ShareKUWAIT: Shaikha Al-Bahar, Deputy Group CEO of National Bank of Kuwait (NBK) said that the outstanding bottom line growth for the first half of 2023 was mainly driven by higher core banking income, as the bank continued to deliver very strong profitability trends, both for the quarter and year-to-date figures. On the sidelines of the Analyst Conference for the results of 1H 2023, Al-Bahar added, “We continued to deliver very strong trends operationally, with our revenue growth surpassing the increase in our operating expenses and hence delivering very solid growth in our pre-provision income to reach KD 359.2 million, growing by 23.1 percent year on year.
NBK’s strong operating performance has resulted in the Bank reporting the highest quarterly profit to date.” “Our focus remains on creating shareholders value as evident in the constant and fundamental improvement in our profitability ratios with return on average assets of 1.53 percent and return on average equity of 15.2 percent,” she noted. Strategic pillars Al-Bahar mentioned, “NBK continued to deliver on its key strategic pillars focusing on diversification and defending our market share. We continued to be competitive in the local market and the bank of choice whether for retail & high net worth clients, domestic and foreign corporates or institutions.”
Shaikha Al-Bahar“Internationally, we remained focused on establishing a network for our clients in key priority markets; working on growing the business in the Egyptian, UAE and Saudi markets while consolidating a leading position as a regional player in the area of wealth management,” she added. Investment in technology “The Bank looks forward to continue building and investing in technology and digital platforms. This will help us operate more efficiently and grow in key areas and markets, in order to achieve all stakeholders’ aspirations. The Bank is putting significant emphasis on innovation as a key driver for future growth,” Al-Bahar said.
On another front, Al-Bahar mentioned that NBK continues to integrate critical ESG issues into its business, culture and operations, creating meaningful change, and driving continuous improvement to ESG policies and disclosures to secure a more sustainable future. “The Bank focuses on four key pillars that shapes its updated sustainability strategy; Responsible Banking, Capitalizing on our capabilities, investing in our communities and Governance for Resilience. We view our ongoing sustainability journey as integral to improving business performance and increasing our positive impact in the world,” she indicated. “We have just released our 2022 sustainability report, which focuses on these four pillars of our ESG strategy.
Additionally and for the first, the report has received third party assurance on aligning with global GHG protocol as well for aligning with GRI reporting principles,” she added. On the expectations for economic rebound in 2024, and if NBK may benefit from any key growth drivers more than peers, Al-Bahar said, “The government submitted the 4-year plan to the Parliament, and the plan includes 5 main pillars namely ensuring public finance stability, economic development, job creation, welfare sustainability and productive government.” “This will create opportunities for banks to get involved in the mega projects, by financing projects and NBK has the experience, as we have a specialized group dealing with all models of projects like PPP, BOT and so on.
So, definitely we will benefit a lot from such ambitious plan from the government,” she noted. “Creating jobs, this means we will see more and more of Kuwaitis in the work market so this will create opportunities for our consumer business and hopefully when they will approve the mortgage law will create opportunities as well,” she added. Stable operating environment On his part, Sujit Ronghe, Group CFO commented: “The results for the first half reflect a solid operating performance by the Group and demonstrate the continued growth in our businesses.” “The benefit of increased benchmark interest rates, a strong operating performance combined with a healthy balance sheet, comfortable liquidity levels and a strong capital base were features of NBK’s 1H23 results,” he pointed out.
“The higher interest rate regime and an overall stable operating environment in Kuwait have benefitted the Bank during 1H23. Inflationary conditions in USA and some other advanced economies have started to wane and with that, the risk of a possible recession. We are cautiously optimistic that the overall operating environment will remain stable during upcoming quarters,” he elaborated. Ronghe mentioned that the Group reported a loan growth of 2.7 percent during 1H23. “Given the current local, political and the general macroeconomic situation, we are expecting the overall loan growth for 2023 to be in mid-single digit range. An improvement in overall operating environment will be a positive to loan growth.”
“1H23 NIM has improved to 2.52 percent benefiting from higher interest rates and stronger volumes compared to the last year,” he said. “The general expectation is that US benchmark interest rates will probably increase by 25bps, before beginning to plateau. That said the extent and timing of changes to local interest rates remains uncertain. We should also expect increasing competition and the funding cost to remain high, despite Group’s healthy overall funding mix. Our guidance is for an expansion in NIM compared to 2022 and we expect the full year 2023 NIM to remain broadly similar to 1H23, with a potential for a small upside,” he explained.
“Our operations in Egypt continued to deliver very strong bottom line performance and asset growth in the local context. In the first quarter, Egypt has delivered a profit growth of 87 percent and 36 percent YoY growth in assets,” Ronghe said. “Our Egyptian loan book has been stable over the years and we have not witnessed specific signs of deterioration in credit quality. NPL ratio remains low and comparable to levels similar to the last couple of years. As such, from an Egyptian operational view, we do not have specific concerns with respect to credit quality at this stage,” he noted.
