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Kuwait: NBK Successfully Redeems KD125 Million 2015 Subordinated Tier 2 Bonds and Issues KD150 Million 10NC5 Subordinated Tier 2 Bonds


The National Bank of Kuwait S.A.K.P. (“NBK” or the “Bank”) successfully closed its issuance of Basel III Compliant KD150 million 10NC5 Subordinated Tier 2 Bonds (the “Bonds” or the “Issuance”), rated Baa1 by Moody’s, on November 18, 2020. The Bonds replaced the Bank’s KD125 million Subordinated Tier 2 Bonds issued in 2015, which were redeemed on their first call date on November 18 2020 (the “Redeemed Bonds”). In addition to replacing the Redeemed Bonds, the Issuance will further enhance the Bank’s Tier 2 portion of its regulatory capital.

The 10-year non-callable 5-year Bonds will mature in 2030 and are equally allotted between a fixed rate and a floating rate tranche. The fixed rate tranche has a coupon of 4.75% per annum for the first five years, and will have a coupon of 3.25% over the prevailing CBK Discount Rate for the subsequent period. The floating rate tranche has a coupon of 3.00% over the CBK Discount Rate per annum, capped at 1.00% over the fixed rate tranche, and determined semi-annually. Both tranches have semi-annual coupon payments.

The subscription period for the Issuance lasted from 27 October 2020 to 11 November 2020, during which the Bonds attracted diverse and healthy demand from Institutional and Individual investors, reaching a peak orderbook of KD228.3 million (oversubscription of 1.52x) from more than 200 respective investors. Investors in the Redeemed Bonds had the option to rollover into the Bonds, which resulted in 39.7% of the value of the Redeemed Bonds being rolled-over.

The Issuance marks the first liability management transaction on a KD-denominated Basel III Compliant Tier 2 Bond issuance and the largest local bond issuance actively marketed to fixed income investors on a private placement basis, to date.

NBK appointed Watani Investment Company K.S.C.C. (NBK Capital), Gulf Bank K.S.C.P. (Gulf Bank), Kamco Investment Company K.S.C.P. (Kamco Invest) and Kuwaiti Financial Center K.P.S.C. (Markaz) as Joint Lead Managers for the Issuance.

NBK also priced an issuance of Regulation S US$300 million Resetting Subordinated Tier 2 notes due 2030 (the “Notes”) through its wholly owned DIFC prescribed company, NBK Tier 2 Limited. The Notes mark the first US$ Basel 3 compliant Tier 2 from Kuwait and were rated Baa1 by Moody’s. The Notes offer semi-annual coupon payments set at 2.50% per annum and have a reset date of 24 November 2025.

The transaction achieved a peak orderbook of over US$1.1 billion, translating to an oversubscription of over 3.6x, from more than 80 investors. The robust demand for the Notes allowed NBK to price the lowest Tier 2 coupon by a GCC bank and the 6th lowest coupon on a Tier 2 10NC5 globally at 2.50% (5-Year US Treasury rate + 210.8bps). The transaction achieved a diverse final allocation lead by UK investors at 42%, Asia at 27%, MENA at 14%, Europe at 12%, while US (Offshore) accounts made up 5%. Asset Managers dominated the placement, making up 82%, followed by Banks at 10%, then Insurance companies and Private Banking at 5% and 3% respectively.

NBK appointed Watani Investment Company K.S.C.C. (NBK Capital) and Citigroup Global Markets Limited as Global Coordinators and Joint Lead Managers.

The Notes will further boost NBK’s capital position, reasserting the buffer on the Bank’s capital adequacy ratios, in line with its historically conservative approach towards capital management.

The oversubscription for both issuances reflects the strong demand for NBK paper in the global markets and the Bank’s strong credit profile despite the challenging times. 

Kuwait: NBK Reports 2020 Net Profit of KD 246.3 million


National Bank of Kuwait (NBK) posted a net profit of KD 246.3 million (USD 812.3 million) for the year ended 31 December 2020, compared to KD 401.3 million (USD 1.3 billion) for the same period last year; dropping by 38.6% year-on-year.

As of end of December 2020, NBK’s total assets grew by 1.5% on annual basis, to reach KD 29.7 billion (USD 98.0 billion), while customer loans and advances grew by 5.7% compared to the same period last year, to reach KD 17.5 billion (USD 57.7 billion) while customers’ deposits grew by 7.4% to reach KD 17.1 billion (USD 56.4 billion).

NBK’s Board of Directors has proposed the distribution of a cash dividend of 20 fils per share, representing 55.6% of net profit, in addition to 5% bonus shares (5 shares for every 100 shares). The cash dividend and bonus shares, if approved by the shareholders’ general assembly, shall be payable to the shareholders after obtaining the necessary regulatory approvals. Earnings per share (EPS) stood at 32 fils, as compared to 57 fils in 2019, while shareholders’ equity stood at KD 3.2 billion (USD 10.5 billion)

Commenting on the Bank’s results, Mr. Nasser Al-Sayer, The Chairman of the Board of Directors of National Bank of Kuwait, said: “In a profoundly challenging year, NBK performed well and we are pleased with the results achieved by the Group in light of exceptionally challenging operating conditions.

This demonstrates the strength and resilience of our business model, the positive impact of our digital strategy and the dedication of our employees in performing their duties in such critical times.”

“The year 2020 was characterized by unprecedented challenges combined with a high level of uncertainty. NBK held up well in the face of extraordinary market conditions and clearly demonstrated its governance and prudent risk management. Furthermore, NBK reaffirmed its solid financial position alongside its commitment to supporting clients and the communities in which it operates.”

“Besides the growth in Islamic banking through our subsidiary, Boubyan Bank, remaining an important driver for earnings diversification, our international operations proved to play a vital role in mitigating risks and further diversifying our income streams.”

Al Sayer added: “The solid profits of the Bank and its strong capital base provided enough flexibility allowing for a sustained dividend policy despite the operational challenges. Throughout the year 2020, NBK boosted its capital levels by issuing KD subordinated Tier 2 bonds along with USD Tier 2 notes. The issuances being oversubscribed by 1.5x and 3.6x respectively were a testament to NBK’s strong credit profile.”

“Today, our main focus is to strength our operations in our international markets, leveraging the loyalty of our customers, while building a digitally driven culture to be fully prepared for the future.”

“Looking ahead, and although uncertainty continues to dominate the global macro scene, NBK is very well-prepared and positioned for different recovery scenarios, thanks to our flexible operational model and strong financial position.”

Al-Sayer concluded by extending his sincere appreciation to NBK employees for their devotion and commitment in supporting the bank’s customers with all their financial needs during these challenging times.
On his part, Mr. Isam Al-Sager, NBK Group CEO said: “Our 2020 profits is testimony to our dynamic business model and strategy, as well as our ability to adapt promptly to the adverse operating conditions that the pandemic imposed on us.”

Al-Sager highlighted that “the Bank has delivered good performance in 2020 considering the unprecedented operating environment that prevailed following the outbreak of COVID 19, along with the drop in oil prices and low interest rates.”

“The partial and full lockdown of activities that was introduced to limit the spread of the virus weighed heavily on businesses leading to a drop in transaction volumes. Our profitability was also negatively impacted by an increase in provisions that is mostly precautionary in nature as we maintain a conservative approach to risk”, Al-Sager pointed.

Al-Sager also highlighted that looking ahead, “The Group is moving rapidly to enhance fees and commission income streams and will stringently monitor costs, and this discipline has already enabled us to maintain operating expenses at an appropriate level. Moreover, NBK’s regional focus will be to grow organically in key markets, in particular Egypt and Saudi Arabia, where in the case of the former both the retail and wholesale markets offer compelling opportunities, while in KSA the Group’s wealth management proposition has strong momentum.”

Concluding his statements, Al-Sager said: “As we turn our attention to 2021, we have good reason to be confident in our future. We have created a strong position for ourselves through the strategic investments in our employees, operations and digital platforms”. In parallel, supported by a strong balance sheet, healthy asset quality and comfortable liquidity levels, we will be able to withstand the current crisis, and continue to deliver on our commitment towards all our stakeholders and returning to profitable growth”.