National Bank of Kuwait (NBK) reported net profits of KD 150.6 million ($499.1 million) for the period of 1H 2016 compared to KD 163.4 million ($541.5 million) for the same period in 2015. In 2015 net profits included KD 22.5 million ($74.7 million) of net gains resulting from the sale of NBK's share in the International Bank of Qatar (IBQ). However, upon excluding last year's exceptional gains, NBK's profits during the 1H 2016 grew by 6.9 percent compared to the same period last year. NBK's 2Q 2016 net profits reached KD 71.7 million ($237.6 million), compared to KD 66.9 million ($221.6 million) for the same period in 2015 recording an increase of 7.2% YoY. As of end of June 2016, NBK's total assets grew by 4.9 percent on annual basis, to reach KD 24.1 billion ($79.8 billion), while total shareholders' equity increased by 6.8 percent to KD 2.8 billion ($9.4 billion).
Total loans and customer advances, as of end of June 2016, have also grown by 7.8 percent compared to the same period of last year, to reach KD 13.7 billion ($45.4 billion) while customers' deposits grew by 4.5 percent to reach KD 12.6 billion ($41.6 billion). Non-performing Loans (NPLs) dropped to 1.40 percent as of end of June 2016 from 1.55 percent as of June 2015, while coverage ratio increased to 330 percent compared to 277 percent last year. In light of the current challenges imposed by the drop in oil prices and the uncertainty in the global economic outlook, NBK continued to book relatively high provision charges during the 1H 2016, which were mostly precautionary in nature. In this context, NBK's Chairman Nasser Musaed Al-Sayer, said: "The continuity of growth in NBK's profits during the 1H 2016 after excluding last year's gains from the sale of IBQ, 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 2016 reflect the solid growth of the real banking activities, indicating the increase in the net operating income by 4.9% YoY, after excluding last year's gains from the sale of IBQ, to reach KD 362.1 million ($1,200 million), which asserts the strong position of the bank in all its markets, capitalizing on emerging opportunities domestically, regionally and globally. Al-Sayer highlighted that the Kuwaiti Government continued to show determination in proceeding with its development and expansionary plans despite the impact of falling oil prices and the uncertainties of global economic outlook.
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 NBK continues to be a key player in financing the Government's ongoing infrastructure spending plan. This was strongly demonstrated in the recent success in concluding the first phase of the financing of the Clean Fuels Project, valued at KD 1.2 billion with the NBK's share amounting to KD 400 million. NBK's Group CEO, Isam Jasim Al- Sager, highlighted that during the 2Q 2016, the bank concluded successfully a 6.5 percent capital increase through a rights issues that attracted a 3-times oversubscription reflecting the shareholders' solid trust in the Bank's current operations and future prospects. Al-Sager also stated that the 6.5 percent increase in the Bank's capital was derived by a strategic framework aimed at strengthening the Group's capital base to comply with the requirements of the Central Bank of Kuwait relating to capital requirements under the Basel-3 accord. Al-Sager stressed that the capital increase is for prudence purposes rather than merely a need.
NBK's high capitalization reflects the significance of the Bank in the domestic economy and its capacity as the largest banking entity in Kuwait with a major role in financing large development projects. Capital adequacy ratio reached 17.2 percent as of end of June 2016 ahead of all regulatory requirements. 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 resourcefulness 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.
On a domestic level, NBK maintained its high market share achieving growth in the various business segments in Kuwait. NBK also continued to improve its earnings from its ownership in Boubyan Bank whose performance is witnessing strong growth since NBK's acquisition of 58.4 percent of its shares in 2012. On the regional and international fronts, Al-Sager confirmed that the external branches of NBK and its affiliated companies continued to deliver solid growth despite adverse circumstances and challenges in many regional markets.
During the 1H 2016, NBK generated 30.4 percent of its net profits from its operations outside Kuwait, confirming its successful diversification strategy. Al-Sager also revealed that despite the distinguished existence and wide presence of NBK regionally, the Bank continues to strengthen its position in the markets it operates in and closely monitors new emerging opportunities that could add value. NBK continues to enjoy collectively 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 maintains its position among Global Finance's list of the 50 safest banks in the world for the tenth consecutive time. 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).
Source: Arab Times Online