ShareKUWAIT: Isam Al-Sager, the Vice Chairman and Group CEO of National Bank of Kuwait (NBK), said, “NBK continues to prove its resilience against shifting operating conditions, its prudent approach to risk management and its ability to sustain growth from diversified income streams.” On the sidelines of the Analyst Conference for the results of 9M 2024, Al-Sager added, “We reported net profits of KD 457 million for the nine months of the year; growing by 6 percent on an annual basis. As for the three months ended September 2024, net profits reached KD 164.6 million; posting a growth of 5.7 percent year-on-year.
“Our diversified business portfolio across geographies and business segments has further driven growth while capturing opportunities even in volatile market conditions. We achieved growth of 7.8 percent year-on-year in net operating income to reach KD 931.0 million for the nine months period,” he noted.
Digital excellence
Al-Sager mentioned, “In line with the evolving needs of our clients, we continue to excel in digital innovation and deliver a holistic banking experience that reflects positively on operational efficiency while reinforcing our commitment towards long-term value creation to both stakeholders and customer. Accordingly, our return on average assets for the reporting period reached 1.60 percent whereas our return on average equity reached 15.4 percent.”
“Our strategic initiatives continue to contribute to the leadership position that the Bank is recognized for in Kuwait. We will continue advancing our technological and digital investments and growing our products and services portfolio in the market. Furthermore, by deepening the relationships with existing clients and actively seeking new business opportunities, we will endorse the Group as a trusted financial partner,” he explained. “Moreover, we will remain focused on leveraging our unique competitive advantage domestically, as the only bank in Kuwait with access to both conventional and Islamic banking markets. Our subsidiary Boubyan Bank continues to support the Group in diversifying our client base and income streams.
Meanwhile, NBK wealth will solidify its proposition and offering best-in-class wealth management experience in the market. Similarly, our international operations remain vital for the Bank’s stability and growth prospects,” he continued.
Robust governance
Al-Sager pointed out, “At NBK, ESG principles remain a cornerstone of our operations and lending philosophy. Our robust governance framework is central to every strategic decision that we continue or intend to make. This affirms our dedication to ESG stewardship, our commitment to transition to a low-carbon economy and our carbon neutrality pledge.”
Saudi market
On a question about NBK’s strategy in Saudi Arabia, Al-Sager said, “Our strategy in Saudi Arabia is to increase our presence in the wealth management business through NBK Wealth. This is in line with the focus on increasing wealth management offerings to private banking customers beyond Kuwait and Saudi is a key growth market for us.” “With respect to corporate banking, we continue to provide credit facilities and other trade finance services to different companies in Saudi Arabia - some GREs while others are high-quality corporates. We of course maintain our conservative approach to credit, which has resulted in a sound credit quality and lower NPLs for the Group,” he added.
Economic conditions
Commenting on local economic conditions, Al-Sager said, “In Kuwait, economic indicators point to subdued pace of growth but not far from a rebound. Latest provisional data showed that non-oil GDP grew modestly in 2Q-2024. Meanwhile, oil GDP contracted on lower crude production.” “Inflation on the other hand softened marginally to 2.9 percent as of August-2024 and expected to continue to trend lower to remain on track for an average annual rate of 3.0 percent compared to 3.6 percent recorded in 2023.” “On a positive note, project activity maintained its momentum and remained solid in 3Q 2024 with the power and water sector constituting three quarters of the value awarded during the period. Activity is likely to pick up for the remainder of the year, in line with government development plan priorities with around KD 3.3 billion worth of awards penciled for next couple of quarters,” he clarified.
Mortgage law
On a question about the mortgage law, Al-Sager said, “The previous parliament pencilled various housing-related laws and initiatives that position the law closer to getting passed; minding that the political scene has changed in the meantime. Given the growing number of housing applications which reached 97.6 thousand as of September 2024, there is an increased likelihood that the law will be passed to address this financing mechanism issue going forward. Looking at the political scene recently in Kuwait, there is no solution other than passing the law and the sooner it does the better.”
“In the GCC region, performance across markets witnessed relatively positive economic developments with strong non-oil growth amid looming uncertainties. On the other hand, the challenging geopolitical scene and oil price volatility will continue to have an economic impact on GCC economies.” “On a global scale, uncertainty continues to shadow the economic outlook as major central banks shift their attention from rising prices and inflation towards potential recession challenges. The sluggish demand and increased geopolitical tensions added to the uncertainty of the outlook,” he added.
Strong operating performance
On his part, Sujit Ronghe, Group CFO of National Bank of Kuwait commented, “Our results for 9M2024 stem from a strong operating performance by the Group and demonstrate the continued growth in our business. The higher interest rate regime for a significant part of the reporting period and an overall stable operating environment in Kuwait have generally benefitted the bank.”
“The Group’s Balance Sheet remains strong with a stable credit quality. NBK’s capital base along with the ability to generate healthy operating profits provides a strong credit loss-absorption capacity,” he added. “Average earning assets grew by KD 1.8bn i.e. 5.2 percent over September 2023, to reach KD 36.4 billion. NBK’s focus on digital channels and product offerings continues to play a vital role in attracting and servicing customers, with increased volume of electronic transactions. We also continue to press ahead with selective product offerings in certain geographies e.g. through our global wealth management business i.e. NBK Wealth, Islamic banking through Boubyan Bank and by further leveraging our overseas network.” Ronghe mentioned that NBK’s Consumer Banking contributed 20 percent and 17 percent to the Group’s net operating income and profit respectively. Similarly, Corporate Banking contributed 13 percent and 19 percent to the Group’s net operating income and profit,” he added.
International operations
“International Banking contributed 24 percent to net operating income and 23 percent to the Group’s profit, reflecting a strong operating performance. The Group’s Islamic banking subsidiary, Boubyan Bank, delivered a net profit of KD 73.5 million, up 20.3 percent on 9M 2023. International Banking and Boubyan Bank contributed 42 percent and 23 percent, respectively, to Group’s total assets reinforcing the Group’s diversification strategy,” Ronghe said. “NBK Wealth contributed to 10 percent and 11 percent of the Group’s operating income and profit respectively. NBK Wealth provides asset management, brokerage, lending, deposits and other customized and innovative offerings to high-net-worth individuals and institutional clients, further advancing the Group’s diversification agenda,” he added.
Operating environment
On the operating outlook for the coming period, Ronghe said, “In light of the ongoing regional and international geopolitics, we remain cautiously optimistic that the overall operating environment, although challenging, will remain generally stable in the coming quarter. As regards loan growth, given the current geo-political and the general macroeconomic situation, we continue to expect the overall loan growth for 2024 to be in the mid-single digit range.”
“At the same time, we remain very optimistic that the significant project activity expected, would lead to first non-cash in the business i.e. guarantees, LC’s, etc. and later translate into loan growth,” he noted.
Saudi market
On a question about NBK’s strategy in Saudi Arabia, Ronghe said, “Our strategy in Saudi Arabia is to increase our presence in the wealth management business through NBK Wealth. This is in line with the focus on increasing wealth management offerings to private banking customers beyond Kuwait and Saudi is a key growth market for us. “With respect to corporate banking, we continue to provide credit facilities and other trade finance services to different companies in Saudi Arabia - some GREs while others are high-quality corporates. We of course maintain our conservative approach to credit, which has resulted in a sound credit quality and lower NPLs for the Group,” he added.
