The market value of the banking sector listed on Boursa Kuwait, from the beginning of 2021 until December 15, gained about 5 billion dinars, an increase of 27%, to record the market value of the sector to about 23.64 billion dinars, equivalent to 58% of the market value of the Kuwait Stock Exchange of 41 billion dinars.
According to Al-Anba’s monitoring of the performance of Kuwaiti banks’ shares, the market value of the banking sector on the stock exchange had reached 18.65 billion dinars by the end of 2020, however, there are several factors that reinforced the rise in the market value of the shares of local banks, which is represented by the rise in oil by about 45% since the beginning of the year, and the state of optimism among investors that the health crisis is nearing the end, and the acceleration of the growth in the domestic credit market, the strong growth in the financial results of banks during the first nine months of the year, as well as the stability of economic conditions and the improvement of the state’s general budget position.
The Kuwaiti banks’ shares in the stock market since the beginning of this year, until December 15, as it turns out that the shares of all banks recorded increases in varying proportions, as the market value of Boubyan Bank increased by 46% to record 2.51 billion dinars, and the market of the Kuwait Finance House (KFH) increased by 34% to record 6.98 billion dinars, an increase by 1.79 billion dinars, and its market value constituted 17% of the total market value of the Kuwait Stock Exchange, and the Ahli United Bank-Bahrain recorded an increase in its market value by 29% to reach the level of 2.82 billion dinars, while the market value of Burgan Bank increased by 25% to reach the level of 698 million dinars.
As for the National Bank of Kuwait, its market value increased by 22% to record 7 billion dinars, equivalent to a market weight of 17.07% of the total market value of the Kuwaiti Stock Exchange, an increase of about 1.26 billion dinars.
As for the lowest closing of bank shares during the first half of 2020 as a result of the repercussions of the Corona crisis on the financial markets, it is noticeable that most of the banks’ stock prices recovered and their share prices rose in varying rates, driven by the banks’ financial results for the year 2021 as a result of business growth and a sharp decrease in provisions for credit losses and improvement in the operational environment of the banks and the acceleration of credit market growth due to the improvement of living conditions and the return of confidence to consumers and companies.
Boubyan Bank’s share topped the listed banks in terms of recovering from its lowest level in the crisis, rising by 108% and closing at 789 fils on December 15, 2021. As for “KFH” its share rose by 75% to record 827 fils, followed by “Warba” and “Al-Ahly” with an increase of 66.5% and 51.3%, respectively, recorded the lowest closing in the crisis. As for the National Bank and the Gulf Bank, the rise was around 49%, while Al-Ahly United recovered by 38%.
In conjunction with the recovery in bank stock prices and the increase in net profits in the first nine months of 2021 compared to the financial results for 2020, the sector’s valuations (profitability multipliers and the price-to-book value multiplier) have improved to acceptable levels and it is expected that a further improvement in valuations at current prices will happen. As the financial performance of banks during the current year and next year will witness an average rise in revenues and net profits, the provisions may continue to decline from their level in 2020.
The banking sector listed on the Kuwait Stock Exchange is currently trading at a profit multiplier of 25.6 times based on the profits of the last 12 months ending in September 2021, compared to the P/E ratio above the level of 31 times during the crisis period, while the price multiplier reached the book value of the sector P/BV Ratio 2.3 times.
Warba Bank trades at the best profitability ratio of 16.4 times and is considered the best among the banks listed on the Kuwait Stock Exchange, while Gulf Bank and the National Bank are trading at the profitability multiple of 21.5 and 21.1 times, respectively, and it is considered better when compared to the sector and stock exchange rates.
As for Boubyan Bank, its profitability is still one of the highest among banks at 58 times, up from 28 times before the crisis.
