Kuwait: NBK Reports KD 431.1 Million in Net Profit for 9M202317.10.2023
National Bank of Kuwait (NBK) has announced its financial results for the nine-month period ended 30 September 2023.The Bank reported a net profit of KD 431.1 million (USD 1.4 billion), compared to KD 374.2 million (USD 1.2 billion) for the corresponding period in 2022, improving by 15.2% year-on-year.
In the three-month period ended September 30, 2023, NBK achieved a net profit of KD 155.8 million (USD 504.1 million), demonstrating an annual growth rate of 14.2%.
Total assets as of the end of September 2023 grew by 6.1% year-on-year to reach KD 36.8 billion (USD 119.2 billion), whereas total loans and advances increased by 5.8% year-on-year to KD 21.8 billion (USD 70.5 billion), while total shareholders’ equity reached KD 3.8 billion (USD 12.1 billion), growing by 7.4% year-on-year.
Commenting on the bank’s 9M2023 financial results, Hamad Al-Bahar, NBK Group Chairman, said: "We are delighted by the continuous growth in our profits, as it extends from our strong financial performance. This success primarily stems from our core banking activities, demonstrating our solid financial standing, the resilience of our business model, and its ability to generate positive results in diverse economic conditions and cycles”.
"Our prudent approach in diversifying revenue streams and making substantial investments, which have upheld our leadership in digital service provision, further strengthen the robust foundations upon which NBK stands. This approach drives us toward sustainable future growth and underscores our dedication to optimizing value for our shareholders," Al-Baher added.
Furthermore, Al-Bahar highlighted that the commitment to maximizing value extends to encompass all stakeholders. He affirmed NBK's dedication to meeting its social responsibilities, supporting the country's development initiatives and projects, providing innovative and exceptional services to customers, nurturing the growth of local talent, and strengthening reliance on local suppliers.
Al-Bahar concluded his remarks by underlining the ongoing commitment to responsible growth, with a significant focus on adhering to environmental, social, and corporate governance (ESG). He also reaffirmed NBK's unwavering dedication to maintaining responsible banking standards not only in Kuwait but also throughout the region.
Meanwhile, Mr. Isam J. Al-Sager, NBK Group Vice Chairman and CEO, said: “We are delighted to announce robust profits for the first nine months of 2023. This achievement aligns with our ongoing progress towards attaining our strategic objectives, further solidifying our leadership position and bolstering NBK’s prospects for future growth, all while emphasizing our commitment to sustainable and diversified sources of revenue.
Al-Sager envisions that NBK's profitability will continue to rise in the future. This growth is bolstered by the bank's robust balance sheet, healthy liquidity levels, and substantial capitalization. Furthermore, the careful strategy NBK employs in diversifying revenue streams and managing risks will be instrumental in further strengthening this positive outlook.
“All major business sectors sustained their growth momentum, resulting in a year-on-year increase in net operating income 15.6% to KD 863.8 million. This growth was underpinned by the expansion of net interest income, as well as income derived from fees and commissions,” Al-Sager added.
Al-Sager highlighted that confidence in the operating environment continued to rise during the third quarter. This optimism was particularly boosted by the government's unveiling of a comprehensive work plan, featuring ambitious development strategies and projects, with a strong emphasis on private sector participation. This favorable backdrop is expected to stimulate business activity in the future.
“We remain cautious on the operating environment as we monitor how the recent geopolitical tensions will evolve and their impact on the business sentiment.” Al-Sager added
Al-Sager also explained that the growth in profitability aligns with the strengthening of NBK’s financial position. This is evident through the consistent growth in the loan portfolio, customer deposits, and total assets, all while maintaining a high level of asset quality, thanks to NBK's prudent risk management policy.
“The contribution of our International Banking Group and our Islamic banking division, Boubyan Bank, in driving profit growth underscores our forward-looking vision and the success of our diversification strategy. This emphasizes NBK's continued dedication to increasing its presence in local markets and capitalizing on growth opportunities in the markets where it operates,” Al-Sager added.
“We remain committed to making strategic investments aimed at further strengthening our leadership in delivering digital banking services. This plays a pivotal role in maintaining our dominant market share in Kuwait and extending our reach to various customer segments, particularly the younger demographic. Furthermore, these investments align with our expansion goals for our international branches and subsidiaries in the markets where NBK operates,” Al-Sager confirmed.
Al-Sager emphasized the current focus on enhancing reliance on big data analytics, Artificial Intelligence (AI), and machine learning. This strategic focus aims to fully leverage the bank's substantial technological infrastructure and enhance the digital banking experience for NBK customers.
“We have made significant advancements in offering responsible banking services to our customers in line with our strategy to incorporate ESG practices and initiatives across all the Group's operations and activities. Additionally, we have introduced services and products to support our customers' efforts in advancing their green transformation initiatives,” Al-Sager noted.
Al-Sager concluded by highlighting that NBK continues to set a leading example for all private sector institutions by prioritizing social responsibility. This commitment reflects a strong belief in the significance of such endeavors in driving forward the journey toward sustainable growth.
Kuwait: Al-Bahar: We are Optimistic for More Political Stability, Promoting Business Environment in Kuwait06.02.2024
In 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 202301.02.2024
National 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.