Na­tional Bank of Kuwait posts KD 164.7m in net prof­its

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Na­tional Bank of Kuwait NBK re­ported net prof­its of KD 164.7 mil­lion (USD 543.5 mil­lion) for the pe­riod of 1H 2017 com­pared to KD 150.6 mil­lion (USD 497.1 mil­lion) for the same pe­riod in 2016. NBK’s prof­its dur­ing the 1H 2017 grew by 9.3% com­pared to the same pe­riod last year. NBK’s 2Q 2017 net prof­its reached KD 79.3 mil­lion (USD 261.8 mil­lion), com­pared to KD 71.7 mil­lion (USD 236.6 mil­lion) for the same pe­riod in 2016 record­ing an in­crease of 10.7% YoY.

As of end of June 2017, NBK’s to­tal as­sets grew by 5.8% on an­nual ba­sis, to reach KD 25.5 bil­lion (USD 84.0 bil­lion), while to­tal share­hold­ers’ eq­uity in­creased by 1.0% to KD 2.9 bil­lion (USD 9.5 bil­lion). Cus­tomer loans and ad­vances, as of end of June 2017, have also grown by 4.6% com­pared to the same pe­riod last year, to reach KD 14.3 bil­lion (USD 47.3 bil­lion) while cus­tomers’ de­posits grew by 8.0% to reach KD 13.6 bil­lion (USD 44.8 bil­lion).

Non-per­form­ing Loans (NPLs) dropped to 1.23% as of end of June 2017 from 1.40% as of June 2016, while cov­er­age ra­tio in­creased to 371% com­pared to 330% last year. Cap­i­tal ad­e­quacy ra­tio reached 17.5% as of end of June 2017 ahead of all reg­u­la­tory re­quire­ments.

NBK’s Chair­man Nasser Musaed Al-Sayer, said: “The con­ti­nu­ity of growth in NBK’s prof­its dur­ing the 1H 2017, is yet an­other ev­i­dence and con­fir­ma­tion of the strength and sound­ness of the Bank’s fi­nan­cial po­si­tion and its pru­dent op­er­a­tional vi­sion and suc­cess­ful strat­egy which the Bank has con­sis­tently adopted.”

Al-Sayer has also shed light on the con­tin­u­ing im­prove­ment of the qual­ity of the Bank’s as­sets in ad­di­tion to the con­ser­va­tive poli­cies which rep­re­sent se­cure buf­fers against ad­verse re­gional de­vel­op­ments and their im­pact on the gen­eral eco­nomic en­vi­ron­ment in the dif­fer­ent mar­kets that the Bank op­er­ates in.

Al-Sayer re­it­er­ated that NBK’s re­sults in the 1H 2017 re­flect the solid growth of the real bank­ing ac­tiv­i­ties, in­di­cat­ing the in­crease in the net op­er­at­ing in­come by 10.1% YoY, which as­serts the strong po­si­tion of the bank in all its mar­kets, cap­i­tal­iz­ing on emerg­ing op­por­tu­ni­ties do­mes­ti­cally, and re­gion­ally.

Al-Sayer high­lighted that the progress in the eco­nomic ac­tiv­ity in Kuwait on the back of the strong project ten­der­ing and award­ing ac­tiv­i­ties, sup­ported a strong pipe­line of trans­ac­tions which re­flected pos­i­tively on pri­vate sec­tor ac­tiv­ity. Lend­ing growth mo­men­tum for key govern­ment projects con­tin­ues and ex­pan­sion­ary plans de­spite the im­pact of fall­ing oil prices re­mained strong. This con­firms the lim­ited im­pact of lower oil prices on the Kuwaiti econ­omy com­pared to other economies in the re­gion, which is a re­sult of the huge re­serves and the solid fi­nan­cial po­si­tion that Kuwait pos­sesses.

Al-Sayer added that in recog­ni­tion of the Bank’s strong fund­ing base, strong de­posit fran­chise and healthy liq­uid­ity pro­file; NBK con­tin­ues to be in a very fa­vor­able po­si­tion as a key player in fi­nanc­ing mega in­fra­struc­ture projects.

NBK’s Group CEO, Isam Jasim Al-Sager, high­lighted that dur­ing the 1H 2017, the Bank suc­cess­fully is­sued a $750 mil­lion five-year Se­nior Un­se­cured Se­cu­ri­ties un­der 144A/Reg­u­la­tion S. The is­suance came un­der NBK’s new USD 3.0 bil­lion Global Medium-Term Note (GMTN) Pro­gram. The re­ceipts from the is­suance will be used to fur­ther di­ver­sify the Bank’s fund­ing base, boost liq­uid­ity and in­crease li­a­bil­ity du­ra­tions. The trans­ac­tion was very well re­ceived by re­gional and in­ter­na­tional in­vestors with the Or­der Book clos­ing at USD 2.2 bil­lion; trans­lat­ing to around 2.9x over­sub­scrip­tion for the deal. The notes carry a fixed in­ter­est rate of 2.75% per an­num payable semi-an­nu­ally in ar­rears and were rated Aa3 by Moody’s and AA- by Fitch, in line with NBK’s rat­ings.

Al-Sager also stated that 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. US-based in­vestors dom­i­nated the deal with 57% share of the is­suance, fol­lowed by MENA in­vestors at 26%, Euro­pean in­vestors at 13% and 4% from Asia. The strong de­mand along with the di­ver­si­fied, high­qual­ity in­vestor base are tes­ti­mony to NBK’s su­pe­rior name in in­ter­na­tional mar­kets and how it is per­ceived as be­ing a top-qual­ity in­sti­tu­tion by in­ter­na­tional in­vestors.

Al-Sager also em­pha­sized the po­si­tion of NBK and its im­por­tant role in lead­ing huge multi-bil­lion schemes and fi­nanc­ing of large strate­gic projects, plac­ing the Bank in a unique po­si­tion to be the prime part­ner for com­pa­nies’ ex­pan­sion­ary plans do­mes­ti­cally, re­gion­ally and glob­ally.

In ad­di­tion, Al-Sager praised the Bank’s con­tin­u­ous ef­forts in di­ver­si­fy­ing its sources of in­come and rev­enue streams, while en­hanc­ing its lead­ing po­si­tion do­mes­ti­cally and re­gion­ally through devel­op­ing busi­ness and ser­vices pro­vided to cus­tomers. Do­mes­ti­cally, NBK main­tained its high mar­ket share and con­tin­ued to im­prove its earn­ings from its own­er­ship in Boubyan Bank whose per­for­mance is wit­ness­ing strong growth since NBK’s ac­qui­si­tion of 58.4% of its shares in 2012.

On the re­gional and in­ter­na­tional fronts, Al-Sager con­firmed that the con­tri­bu­tion from nonKuwait op­er­a­tions con­tin­ues to demon­strate the on­go­ing ben­e­fits that the Bank is earn­ing. Dur­ing the 1H 2017, NBK gen­er­ated 27% of its net prof­its from its op­er­a­tions out­side Kuwait, con­firm­ing its suc­cess­ful di­ver­si­fi­ca­tion strat­egy.

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 the eleventh con­sec­u­tive time and was awarded as the Best Bank in Kuwait in 2016 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, GCC, Mid­dle East, Sin­ga­pore as well as China (Shang­hai).

Isam Al Sager

Nasser Musaed Al-Sayer

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