Board proposes cash dividends of 30 fils per share and 5% bonus shares

Nasser Musaed Al-Sayer and Isam Al-Sager

KUWAIT: National Bank of Kuwait (NBK) reported net profits of KD 322.4 million ($1,068.3 million) for the year 2017 compared with KD 295.2 million ($978.2 million) in 2016, growing 9.2 percent year-on-year.

Total assets as of year-end 2017 reached KD 26.0 billion ($86.3 billion) up 7.4 percent compared to year-end 2016, while total shareholders' equity increased by 5.0 percent to KD 2.9 billion ($9.5 billion). Customer loans and advances reached KD 14.5 billion ($48.1 billion) as of year-end 2017, 6.5 percent up from last year's levels. Customer deposits grew by 9.3 percent year-on-year to reach KD 13.8 billion ($45.7 billion) as of year-end 2017.

Asset quality metrics remained strong with NPL/Gross Loans ratio at 1.42 percent as of year-end 2017, and NPL coverage ratio at 287 percent; reflecting NBK's resilient risk management approach.

NBK Board of Directors has proposed the distribution of 30 fils per share cash dividend, representing 30 percent of the nominal share value. The board has also proposed the distribution of a 5 percent bonus shares (5 shares for every 100 shares) for the year 2017.

Nasser Al-Sayer, NBK Group Chairman said "NBK recorded promising performance in 2017 demonstrating the resilience, quality and diversity of earnings in a globally challenging operating environment. The Group maintained its leadership in Kuwait while successfully strengthened synergies between its international operations to deliver an ultimate customer experience".

"The Group's net operating income grew by 10.4 percent year-on-year to KD 822.7 million ($2,726.3 million), primarily driven by core banking activities as business volumes continued to grow thus ensuring NBK's successful strategy implementation," Al-Sayer added.

Al-Sayer also added that "Credit growth in Kuwait remains solid supported by positive economic activity as the government's capital spending program remains intact. Kuwait's fiscal position is better than peers given the substantial buffers and strong sovereign ratings; creating room for acceleration in spending despite lower oil prices".

"The Group is committed to contributing positively to Kuwait's economic growth and remains fully supportive of the New Kuwait vision 2035. NBK's robust financial position, strong franchise, diversified business model in addition to its regional and global presence, has positioned the Bank as the country's foremost financial provider and the largest beneficiary of the growing government expenditure". "Additionally, and in line with our commitment to the economic development of Kuwait; NBK remains highly committed to its corporate social responsibly being consistently the largest contributor to the community year after year," Al-Sayer highlighted.

Isam Al-Sager, NBK's Group Chief Executive Officer said; "the solid results of NBK reflect a period of strong growth and robust operating performance. Given the Bank's adequate capitalization, stable funding and ample liquidity conditions; NBK continues to benefit from emerging opportunities locally and regionally, affirming the Bank's income diversification strategy and improved profitability trends".

"In the context of income diversification, NBK maintained its leadership position across business segments in Kuwait and further strengthened that position as Boubyan Bank continues to drive the growth on the Islamic Banking front. The acquisition of a 58.4 percent stake in Boubyan Bank in 2012 was a long-term strategic move by NBK. We continue to see very positive momentum at Boubyan Bank, which contributed around 14 percent of the Group's profits in 2017."

"On the other hand, NBK's International operations remained highly profitable contributing 28 percent of the Group's total profits. Our regional and international growth strategies continued to focus on Egypt and GCC countries while the improved synergies across other locations increases opportunities of cross selling and business optimization, which all supports more diversified assets, client base and income streams". "During the year, we transformed our representative office in China to a branch and received SAMA approval to open two new branches in Saudi Arabia", Al-Sager added.

In 2017, NBK issued $750 million, 5-year senior unsecured debt in May as part of a $3.0 billion Global Medium Term Notes (GMTN) program. Being three times oversubscribed, the issuance attracted sizable demand, especially from US investors. The issuance was priced at 29 bp above the yield on the respective Kuwait sovereign bond, the tightest spread amongst our regional peers. The issuance comes in line with the Bank's strategy of enhancing its funding profile by diversifying the funding sources and extending the liabilities' duration.

The Group maintained strong levels of capitalization throughout the year. As of end-December 2017, NBK's capital adequacy ratio (CAR) reached 17.8 percent, comfortably exceeding regulatory requirements.

NBK continues to enjoy collectively one of the highest ratings among all banks in the Middle East from the three international rating agencies Moody's, Fitch Ratings and Standard and Poor's. The Bank's ratings are supported by its high capitalization, prudent lending policies, and its disciplined approach to risk management, in addition to its highly recognized and very stable management team. NBK was also named among Global Finance's list of the 50 safest banks in the world for twelve consecutive times and was awarded as the Best Bank in Kuwait in 2017 by the Banker, Euromoney and Global Finance.

NBK enjoys the widest banking presence with a local and international network reaching 4 continents. NBK's international presence spans many of the world's leading financial centers including New York, Europe, Singapore and China; in addition to its presence in MENA.