Kuwait: NBK Reports KD 275.3 Million in Net Profit for 1H 202318.07.2023
National Bank of Kuwait (NBK) has released its financial results for the six-month period ended 30 June 2023. The Bank reported a net profit of KD 275.3 million (USD 896.7 million), recording a year-on-year growth of 15.8% compared to the same period in 2022, where it recorded KD 237.8 million (USD 774.6 million).
In the three-months period ended 30 June 2023, NBK achieved a net profit of KD 141.1 million (USD 459.7 million), reflecting a year-on-year growth rate of 16.4%.
Total assets as of the end of June 2023 grew by 5.3% year-on-year to reach KD 36.1 billion (USD 117.5 billion), whereas total loans and advances increased by 7.1% year-on-year to KD 21.6 billion (USD 70.2 billion), while total shareholders’ equity reached KD 3.6 billion (USD 11.7 billion), growing by 6.6% year-on-year.
NBK Board of Directors has resolved to distribute semi-annual cash dividends of 10 fils per share for the period ended 30 June 2023 representing 10% of the nominal value of the shares.
Commenting on the bank’s 1H2023 financial results, Hamad Al-Bahar, NBK Group Chairman, said: “NBK delivered robust financial results in the first half of 2023. Our performance during that period reflects the great value derived from our diversified business portfolio and the resilience demonstrated by our balance sheet. It further reinforces our dedication to delivering sustainable and long-term added value to our customers, communities, and shareholders”.
“In the face of a challenging global economic landscape, we demonstrate our resilience and strength through our growth strategy, prudent risk and capital management, and diverse business portfolio,” Al-Bahar added.
Furthermore, Al-Bahar highlighted that NBK is reaping the benefits of its strategic investments in technology and its people, expressing his unwavering confidence in the bank's ability to continue its successful path, effectively addressing the growing needs of its customers, and achieving accomplishments that cater to their increasing demands.
“Our dedication to fostering customer loyalty, community contributions, and upholding the highest sustainability standards, strengthens our position as a regional leading bank. Moreover, it facilitates long-term growth opportunities,” Al-Bahar stated.
Meanwhile, Mr. Isam J. Al-Sager, NBK Group Vice Chairman and CEO, said: “In the first half of 2023, we demonstrated our commitment to our shareholder-focused strategy by successfully achieving strong profits and maximizing returns”.
Al-Sager highlighted that the sentiment in the operating environment in Kuwait is gradually improving following the election of the new parliament. He also expressed his optimism that this could result in improved momentum in the operational environment during the second half of the year.
Furthermore, he emphasized the exceptional performance of NBK's core business activities during the reporting period, building upon the continued positive performance achieved since the beginning of the year.
“Thanks to substantial growth in net interest income and net fees and commissions, the net operating income experienced a notable increase of 18.8% in the first half of 2023, reaching KD 565.9 million,” Al-Sager stated.
“Leveraging its robust foundation and a proven track record of maintaining resilient financial performance in various scenarios, NBK is well-positioned to provide its customers with comprehensive and tailored services from professional financial advice, to all products and services they require. Furthermore, the bank is dedicated to advancing its innovative digital experiences, distinguishing itself from competitors, and creating long-term value for its shareholders,” Al-Sager explained.
He highlighted the significance of strong business growth, robust liquidity, and prudent levels of asset quality as factors that will continue to drive profit growth throughout 2023. Furthermore, he emphasized that these factors have also empowered the bank to successfully navigate substantial challenges within the global banking industry.
“The first six months of the year witnessed NBK’s unwavering commitment in executing its strategic priorities and initiatives, resulting in notable revenue growth and strong operational performance. Additionally, significant milestones were achieved in the bank's digital transformation journey, bolstering relationships with existing customers and attracting new ones,” Al-Sager noted.
Furthermore, Al-Sager expressed the bank's pride in being awarded the “Best Bank for Corporate Responsibility in the Middle East” by Euromoney Awards for Excellence 2023. He also highlighted NBK’s advancements in digital innovation, initiatives for women's empowerment, sustainable development of resources and talent. These achievements are the results of the diligent efforts of the bank's employees in creating a unique customer experience and executing the bank's strategic priorities.
“In its pursuit to become the leading partner for customers and the community, NBK has unveiled its strong commitment to business practices and sustainable financing activities, including dedicated efforts towards achieving carbon neutrality. In alignment with these endeavors, NBK has recently re-envisioned the ESG strategy, with a focus on integrating its pillars throughout the group's operations and various activities. The bank has also published its Sustainability Report 2022, employing a new methodology and framework that effectively highlights the progress achieved in its initiatives. Additionally, NBK has organized training programs to equip employees with accredited certificates, ensuring that they possess the necessary knowledge and skills to fully understand the standards established by the Global Reporting Initiative (GRI),” Al-Sager concluded.
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.