ShareKUWAIT: Al-Ahli Bank of Kuwait (ABK) recently hosted its 9-month 2024 analyst conference attended by Abdulla Al-Sumait, Acting Group Chief Executive Officer; Shiamak Soonawalla, Group Chief Finance Officer; Abdulaziz Jawad, Chief Strategy Officer; and Yaqoub Almulla, Senior Manager of Investor Relations.
Al-Sumait commenced by discussing the key financial achievements of this period, stating, “We have experienced a 19 percent increase in net profit attributable to shareholders, rising from KD 32.6 million in the first nine months of 2023 to KD 38.8 million in first 9 months in 2024. Moreover, Earnings Per Share have grown by 23 percent, rising from 13 fils to 16 fils, supported by a robust Capital Adequacy Ratio of 17 percent.”
In addition, during mid-September the Bank successfully issued Additional Tier 1 perpetual bonds with a value of $300 million at a fixed rate of 6.5 percent which was oversubscribed 4.5 times, demonstrating international investors’ confidence in ABK’s credit worthiness and performance. He added, “Our adaptability to the evolving economic landscape is reflected in our successful strategic execution, as evident in our KPIs. Over the last nine months, ABK has maintained positive momentum, as seen in our improved profitability and asset quality metrics, with a Non-Performing Loan Ratio of 1.30 percent displaying stability along with loan growth of 6 percent YoY.”
Goal development
The Bank is continuously advancing its strategic goals and sustaining excellence in digital transformation across all sectors. This is highlighted by a major overhaul and near completion of our mobile banking app to provide state-of-the-art services to our customers. Al-Sumait said, “Both our corporate and retail portfolios have grown significantly and are closely monitored using real-time data analytics.” He added, “Looking forward, ABK is well-prepared to capitalize on emerging growth opportunities by leveraging its financial robustness and customer-centric strategies. We remain committed to maintaining the highest standards of corporate governance and transparency, aiming for a positive outcome by the end of 2024.”
Financial indicators
On his part, Soonawalla disclosed, “Our Operating Income has grown by 11 percent, amounting to KD 150.8 million, while Operating Profit increased by 13 percent to KD 80.6 million. After the successful issuance of Tier 1 perpetual bonds (AT1) of $300 million, our Capital Adequacy Ratio has strengthened to 17 percent, comfortably above the regulatory benchmarks.”
In terms of asset quality, he was pleased to report, “Our Loan Loss Coverage Ratio is also impressive at 467 percent, reflecting our prudent provision strategies and solid credit practices. Additionally, as of September 2024, our provisions exceed IFRS requirements by KD 226 million, providing a substantial buffer against potential risks.” Soonawalla affirmed, “Profitability continues to be a priority, as indicated by our Net Interest Margin at 2.2 percent, an improvement from 2.1 percent in the previous year. Moreover, our Operating Profit to Average Assets Ratio increased by 11 basis points to 1.61 percent. These figures highlight the Group’s strong performance. Additionally, our Return on Average Equity has risen to 8.4 percent, an impressive 35 percent increase from the same period in 2023.”
For the first nine months of 2024, the Group has achieved KD 108 million in Net Interest Income, marking a 7 percent rise of KD 6.7 million in comparison to the same period in 2023. This growth is largely driven by increased asset levels and loan volumes. Shifting to the Group’s Total Assets, Soonawalla said, “These have grown by 13 percent, reaching KD 7.1 billion, while our loan book has grown YoY by 6 percent, from KD 4.3 billion to KD 4.6 billion. Furthermore, Total Deposits stand at KD 4.3 billion, making up 68 percent of our Total Liabilities. In terms of liquidity, we are well positioned with a Net Stable Funding Ratio of 116 percent and a Liquidity Coverage Ratio of 378 percent, both well above regulatory requirements.”
Furthermore, Operating profit increased by 13 percent YoY driven by improved margins and higher non-interest income. The major contributions to our operating income of KD 150.8 million for the 9-month period came from Corporate Banking (46 percent), Retail Banking (39 percent) and Treasury operations (15 percent). Our asset allocation shows 56 percent in Commercial Banking, 12 percent in Retail, and 32 percent in Treasury. Soonawalla clarified, “Fees and commissions have significantly contributed to our operating income, growing by 15 percent from last year to KD 29 million during the first nine months in 2024.
These are broadly diversified across various regions and business sectors, arising primarily from core banking operations. Moreover, our cost-to-income ratio has improved to 46.6 percent from 47.6 percent last year, emphasizing our ongoing commitment to cost optimization and efficiency.” He concluded, “The 9 months of 2024 have been marked by significant enhancements in profitability, operational efficiency, asset quality, and capital strength. We remain optimistic about continuing this positive trajectory throughout the remainder of the year.”
A positive impact
Moving on to Jawad, he stated, “Despite the global and regional challenging conditions over the last period, ABK has impressively grown its profitability and balance sheet size whilst maintaining its asset quality. ABK’s organic growth strategy remains focused on its key pillars of targeting youth and high-value customers on the corporate and retail banking fronts, whilst optimizing our operating model. In parallel, ABK Group is selectively exploring and assessing different inorganic growth avenues and opportunities.”
He highlighted, “As we move forward, our dedication to creating long-term value for our shareholders remains steadfast at ABK. We are strategically investing in our future while maintaining a prudent approach to risk management, which has earned us strong credit ratings of ‘A2’ and ‘A’ from Moody’s and Fitch respectively.” Furthermore, Jawad stated that ABK is honored to have received six distinguished awards from the esteemed Global Finance institution in 2024. This is in addition to ABK-Egypt being named Best Retail Bank in Egypt at the Banking Excellence Awards ceremony organized by MEED this year, which reflects ABK-Egypt’s commitment to realizing its long-term vision, thereby establishing a prominent and distinguished position within the banking sector in Egypt.
Reflecting on the commitment to sustainability across the Group, he disclosed, “We have recently published ABK-Egypt’s first annual Sustainability Report and Carbon Footprint Report for 2023, adhering to GRI standards.” Jawad also shed light that from a strategy standpoint, ABK-UAE has achieved significant milestones, most notably launching the corporate service desk to streamline operations and enhance client experience. On the consumer-banking front, ABK enhanced our UAE mortgage product by extending financing against cash collateral, which broadens our customer base and meets short-term cash flow needs. He said, “Our special mortgage rate program is in the final development stage and is expected to boost UAE mortgage growth, hand in hand with a new personal loan product that is set to roll out soon, diversifying our consumer banking offerings.”
Furthermore, Jawad shared that global economic growth is forecasted to remain stable at 3.2 percent according to the latest IMF report in October. He continued, “From a monetary perspective, the Central Bank of Kuwait has reduced the discount rate by 25 basis points from 4.25 percent to 4 percent effective September 19, 2024, which was in parallel to the Federal Reserve’s (Fed) implementation of a 50-basis points rate cut.”
He explained that the geopolitical and macroeconomic landscapes for the region have been fluid with a lot of volatility over the past 12 months, which have, and continue to have, an impact on oil prices and GCC economies. In the GCC region, market performance has shown encouraging economic progress, characterized by strong non-oil growth, despite ongoing uncertainties and fluctuations in oil prices.
He added that while Kuwait’s economic activities were subjected to subdued growth over the last period, the IMF projects a rebound of 2.8 percent GDP growth in 2025 with activity expected to increase in the energy, water, and construction sectors. Such outlook will have positive effects on the banking sector as a whole, and ABK in particular. Finally, transitioning to ABK’s international footprint and starting with Egypt, he disclosed “The IMF Executive Board completed the third review of Egypt’s Extended Fund Facility (EFF) arrangement in July 2024, noting that Egypt’s recent reform efforts have shown positive results and are yielding improvements in macroeconomic stability.”
Concluding his statement, Jawad affirmed, “As we move through the remainder of 2024, we will continue to approach the execution of ABK’s strategy with determination, ensuring we pave a successful way for our full-year results.”
