KUWAIT CITY, March 19: National Bank of Kuwait (NBK) held its annual General Assembly meeting on 19th March at the bank’s headquarters.
NBK reported net profits of KD 282.2 million ($929.7 million) for the year 2015 compared with KD 261.8 million ($862.6 million) in 2014, growing 7.8% year-on-year. As at year-end 2015, NBK’s Group total assets reached KD 23.6 billion ($77.8 billion) up 8.3% compared to year-end 2014, while total shareholders’ equity increased by 3.8% to KD 2.6 billion ($8.6 billion).
The General Assembly approved the distribution of a cash dividend equivalent to 30% of the nominal value of the share (30 fils per share) to the shareholders of the bank as of the date of the AGM. The AGM also approved the distribution of bonus shares of 5% (5 shares for every 100 shares) to the shareholders of the bank as of the last working day prior to the day of the share price adjustment.
Nasser Al Sayer, NBK’s Chairman, highlighted the many achievements and accomplishments NBK Group attained in 2015. NBK’s results reaffirm the bank’s well established and solid financial position and its leadership in the Kuwaiti banking sector.
“2015 was a year of deliverables for NBK. We saw a confirmation of our earlier view that Kuwait is moving into a new era of economic development. Activity is picking up as the Government continues to deliver on the awarding and execution of mega projects. This has reflected positively on the growth trends of NBK’s operating income. During the year, several multi-billion dollar development projects have been awarded where NBK played a major role in their financing. With the size of our balance sheet, our regional and international presence and relationships, we are the largest beneficiary of the growing government expenditure, leveraging the high growth opportunity in the project finance business.” Al-Sayer highlighted.
“Regionally, NBK continued its strategy to strengthen its position in MENA markets with a particular focus on the GCC markets that are characterized by their strong economic scope and promising growth opportunities,” Al Sayer said.
Isam Al Sager, NBK’s Group Chief Executive Officer said that NBK continued to achieve a strong performance in 2015 thanks to the bank’s financial resilience, clear strategy, conservative culture, and high professional standards. In 2015, NBK reported a net profit of KD 282.2 million, once again confirming the superiority of the Bank’s conservative strategy, prudent risk management and commitment to the highest standards. Strong growth across business lines proved the effectiveness of the Bank’s sound and solid leadership.
Al Sager added that the financial indicators reflected NBK’s strength and resilience. Total Group assets reached at year-end 2015 reached KD 23.6 billion, a growth of 8.3% year-on-year. Total shareholders’ equity reached KD 2.6 billion, growing at 3.8% year-on-year. Deposits also witnessed strong growth of 7.1%, reaffirming the reputation of NBK as one of the region’s most safest banks.
NBK continued to improve its asset quality ratios with NPL/Gross Loans ratio dropping to 1.34% as of year-end 2015 down from 1.50% a year earlier, and NPL coverage ratio increasing to 322%, up from 276% at year-end 2014.
In parallel with its regional strategy, NBK continued to reap the benefits from its acquisition of 58.4% of Boubyan Bank. “A fundamental change in Boubyan Bank has been witnessed in growth and profitability trends, continuously increasing its market share since its acquisition by NBK. NBK will continue its strategy to support Boubyan Bank by providing the bank with expertise and guidance. NBK is fully committed to the independence of the two banks according to the provisions of Shari’a law,” said Al Sager.
Strong capital base
During 2015, NBK boosted its capital base through issuing $700 million Additional Tier-1 (AT-1) securities and KD 125 million of Tier 2 subordinated bonds. “The issuances are used to improve NBK’s capital as per Basel III requirements and the directives of the Central Bank of Kuwait and both issuances were highly received by investors attracting two times subscription in both instances. As of end-December 2015, NBK’s capital adequacy ratio (CAR) reached 16.8% exceeding regulatory requirements,” commented Al Sager.
The General Assembly approved to increase the bank’s authorized capital from KD 504 million to KD 600 million. The approved increase in authorized capital gives NBK the flexibility to increase its paid-in-capital at a later stage, if needed.
Al Sager said “This approval will allow the bank to better manage the timing of any potential increase in paid-in-capital to continue capturing growth opportunities, especially in Kuwait as the government’s capital spending plan remains intact. Also, this move is in line with the bank’s plans to maintain healthy capitalization ratios in light of the Basel 3 implementation and the regulations of the Central Bank of Kuwait in this regards.”
Growth and development
Shaikha Al Bahar, NBK Deputy Group Chief Executive Officer stressed on the marked improvement in the operational environment with the launch of the government’s new Five Year Development Plan and the implementation of many mega projects.
Al Bahar also added that “Despite the large drop in oil prices over the past year, our outlook for the Kuwaiti economy remains positive. Kuwait has ample liquidity and substantial buffers making the impact of lower oil prices relatively less compared to other regional economies. The government has affirmed in several occasions its commitment to continue with its capital expenditure plan mainly on infrastructure projects which we believe will relatively contain the impact of a period of lower oil prices on the operating environment in Kuwait.”
Stability and solidity despite turmoil
Al Bahar highlighted that NBK is progressively implementing its income diversification strategy. “Our regional and international strategy remains on track. We are focusing our efforts on the GCC countries to leverage NBK’s strong franchise there and to benefit from the strong economic fundamentals of these economies.
Al Bahar stressed that despite the large drop in oil prices and the political and social unrest in some markets, the overseas operations proved resilient. The profits of NBK’s overseas operations remained very lucrative supporting the bank’s income diversification strategy. NBK Group generated 27% of the year’s profits from its operations outside Kuwait affirming the bank’s successful regional and international diversification strategy.
Al Bahar explained that selling NBK’s stake in its Qatari associate, International Bank of Qatar (IBQ), was among the important decisions taken by NBK. The decision came after difficulties to raise NBK’s 30% ownership to a controlling stake. But the exit from IBQ along with the high returns that NBK achieved from this investment enhanced the Bank’s ability to seize better growth opportunities in Qatar and other GCC markets.
Al Bahar also commented on NBK’s investment in Egypt: “Egypt features prominently in NBK’s regional expansion strategy. The Bank is confident in the country’s medium-to-long term economic growth prospects. To better align with the Group and strengthen the identification with the strong and widely trusted NBK brand, the Bank rebranded Al Watani Bank of Egypt to NBK-Egypt furthering integration and alliance at the Group level. We expect that NBK-Egypt will deliver better performance in coming years as the political situation stabilizes and continue to view Egypt as a long term investment with significant potential,” Al Bahar added.
Highest rated and safest
Al Bahar stressed that NBK retained its leadership position in Kuwait and the region as one of the highest rated banks in the world from the three largest rating agencies: Moody’s, Fitch and Standard & Poor’s. NBK is rated “Aa3” by Moody’s, “AA-” by Fitch Ratings and carries an “A+” rating from Standard and Poor’s.
Al Bahar added that NBK also maintained its leading position as one of the safest banks in the world for the tenth consecutive time. The ranking is an endorsement of the Bank’s prestigious reputation and global positioning as NBK is the only bank in the Arab world to maintain this position among global banks for ten consecutive years.
Salah Al Fulaij, NBK-Kuwait Chief Executive Officer stressed that NBK has been able to considerably increase its share of the total banking sector profits in Kuwait throughout the global financial crisis. NBK’s share of the total banking sector profits stood at 47% in 2015.
Al Fulaij highlighted NBK’s profile: NBK is the largest financial institution in Kuwait with highest profits among all companies. NBK is the “development bank” in Kuwait and the most beneficiary of the execution of the mega projects in Kuwait.
Mega projects gain momentum
Al Fulaij stated that the year 2015 was a remarkable year for the prospects of the Kuwaiti economy. The year saw the launch of several major development projects in which NBK took a leading financing role. NBK’s role reflects its strong reputation and its leadership position in the banking sector locally, and regionally.
Al Fulaij highlighted NBK’s role in some of the most prominent projects. NBK continued to position itself as the premier bank of choice for both domestic and foreign corporates doing business in Kuwait. During the year, NBK provided support for all of the EPC contractors in Kuwait’s largest development project ever, the $13 billion KNPC Al Zour Refinery Project, with their banking requirements. NBK also was chosen as the initial Underwriter and Mandated Lead Arranger in the $$6 billion Equate syndication deal.
“NBK’s role reflects its prestigious reputation and its leadership position in the banking sector locally, and regionally. This positioning of NBK reflects its ability to benefit from the growth opportunities including, most importantly, the pickup in the implementation of mega development projects in Kuwait which is expected to accelerate considerably in the coming year,” Al Fulaij stated.
NBK also continued to build on the Bank’s strategic client relationships, making NBK the first choice for expansion plans of major corporates increasing the Bank’s market share. NBK landed several noticeable deals including the prominent role of Mandated Lead Arranger for the syndicated financing facility of $400 million for OSN, the region’s leading Pay-TV network. The syndicate facility included 11 international and regional banks and was nearly two times oversubscribed, with NBK being the only Kuwaiti bank participating, a sound testament to NBK’s international reach and capabilities in handling sophisticated deals and building relationships with other international lenders.
NBK also participated in an award-winning syndicated facility for global logistics provider, Kuwait-based Agility. The syndicated facility won the “Corporate Finance Award” in the 2015 ACT Middle East Deals of the Year Awards for the impressive structure of the deal.
Absolute commitment to CSR
Al Fulaij said that in addition to its financial achievements, NBK remains the largest contributor to society. The NBK Children’s Hospital remains an icon of the Bank’s social contributions. The Bank continued with its commitments by establishing the first specialized center for marrow transplantation in Kuwait in the Children’s Hospital.
Al Fulaij explained that the development of human talent remains a top priority for the Bank. Al Fulaij revealed that NBK hired about 300 Kuwaiti citizens in 2015. In line with the permanent quest to localize and increase the national employment rate, Kuwaiti employees comprise 66% of NBK’s workforce. The bank maintained its position as a major national employer in the private sector. This confirms NBK’s full support of government efforts to employ young national cadres in the private sector and develop the human capital of Kuwait.