated steps towards women's empowerment. Importantly, this effort extends beyond the bank itself to encompass several leading organizations in Kuwait.
Leadership Centre
On the sidelines of the AGM, Mr. Salah Y. Al-Fulaij, Chief Executive Officer – Kuwait remarked that throughout 2023, NBK’s endeavors were marked by initiatives aimed at strengthening its leading position in Kuwait and enhancing customer loyalty.
Al-Fulaij further added that the bank focused on enhancing and refining the NBK Mobile Banking App by incorporating over 30 enhancements to improve both user interface and experience. He highlighted that the App witnessed over 50 million banking transactions in the past year, marking a notable 19% year-on-year growth.
He emphasized that NBK Mobile Banking App is elevating digital offerings to new levels as part of the bank's ongoing endeavors to empower customers through the digital transformation journey. This is particularly evident in the substantial increase in customer satisfaction rates, exceeding 90%, following the recent update of the new App.
The Youth Segment
Al-Fulaij indicated that in 2023, the bank continued to leverage the valuable offerings provided by Weyay Bank, increasing its market share in the youth segment to over 30%. Additionally, the bank forged a partnership with MasterCard, which now serves as the exclusive provider of bank cards.
He highlighted that NBK extended bank cards to SMEs as part of its commitment to catering to the needs and demands of this segment. Moreover, the bank entered into several partnerships to introduce new services, including exclusive offers for retirees in collaboration with the Public Institution for Social Security.
He emphasized that the bank has broadened its range of robust offerings for customers in the premium services sector through partnerships with top-tier brands, providing this segment with an exclusive lifestyle experience.
“We will persist in implementing customer-centric strategies that foster technological advancements and introduce innovative initiatives to bolster NBK's standing as a reliable financial partner and establish new benchmarks in Kuwait's banking industry,” Al-Fulaij said.
Al-Fulaij underscored that NBK's commitment to delivering exceptional products and services to its customers earned it several accolades throughout the year, notably being recognized as the Best Innovation and Transformation (World) by Global Finance. He emphasized that NBK's significant and strategic investments in its workforce, operational infrastructure, and digital platforms over the years have unequivocally proven their worth and effectiveness.
Maximum Benefit
Al-Fulaij emphasized that NBK's Personal Banking Group capitalized on the momentum of consumer spending and operations by offering exceptional banking services and products. He highlighted the implementation of a strategy that prioritizes customer choice based on individual needs and lifestyle preferences when designing products. Additionally, he emphasized NBK's commitment to maintaining a significant digital advantage over its competitors.
He added that the Corporate Banking Group remains steadfast in achieving its strategic objectives, with a primary focus on maintaining and expanding NBK's leadership and market share as the preferred corporate partner in Kuwait.
He emphasized that the bank plans to continue leveraging new business opportunities with existing customers and attract new ones, thanks to its exceptional service and the strength of its capital base.
Al-Fulaij elaborated that in 2023, the Corporate Banking Group introduced a pioneering set of commercial cards, the first-of-its-kind in Kuwait, aimed at empowering customers to manage their business expenses effectively. Additionally, new services were introduced to streamline the provision of digital and physical documents to corporate clients, fostering the growth of our medium-sized corporate clientele.
“In 2024, our focus will remain on maintaining prudent credit risk management practices, We will continuously monitor and assess the performance and effectiveness of our interactions with corporate customers, to continually enhance our offerings. Moreover, we are committed to continue our efforts to integrate ESG standards into our assessments of corporate customer credit and creditworthiness, thereby fostering improved governance in business practices,” Al-Fulaij commented.
Renewed Momentum
Al-Fulaij also noted that Kuwait's operating environment in the past year displayed continued signs of recovery, driven by increased consumer spending and improved business activity. Additionally, there was a gradual recovery in spending and project awards, with project activities experiencing their strongest performance since 2017 in terms of the value of contracts awarded. This positive trend is expected to have a favorable impact on private sector lending.
Key Pillar
Al-Fulaij indicated that the exceptional results achieved by the bank in 2023, along with its robust operational and financial performance, owe much to the exceptional human capital, which stands as the cornerstone of the bank's achievements. He highlighted that the Human Resources Group is persistently dedicated to fostering a work environment conducive to enhancing employees' capabilities, encouraging peak performance, fostering innovation, and driving continuous improvement.
Al-Fulaij revealed that in 2023, NBK allocated approximately 179,000 training hours to its employees, with 142,000 hours dedicated to local training initiatives and 36,700 hours for IBG.
Moreover, the bank initiated numerous academic, motivational, and cultural programs. He emphasized NBK's commitment to providing equal opportunities to all employees, underscoring that this commitment is evident in the bank's workforce composition. Notably, women accounted for approximately 44% of the total workforce, with around 28.8% holding senior management positions. Additionally, Kuwaiti employees constituted about 76.7% of the total workforce by the end of 2023.
He highlighted that the bank's initiatives persist in fostering a workplace culture where individual advancement meets collective achievements. These initiatives entail offering professional development avenues for employees, equipping them to navigate the complexities of the dynamic landscape and the evolving demands of the sector. "Our investments have not only empowered our employees and supported their capability to tackle challenges but have also positioned our organization as a frontrunner in innovation and competitiveness," He emphasized.
"In 2023, the bank's endeavors culminated in receiving five prestigious awards. Among these accolades were three awards from MEED, recognizing our outstanding contributions to women's empowerment initiatives and sustainable development of human resources. Additionally, we were honored with the bronze award from the Society for Human Resource Management (SHRM). The recognition is credited to the NBK RISE program, recognizing the initiative’s excellence in diversity and inclusion. Furthermore, we received the coveted Bronze Medal from Brandon Hall International Group, for our excellence in Best Advance Program in Compliance Training,” Al-Fulaij concluded.
Kuwait: Al-Bahar: We are Optimistic for More Political Stability, Promoting Business Environment in Kuwait
06.02.2024In an interview with Bloomberg, Ms. Shaikha Al-Bahar, NBK Deputy Group CEO, expressed optimism that a stabilized political environment will improve Kuwait's business landscape.
During the interview, Al-Bahar confirmed that in 2023, NBK consistently maintained strong asset quality and solid capitalization.
Optimism & Positivity
Al-Bahar expressed confidence in the impact of Kuwait's political landscape on business prospects. She underscored the favorable perspective on the newly appointed government and the transformative policies introduced by the new Prime Minister. Recognized as technocrats committed to a reform agenda, the new cabinet representatives aim to implement strategic changes that will boost the business environment in Kuwait.
“The new cabinet has started to actively engage with the parliament to align on the direction and promote cooperation,” Al-Bahar stated, noting that while the political scene is currently calm, the resumption of sessions and further interaction and execution progress by the newly appointed government are key to gain more confidence in a more optimistic outlook.
“What is important here is to highlight that a stable period of political dialogue can see a lot of these hanging issues get resolved and translate into a more productive legislative calendar,” Al-Bahar added.
Discussing the projections for 2024, Al-Bahar pointed out that NBK maintains an optimistic and positive outlook regarding the revival of project execution, fostered by a more stable political environment. Such stability is expected to catalyze improvements in the non-oil GDP growth and boost credit demand.
“The strong momentum of projects is expected to continue and feed into the market in 2024, with another KD 6.2 billion worth of awards in the pipeline,” Al-Bahar indicated.
She also pointed out that the projects market rebounded sharply in 2023 with KD +2.5 billion worth of awards: surpassing last year's awards by almost 300%.
“We are hopeful to see some political stability and an improved dialogue between parliament members and the newly appointed cabinet as this will trigger project activity that can revive non-oil GDP activity and demand for credit,” Al-Bahar noted.
Al-Bahar also mentioned that Saudi Arabia is considered a key market that NBK is approaching from all fronts. She also noted that as the operating environment in the kingdom continues to improve, presenting lot of emerging opportunities that align with the bank’s strategic goals.
“We are also expanding under our newly launched Global Wealth Management platform. We have been active in the Saudi market and the NBK franchise is playing an important role in our AUM growth in KSA,” Al-Bahar stated.
2024 Outlook: Navigating the Future
Al-Bahar emphasized that the performance in 2024 may be influenced by an anticipated shift in the Fed’s monetary policy towards a direction that generally does not favor banks, given their business models are designed to thrive in environments of high or rising interest rates. She pointed out that the operational challenge for banks in 2024 will be to defend their margins.
“With our diversification and our growing focus on fee business, we partially hedge revenue from interest rate movements. Our focus will remain on strategy execution and keeping the strength of our balance sheet intact as this is what helps us navigate through different economic cycles,” Al-Bahar explained.
Al-Bahar further elaborated that alongside the core banking's growth momentum, there is an expectation for the ongoing expansion of NBK’s international and wealth management operations, supported by the Group’s presence in key markets, stating that” Our commitment to digital investments will persist in defining our future, with an increased emphasis on incorporating digital services across all business sectors and markets”.
In answering a question regarding provisions in 2023, Al-Bahar explained that the provisions are primarily a precautionary measure, reflecting a historically prudent stance towards managing credit risk.
The challenges facing the Egyptian Pound
When asked about the Egyptian market's condition and the future of the bank's investments there, Al-Bahar stated, "The Group considers Egypt to be a key strategic market for our operations, often referring to it as our 'second domestic market.' She emphasized that NBK has a steadfast presence in Egypt and has no intentions of exiting from this investment, viewing it as a long-term commitment."
“With regards to our operations in Egypt and in domestic currency terms, it remains one of the most profitable in the Group with the highest ROEs and ROAs,” Al-Bahar responded.
“We are looking forward to some easing of geopolitical tensions to allow for some recovery in foreign currency inflows and a reactivation of the government’s asset sales program. Once the confidence is restored in the economy and the currency, we believe there are huge opportunities in Egypt and remain optimistic on its prospects,” Al-Bahar concluded.
Kuwait: NBK Reports KD 560.6 Million in Net Profits for Financial year 2023
01.02.2024National Bank of Kuwait (NBK) released its full year 2023 financial results for the twelve months period ended December 31, 2023. The Group recorded a net profit of KD 560.6 million (USD 1.8 billion), up 10.1% year-on-year from KD 509.1 million (USD 1.7 billion) in 2022.
As of the end of December 2023, total assets grew by 3.7% year-on-year to reach KD 37.7 billion (USD 122.8 billion), whereas customer deposits surged by 8.8% to reach KD 21.9 billion (USD 71.6 billion). Meanwhile, total loans and advances stood at KD 22.3 billion (USD 72.6 billion), up by 6.1% year-on-year, while attributable shareholders’ equity reached KD 3.7 billion (USD 12.0 billion), growing by 7.3% year-on-year.
In terms of distributions, the Board of Directors proposed a cash dividend distribution of 25 fils per share for the second half of 2023, bringing the total cash dividends for the year to 35 fils; a payout ratio of 50% of profits attributable. The Board of Directors also proposed the distribution of 5% bonus shares. The proposed distributions are subject to approval by the Annual General Assembly, which is scheduled for March 2024.
Earnings per share (EPS) stood at 68 fils per share for the year 2023, compared to 61 fils in 2022.
Mr. Hamad Al-Bahar, Group Chairman commented on the financial results: “In 2023, NBK achieved robust financial results, showcasing the adaptability of our business model and affirming our consistent progress toward delivering enduring long-term value to our customers, shareholders, and communities”.
“We persist in making substantial strides in executing our strategic agenda, and we are confident that the initiatives undertaken in the past year will serve as a catalyst for even stronger performance in the future,” Al-Bahar continued.
He also emphasized that NBK has a robust balance sheet and a stable capital base, providing support for meeting the expanding needs of its customers while simultaneously striving to achieve optimal returns for its shareholders.
Al-Bahar expressed optimism that the operational environment in Kuwait will gain momentum in the upcoming period, particularly following the attainment of political stability. This positive outlook is further bolstered by the appointment of new prime minister and government, placing a priority in its agenda on addressing economic challenges and fostering efforts to restore confidence in the business climate.
“Throughout the past year, NBK solidified its pioneering position as a leading contributor to social responsibility in Kuwait; affirmed through contributions exceeding KD 28 million across various sectors, including health, care for children and society, environmental initiatives, sports and education,” Al-Bahar stated.
Al-Bahar emphasized that sustainability has become a pivotal driver to enhance the Bank's long-term growth opportunities. He highlighted that NBK continues to undertake numerous significant initiatives supporting responsible business practices, contributing to the sustainable development of Kuwait’s economy. The latest of these initiatives was becoming a signatory of the United Nations Global Compact; recognized as the largest sustainability initiative for responsible business practices.
Meanwhile, Mr. Isam J. Al-Sager, Vice Chairman and Group CEO, said: “In 2023, we delivered a robust performance, experiencing growth in both revenues and profits. The favorable operational performance persisted across our business, as we continued to leverage the advantages of our diverse business portfolio and strategic investments in talent and technology”.
Al-Sager underscored that NBK’s primary business sectors demonstrated strong performance throughout the year, registering increased momentum in the operational performance across key areas including international operations and wealth management. These key segments are witnessing substantial expansion in alignment with the Group's strategic plans to grow in main markets and enhance its offerings in investment and wealth management services.
"The Group's net operating income surged by 15.6% annually, reaching KD 1.2 billion, driven by the growth of net interest income and fees and commissions." Al-Sager added.
He further explained that the growth in profitability aligns with the strength of NBK’s financial position. The expansion of the loan portfolio, total assets in general, and customer deposits was sustained while maintaining robust asset quality levels, thanks to NBK’s prudent risk management policy.
“In 2023, we witnessed a compelling demonstration of the strength of our investment philosophy in growth initiatives, underscoring the value of our customer centricity. This played a pivotal role in the sustained growth of our diverse business sectors as we persistently invested in the future throughout the year. A central focus was placed on enhancing our digital capabilities to better serve our customers.. We also introduced innovative products and solutions crafted to assist our customers in seamlessly meeting their banking needs,” Al-Sager confirmed.
He emphasized that throughout the year, NBK maintained a steadfast focus on positioning its customers at the core of its priorities, supporting their financial goals through the provision of innovative digital services and products. Notably, the bank garnered several prestigious accolades during the year, including the recognition for being the most innovative bank worldwide in delivering digital banking services by Global Finance Magazine.
“As we navigate the opportunities and challenges that the year 2024 may present, our commitment remains unwavering in maintaining a focus on profitability, capital robustness and sustainable growth. We also acknowledge the importance of closely monitoring various challenges, particularly the escalating geopolitical tensions. Consequently, we approach the future with a sense of caution, mindful of the potential impacts on the operational environment in the region,” Al-Sager said.
He highlighted that the Group, guided by a commitment to responsible leadership, has embraced a new trajectory for its ESG strategy through the formal adoption of a framework for ESG standards. This commitment is evident in the integration of ESG principles into products and services, including offerings such as green mortgage loans, consumer loans for electric cars, eco-friendly housing loans and sustainable finance value propositions.
In addition to that, NBK is committed to reducing its total operational emissions by 25% by 2025 and strives to achieve net-zero operationally by 2035. These efforts are integral to the Bank's comprehensive plans to attain carbon neutrality by 2060. These initiatives have played a role in improving NBK’s MSCI ESG ratings to BBB, in their 2023 review.