KUWAIT: Nasser Musaed Al-Sayer, Chairman of the National Bank of Kuwait said:” NBK has maintained its leadership position in the banking sector in 2016 through its strong performance and exceptional results, as the bank constituted 40 percent of the banking sector’s aggregate profits, positioning it to be the most profitable among Kuwaiti companies and one of the highest amongst all Arab banks.
This took place during National Bank of Kuwait’s Ordinary and Extraordinary General Assembly meeting for the year 2016, which was held yesterday with a quorum of 79.52 percent. NBK’s AGM and EGM approved the Board of Directors’ recommendations to distribute a cash dividend equivalent to 30 percent of the nominal value of the share (30 fils per share) and 5 percent bonus shares (5 shares for every 100 shares) to shareholders.
Al-Sayer added that NBK has continued its exceptional financial performance during 2016, reporting KD295.2 million in net profits, up by 4.6 percent y-o-y. He explained that after adjusting for a one-off gain in respect to NBK’s exiting its investment in International Bank of Qatar (IBQ) in 2015, the net profits for 2016 represent an 11.2 percent increase y-o-y, once again reaffirming the success of NBK’s conservative strategy and its prudent risk management, as well as its commitment to the highest standards across all business lines.
Al-Sayer indicated that the bank has continued to implement its successful strategy aiming at reinforcing its leadership position in the banking sector, thanks to its strong financial position and its deep understanding of customers’ needs. This allows NBK to continuously offer innovative and diverse products, thus strengthening its leadership position in the local market. NBK also managed to maintain its prominent role in leading and financing large development projects.
He added that acquiring a stake in its Islamic subsidiary Boubyan Bank has reinforced NBK’s strategy aiming at diversifying income sources, as well as the services the bank offers its customers, in addition to expanding its client base. He emphasized on NBK’s commitment to support Boubyan Bank and to strengthen its position in the Islamic Banking market, while maintaining its independence at the same time.
On the regional front, Al-Sayer mentioned that despite the recent developments in the region, and the persistence of several operational challenges in various regional markets, NBK continued to focus on supporting the full integration of its international operations. This led to an increased contribution from subsidiaries and international branches towards the overall profits of the Group, thus reflecting the strength of our reputation and brand name across the region and worldwide.
He pointed out that NBK has always been the bank of choice for local and international corporations operating in the region, thanks to its in-depth knowledge of the regional markets, its strong financial position, and its prestigious reputation over the years.
Meanwhile, Isam Jasim Al-Sager, Group Chief Executive Officer said: “NBK continued its solid performance and achieved a 4.6 percent growth in its net profits in 2016 y-o-y, reaching KD295.2 million. NBK’s 2016 net profits jumps by 11.2 percent after excluding the one-off gain in respects to the NBK’s exiting its investment in IBQ in 2015.
He added that on similarly adjusted basis, the Group’s net operating income grew by 5.4 percent year-on-year to KD745.3 million. He also pointed out that the growth in Operating Income is primarily driven by higher Net Interest Income.
As for the bank’s operating performance, Al-Sager pointed out that the Net Interest Income and Net Income from Islamic Financing reached KD570 million in 2016, up from KD530 million in 2016 (7.5 percent year-on-year). Net Fees and Commissions also grew by 2.3 percent in 2016, reaching KD133 million.
Al-Sager carried on saying that NBK is keen on continuously enhancing its asset quality ratios, with NPL’s/Gross loans ratio at 1.28 percent by the end of 2016, down from 1.34 percent in 2015, and NPL coverage of 365 percent in 2016, compared with 322 percent in 2015.
Al-Sager pointed out that the growth in deposits reflects the Group’s strong brand name and its ability to attract depositors across all markets. Customers Deposits increased by 4.6 percent in 2016, reaching KD12.6 billion, up from KD12.05 billion in 2015. He explained that Loans, advances and Islamic financing to customers stood at KD13.6 billion, changing marginally from last year’s level, due to larger-than-usual loan settlements, in addition to the free floatation of the Egyptian currency, resulting in a decline in the value of assets and liabilities of NBK Egypt (NBKE) when converted to Kuwaiti dinars for Group consolidation purposes.
Al-Sager indicated that NBK has always maintained high levels of capital adequacy, with a capital adequacy ratio of 17.7 percent by the end of 2016, in accordance to Basel III framework, and exceeding the regulatory requirements. He also pointed out that NBK has always kept healthy capitalization ratios, through the implementation of Basel III capital adequacy framework and CBK’s requirements. NBK increased its capital base in 2016 through a 6.5 percent rights issue
Highest credit ratings and the safest bank
Al-Sager confirmed that despite the challenging operational environment, NBK continued to distinguish itself and maintained its leading position in the banking sector, as depicted in the bank’s high credit ratings from the leading agencies worldwide, like Moody’s, S&P, and Fitch, thus positioning NBK as one of the top-rated banks not only in the Middle East, but also worldwide.
Al-Sager explained that the consensus of those renowned credit rating agencies reflects the strong financial indicators of the bank, its high asset quality, strong capitalization, and its clear strategic direction. He also referred to NBK’s ability to continuously upkeep its prestigious reputation over the years thought its designation as the only Kuwaiti bank listed amongst the top safest 50 banks worldwide for the 11th consecutive time.
In the meantime, Shaikha Khaled Al-Bahar, Deputy Group Chief Executive Officer said: “Despite the recent drop in oil prices, we still have a very optimistic outlook for the local economy, thanks to Kuwait’s strong financial position, its huge surplus, low sovereign debt, and its capability to issue debt instruments which ensures the stability of the country’s financial policy. Al-Bahar confirmed that the impact of the continuous drop in oil prices is still limited to the operating environment in Kuwait, as the government constantly confirmed its intentions to continue its capital spending program and to invest in mega development projects.
Al-Bahar pointed out that 2016 has witnessed a continuation of the government efforts in tendering and executing a number of development projects, with over $10 billion in investment expenditures within the government’s development plan aiming to stimulate the business environment. This reflected positively on the local economic activities and credit growth.
She also pointed out to NBK’s prominent leading position which allows it to capture growth opportunities presented by such projects, as it played a major role in financing and arranging for credit facilities related to some of the largest governmental projects, including the development of Terminal (2) as part of Kuwait International Airport’s expansion plan, valued at KD1.3 billion and Kuwait National Petroleum Company’s project to build the liquefied natural gas (LNG) import and regasification terminal for $2.9 billion.
She indicated that NBK continued its strategy aimed to diversify the sources of its income, to support the bank’s financial position and its ability to face market volatilities. It is worth noting that consumer and private banking contributed 33 percent of the total operating income, while contribution from Corporate Banking stood at 23 percent, Islamic Financing at 14 percent, International operations 25 percent and Investment Banking at 3 percent.
As for the diversification of operating income sources, Al-Bahar said:” Net Interest Income constituted 76 percent of the total Operating Income, while fees and commissions were 18 percent and gains from foreign currency contribution was 5 percent.
On the international operations front, Al-Bahar said: “NBK’s international branches and subsidiaries continue their solid performance, in a testament to our successful strategy aiming at diversifying the sources of income and our continuous pursuit to strengthen our position in the markets where we currently operate”.
She also pointed out that despite the existence of some operational challenges in several markets due to the decline of oil prices, NBK’s operations in GCC markets, especially Saudi Arabia and UAE, have shown strong resilience towards those repercussions and proved outstanding capability to capitalize on the growth opportunities those markets present.
Within the same context, Al-Bahar mentioned that following the implementation of the transition strategy at the beginning of 2015, NBK-Egypt (NBKE) managed to report remarkable growth in 2016. This growth helped the bank offset the drop in the Egyptian pound value post the currency free floatation. NBKE is expected to continue to grow positively benefiting from the stabilization of the country’s political environment and its economic reform program. The Group will continue to consider Egypt as a promising and strategic market in the long term.
Al-Bahar noted that NBK continued its presence in the international markets through its wide international network spanning over 4 continents and providing banking services in 15 regional and international market. She confirmed that NBK’s International Operations continues to grow, reflecting NBK’s strong reputation and brand name.
Best financial indicators
Salah Y. Al-Fulaij, Chief Executive Officer – Kuwait, indicated that NBK’s strength across all financial indicators confirms its leadership position amongst all local banks.
Al-Fulaji highlighted that NBK has confirmed its leadership as the most profitable and best performing bank with its increased profits compared to its peers. NBK also has the best financial indicators across the Kuwaiti banking sector. He added that NBK counted for 40 percent of the total banking profits in 2016 and 45 percent of the banking system total distributions in 2016.
Leading development projects
On another topic, Al-Fulaij indicated that NBK is the largest financial institution in Kuwait, with over KD24.2 billion in assets as of year-end 2016, far ahead of its rivals, and is considered one of the few banks in the region that has the capacity to lead and finance mega projects and transactions.
He pointed out that NBK enjoys supremacy as the bank of choice for major local and regional corporations seeking to expand, as it played a leading role in the financing required to meet their needs.
On the oil and gas front, Al-Fulaij mentioned that NBK was mandated to lead a consortium of banks to provide the financing arrangement to a number of mega projects, including Kuwait National Petroleum Company’s (KNPC) Clean Fuels Project (CFP), which is considered the largest Kuwaiti Dinar syndicated financing ever in Kuwait’s history. NBK also extended a credit facility to EQUATE Petrochemical Company to acquire ME Global to become one of the largest petrochemical producers worldwide.
He added that NBK has also extended a $280 million credit facility to Kuwait Styrene Company, the largest bank contributing in EQUATE’s global bond issue, and acted as the mandated lead arranger and underwriter of KNPC’s Clean Fuel project.
Al-Fulaij also mentioned that NBK succeeded in providing credit facilities to KNPC through a number of local banks, as well as extending credit facilities to EQUATE Petrochemicals Company through a number of local, regional, and international lenders.
Az-Zour power plant
He added that the first phase of Az-Zour North Independent Water and Power Project (IWPP) was completed in 2016. This project is the first to be implemented under the public and private partnership program. NBK was one of the largest participating banks, and the only local bank within the international consortium of banks mandated to arrange the credit facility. NBK also acted as account bank and local security agent for the project.
Human resources development
On a different note, Al-Fulaij indicated that NBK is proud to be the largest institution in Kuwait in terms of hiring Kuwaiti nationals, as the bank boosted its investment in the human resources development by hiring 311 new employees in 2016, including 279 Kuwaitis, thus bringing our Kuwaitization ratio to 66.4 percent, up from 66.1 percent in the corresponding period of last year. In addition to that, we announced 81 internal job opportunities to the bank’s employees to enable them to move between various departments during 2016.
Al-Fulaij added that the Group’s Human Resources Department provided around 2,370 training opportunities in 2016, out of which 75 percent were targeted to new employees, whereas around 57 percent of the training programs were directed towards specialized and technical skills.
Al-Sayer said that NBK holds a firm commitment towards the society to which it belongs, which makes the bank one of the largest contributors towards the development of the Kuwaiti society over the past decades, with a proven record of social initiatives across various domains and activities. NBK Children’s Hospital remains an icon of the Bank’s social contributions. The Bank continued with its commitments by establishing the first specialized center for marrow transplantation in Kuwait in the Children’s Hospital. Moreover, the Bank continued to support various charities and humanitarian organizations such as Bayt Abdullah for Children Hospice, Red Crescent and LOYAC.
He pointed out to NBK’s continuous contributions through support and assistance activities aimed at protecting and preserving the environment, in addition to educational and sports activities including NBK’s annual Walkathon, and its annual Ramadan Iftar Campaign.
Thanks and appreciation
Al-Sayer extend his sincere thanks and appreciation to His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, His Highness the Crown Prince, the Kuwaiti government, and the kind people of Kuwait. He also praised the efforts of official and governmental authorities, especially the Central Bank of Kuwait (CBK), for their continued support towards the stabilization and growth of Kuwait’s economy.
He also extended his heartfelt gratitude towards shareholders and customers for their continued support and belief in NBK as the leading Kuwaiti bank and the top financial institution in the region. Al-Sayer also praised NBK’s employees, led by executive management, for their huge efforts and contributions towards the continuous promotion of the bank and its financial results, promising to keep up NBK’s prominent leadership.