Net profit increases by 15.0% on previous year ● Total assets reach KD 27.4 billion

KUWAIT: The National Bank of Kuwait ("NBK", the "Bank" or the "Group") has announced its financial results for the 12-month period ended 31 December 2018. NBK reported a net profit of KD 370.7 million ($1.2 billion), which increased by 15.0 percent on 2017, with total assets increasing by 5.4 percent to reach KD 27.4 billion ($90.4 billion). Customer loans and advances increased by 6.9 percent to KD 15.5 billion ($51.1 billion), while customer deposits increased by 4.4 percent to reach KD 14.4 billion ($47.4 billion). The Group's Board of Directors has proposed a cash dividend distribution of 35 fils per share, representing 35.0 percent of the nominal share value in addition to 5 percent bonus shares, all subject to approval by shareholders at the AGM.

NBK maintained a conservative approach to risk, reflected in the confirmation of strong long-term credit ratings. The Bank's robust asset quality metrics held steady, with the NPL/gross loans ratio at 1.38 percent and an NPL coverage ratio of 228.1 percent. The Group maintained a high level of capitalization, with a capital adequacy ratio of 17.2 percent, comfortably in excess of the Central Bank of Kuwait's requirement.

Commenting on the results, NBK Group Chairman, Nasser Al-Sayer, said: "We are pleased to report another year of solid performance. The Bank has continued to benefit from Kuwait's strong fiscal position, which largely protected the country from regional economic volatility during the year. GDP growth is projected to reach 2.2 percent, and the pipeline of scheduled project awards remains strong. The role that NBK will play in supporting economic growth and the agenda of 'New Kuwait 2035' is assured, as it remains the bank of choice for financing public and private projects.

Having increased the scale and contribution of our international operations, while consolidating our leadership position in Kuwait, we achieved considerable progress in pursuit of our diversification strategy. Our diversification extends to the product and service offering, growth in existing geographies, our approach to new business opportunities, and our commitment to a digital transformation that will position the Bank for future growth."

Group net operating income grew by 7.4 percent year-on-year to reach KD 883.2 million ($2.9 billion), with improved earnings driven by an increasingly diverse range of income generators from across business units. Non-interest income accounted for 22 percent of net operating income in 2018 with robust fee generation across units, as the Bank continues to seek opportunities for improving non-interest income. International banking operations accounted for 29 percent of the Group's net profit, increasing from a contribution of 28 percent in 2017. Islamic Banking, through subsidiary Boubyan Bank, provided further diversity to the income profile, with a growing contribution to Group net profit.

NBK Group CEO, Isam Al-Sager, commented: "While the local and regional banking sector faced challenges due to a high level of liquidity putting pressure on credit growth, NBK recorded another set of exceptional results, as the breadth of its operations and the scale of our international footprint mitigated risk. Earnings from our core banking activities clearly reflect NBK's underlying institutional strength, which is supported by a strategy that hedges risk by diversifying income across products, customer types and geographies, while maintaining a competitive advantage in the domestic market through both a conventional and Islamic offer. NBK remains a safe haven, in light of its high credit ratings and recognition of its prudent risk management approach - as borne out by another year of inclusion in Global Finance's list of the World's 50 Safest Banks.

A core component of the diversification theme in 2018 was the considerable effort made by the Bank towards its digital transformation. The program is cross-segment and cross-geography, impacting internal processes and systems as well as the experience and opportunities of our customers."

Effective cost management policies saw cost growth of just 4.1 percent, compared with 5.3 percent in 2017, resulting in a cost-to-income ratio of 31.3 percent compared with 32.3 percent in the previous year. The Bank's profitability metrics delivered positive results, with return on average assets of 1.38 percent compared with 1.28 percent in 2017 and return on average equity of 12.0 percent compared with 10.8 percent for the previous year. Basic earnings per share (EPS) were 58 fils at year-end (50 fils in 2017), with equity attributable to shareholders increasing by 3.3 percent to KD 2.9 billion ($9.7 billion).

Al-Sager concluded: "Our strategic pathway remains essentially unchanged. Our primary objective is to deliver superior returns to shareholders, which we will achieve by defending our leadership of core businesses, maintaining our dominant share of the domestic Kuwaiti market, achieving growth in target segments and exploiting our international presence. Having achieved particularly robust performance in Egypt, we will look to consolidate and build upon recent growth in that market; while in Saudi Arabia we will seek to grow the client-base and AuMs of the recently launched Al-Watani Wealth Management Company. We look forward to maintaining our commitment to both customers and shareholders, as we build a more diverse and sophisticated banking offer."