The National Bank of Kuwait (NBK) reported net profits of KD 295.2 million (US$ 964.5 million) for the year 2016 compared with KD 282.2 million (US$ 921.9 million) in 2015, growing 4.6 percent year-on-year. The net profit in 2015 included an accounting gain in respect of the Group exiting its investment in International Bank of Qatar (IBQ). When compared to adjusted net profit for the year 2015, net profits in 2016 grew by 11.2 percent.
Total assets as of year-end 2016 reached KD 24.2 billion (US$ 79.1 billion) up 2.6 percent compared to year-end 2015, while total shareholders' equity increased by 4.3 percent to KD 2.7 billion (US$ 8.9 billion).
Customer loans and advances reached KD 13.6 billion (US$ 44.5 billion) as of year-end 2016, marginally up last year's levels mainly due to larger-than-usual loan settlements as well as currency devaluation in Egypt. Customer deposits grew by 4.6 percent year-on-year to reach KD 12.6 billion (US$ 41.2 billion) as of year-end 2016. It is noteworthy that the free floatation of the Egyptian currency in November 2016 resulted in a decline in the value of assets and liabilities of NBK Egypt (NBKE) when converted to Kuwaiti Dinars for Group consolidation purposes.
NBK continued to improve its asset quality ratios with NPL/Gross Loans ratio dropping to 1.28 percent as of year-end 2016 down from 1.34 percent a year earlier, and NPL coverage ratio increasing to 365 percent, up from 322 percent at year-end 2015.
Total impairment charges amounted to KD 152.3 million (US$ 497.7 million) during the year, down from KD 164.4 million (US$ 537.2 million) in 2015.
NBK Board of Directors has proposed the distribution of 30 fils per share cash dividend, representing 30 percent of the nominal share value. The board has also proposed the distribution of a 5 percent bonus shares (5 shares for every 100 shares) for the year 2016. Nasser Al-Sayer, NBK Group Chairman said "NBK continued delivering solid growth and healthy performance in 2016.
Net profits in 2016 reached KD 295.2 million, 4.6 percent year-on-year growth. Adjusting for the exceptional gains from exiting the Group's investment in IBQ, net profits grew by 11.2 percent year-on-year. This is a testimony to NBK's strong financial position, its market leadership and the successful conservative strategy that the Bank has adopted since its founding in 1952". "On similarly adjusted basis, the Group's net operating income grew by 5.4 percent year-on-year to KD 745.3 million (US$ 2,435.3 million), primarily driven by higher net interest income and thus confirming NBK's strong domestic and regional market positions and focus on core banking income." Al Sayer added.
NBK has always held a leading position in the Kuwaiti market across all business segments. In 2016, in parallel with the pickup in business activity as the Government continues to award and execute mega projects, NBK played a major role in financing such transactions. "With the size of our balance sheet, regional & international presence and relationships, we proved to be the largest beneficiary of the growing government expenditure, leveraging the high growth opportunity in the project finance business." Al-Sayer highlighted.
Al-Sayer also added that "The government has declared several times its intent to continue with its development plan despite declining oil prices.
The ability of the government to finance projects is not in question, thanks to the sizeable reserves and ample liquidity which keeps Kuwait in a better position than neighboring countries." Isam Al-Sager, NBK's Group Chief Executive Officer said; the solid results of NBK confirm the Bank's resilience and its ability to continue to grow and progress. "We continue to emphasize on the Group's strategy focusing on market leadership domestically and strong positioning regionally, all serving our efforts for better diversification and balancing of our sources of income".
"Domestically, NBK continues to defend its market share in Kuwait, leveraging growth opportunities in all business segments. The acquisition of a 58.4 percent stake in Boubyan Bank in 2012 was a long term strategic move by NBK to strengthen its domestic market position. The Group continued to foresee very positive momentum at Boubyan Bank, with the subsidiary delivering around 13 percent of the Group's profits in 2016."
Al-Sager also added that in 2016, International operations delivered a solid and sound financial performance, increased its contribution to NBK Group's total profits, and continued to support the diversification of income sources and the funding base of the Group. NBK Group generated 32 percent of the year's profits from its branches, associates and subsidiaries outside Kuwait affirming the banks' successful strategy of regional and international diversification.
Al-Sager also highlighted that the Egyptian market remains a key market for the growth of NBK on the back of improving business sentiment and political stability. "NBK Egypt (NBKE) in 2016 achieved remarkable growth following the transformation strategy implemented since the beginning of 2015. This growth helped the bank offset the drop in the value of the Egyptian pound following the recent currency free floatation.
NBKE is expected to continue to grow positively benefiting from the country's economic reform program. Nonetheless, the group will continue to closely monitor the dynamic economic situation until the recovery is more anchored". During 2016, NBK increased its capital base through a 6.5 percent rights issue. The issuance is in line with the bank's plans to maintain healthy capitalization ratios following the implementation of Basel III and the regulations of the Central Bank of Kuwait (CBK) in this regards.
Also, this increase will allow the bank to continue capturing growth opportunities, especially in Kuwait as the government's capital spending plan remains intact and as NBK continues to be the market leader in the project finance segment. As of end-December 2016, NBK's capital adequacy ratio (CAR) reached 17.7 percent comfortably exceeding regulatory requirements.
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).
NBK was founded in 1952 as the first indigenous bank and the first joint stock company in Kuwait and the Gulf Region. NBK reported net profits of US$ 964.5 million (KD 295.2 million) for 2016. NBK's total assets were US$ 79.1 billion (KD 24.2 billion) at the end of 2016, while shareholder equity stood at US$ 8.9 billion (KD 2.7 billion).