National Bank of Kuwait - Investor Presentation July 2021 - NBK
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National Bank of Kuwait
Investor Presentation
July 2021
National Bank of Kuwait 1
Disclaimer
THE INFORMATION SET OUT IN THIS PRESENTATION AND PROVIDED IN THE DISCUSSION SUBSEQUENT THERETO DOES NOT
CONSTITUTE AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT IS SOLELY FOR USE AT AN INVESTOR
PRESENTATION AND IS PROVIDED AS INFORMATION ONLY. THIS PRESENTATION DOES NOT CONTAIN ALL OF THE INFORMATION
THAT IS MATERIAL TO AN INVESTOR. This presentation has been prepared by (and is the sole responsibility of) National Bank of Kuwait
S.A.K.P. (the “Bank”).
The information herein may be amended and supplemented and may not as such be relied upon for the purposes of entering into any transaction. This
presentation may not be reproduced (in whole or in part), distributed or transmitted to any other person without the Bank's prior written consent.
The information in this presentation and the views reflected therein are those of the Bank and are subject to change without notice. All projections,
valuations and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. They may be based on
subjective assessments and assumptions and may use one among alternative methodologies that produce different results and, to the extent that they
are based on historical information, they should not be relied upon as an accurate prediction of future performance. These materials are not intended to
provide the basis for any recommendation that any investor should subscribe for or purchase any securities.
This presentation does not disclose all the risks and other significant issues related to an investment in any securities/transaction.
Past performance is not indicative of future results. National Bank of Kuwait is under no obligation to update or keep current the information contained
herein. No person shall have any right of action against the Bank or any other person in relation to the accuracy or completeness of the information
contained in this presentation. No person is authorised to give any information or to make any representation not contained in and not consistent with
this presentation, and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of the
Bank.
This presentation does not constitute an offer or an agreement, or a solicitation of an offer or an agreement, to enter into any transaction (including for
the provision of any services). No assurance is given that any such transaction can or will be arranged or agreed.
Certain statements in this presentation may constitute forward-looking statements. These statements reflect the Bank’s expectations and are subject to
risks and uncertainties that may cause actual results to differ materially and may adversely affect the outcome and financial effects of the plans
described herein. You are cautioned not to rely on such forward-looking statements. The Bank does not assume any obligation to update its view of
such risks and uncertainties or to publicly announce the result of any revisions to the forward-looking statements made herein.
National Bank of Kuwait 2Contents
Section 1 Overview of NBK
Section 2 Strategy and Business Overview
Section 3 Operating Environment
Section 4 Financial Performance Highlights
Section 5 Appendix
National Bank of Kuwait 3NBK is Kuwait’s Leading Banking Group
Snapshot Financial snapshot
Established in1952 as the first local and home-grown GCC bank, and first USD million 2018 2019 2020
shareholding company in Kuwait
The leading banking group in Kuwait in terms of assets, customer deposits and
customer loans and advances Total Assets 90,447 96,524 97,996
Background
More than 30% market share of assets in Kuwait
Ranked amongst the 50 safest banks in the world by Global Finance, named the Loans, advances & Islamic financing 51,124 54,584 57,722
most valuable banking brand in Kuwait, and top 10 bank in the region by Brand
Finance
Customer Deposits 47,449 52,533 56,403
Established by a group of leading Kuwaiti merchants, NBK has retained the same Total Equity 12,205 14,045 13,656
core shareholder base since its inception
NBK’s shares are listed on the Kuwait Stock Exchange since 1984 with only one
Ownership Net Operating Income 2,913 2,953 2,778
shareholder holding owning more than 5% of the Bank’s share capital (PIFSS owns
5.60% as of December 2020)
NBK’s market capitalisation at 31 December 2020 was USD 19.0 bn. Net Profit attributable 1,222 1,323 812
Cost to Income (%) 31.3% 34.0% 37.0%
The Bank’s core businesses are (i) consumer and private banking, (ii) corporate
banking, (iii) Islamic banking and (iv) investment banking and asset management
Operations Net Interest Margin (%) 2.69% 2.56% 2.21%
The Bank operates across 14 countries with a predominant focus on the MENA
region.
NPL Ratio (%) 1.38% 1.10% 1.72%
Credit Ratings
Loan Loss Coverage Ratio (%) 228% 272% 220%
Rating Agency Long Term Rating Standalone Rating Outlook
Return on Average Equity (%) 12.0% 12.3% 7.0%
A1 a3 Stable
Tier 1 Ratio (%) 15.3% 15.9% 16.0%
A a- Stable
AA- a- Negative Capital Adequacy Ratio (%) 17.2% 17.8% 18.4%
Notes: Through out the investor presentation, the USD/KD exchange rate used is .30325 for year-end figures and .30105 for interim figures. The rates are based on the Central Bank of Kuwait’s closing exchange rates National Bank of Kuwait 4
as of 31/12/2020 and 30/06/2021.Regional and International Geographic Presence
Middle East
Europe Location - Year established/acquired Legal Structure - Branches
Location - Year established/acquired Legal Structure – Branches Kuwait – 1952 Parent – 68
London – 1983 Subsidiary – 2 Egypt – 2007 Subsidiary – 52
Geneva – 1984 Subsidiary – 1 Iraq – 2005 Subsidiary – 5
Paris – 1987 Subsidiary – 1 Lebanon – 1996 Subsidiary – 2
Jordan – 2004 Branch – 1
Bahrain – 1987 Branch – 2
UAE – 2008 Branch – 2
Saudi Arabia - 2006 Branch – 3
US
Location - Year established/acquired Legal Structure – Branches
New York – 1984 Branch – 1
Asia
Location - Year established/acquired Legal Structure - Branches
Shanghai – 2005 Branch – 1
Singapore - 1984 Branch – 1
National Bank of Kuwait 5Key Strengths
High credit ratings and among the Largest banking group in Kuwait with
top brand values regionally dominant market position
As at 31 December 2020, the Bank was the largest bank in
NBK has one of the highest credit ratings in the MENA region Kuwait in terms of total assets, loans and customer deposits. In
Ranked amongst the 50 safest banks in the world by Global addition, the Bank enjoys a dominant market share across its
Finance, named most valuable banking brand in Kuwait and business segments
among the top 10 in the Middle East by Brand Finance NBK also has one of the largest and most diversified distribution
networks
Sound and consistent Only banking group in Kuwait to provide
financial performance both conventional and Islamic banking
Following its consolidation of Boubyan Bank in 2012, NBK
Long history of profitability, even throughout the global financial became the only banking group in Kuwait to offer both
crisis conventional and Islamic banking services
Excellent asset quality with an NPL ratio standing at 1.72% at This has allowed the Bank to leverage off the opportunities across
end-2020 both markets, particularly given the growing importance of Islamic
Strong liquidity serving as a buffer in times of need Finance in Kuwait
Stable shareholder base and A strong regional and
strong management team international network
Established in 1952 by a group of leading Kuwaiti merchants and Operations in 14 countries, 8 of which are in the MENA region.
has retained the same core shareholder base since The Bank continues to explore opportunities to expand
NBK’s stable shareholder base is complemented by a strong and geographically with a primary focus on further strengthening
stable Board of Directors and a long-serving executive team with operations in MENA region
in-depth experience
Strong investment banking capability
NBK conducts its investment banking and asset management
business through its subsidiary, Watani Investment Company
K.S.C.C. (Known as NBK Capital)
National Bank of Kuwait 6Contents
Section 1 Overview of NBK
Section 2 Strategy and Business Overview
Section 3 Operating Environment
Section 4 Financial Performance Highlights
Section 5 Appendix
National Bank of Kuwait 7NBK’s Strategy
The Group’s strategy, which is based on two main pillars, focuses on defending and growing its leadership position in Kuwait whilst also
diversifying its business
The Bank aims to (i) remain the primary banker for the leading local companies whilst continuing to be active in the
Corporate mid-market sector;(ii) remain the bank of choice for foreign companies and continuing to serve at least 75% of those
Banking companies and (iii) maintain its current market share in trade finance (over 30%). To achieve the above, NBK will
Defend and Grow leverage off its different services, expand its coverage and broaden the range of products and services offered.
Digital Leadership Position
transformation in Kuwait NBK intends to expand its consumer customer base by focusing on profitable consumer segments (such as the
of the core Consumer affluent and mass affluent segments) and by attracting new clients such as the SMEs.
Maintain excellence and Through the above, the Bank aims to maintain its leadership position, maintain its focus on delivery of superior
market leadership position, Banking
customer service experience and achieve the lowest cost of funds among Kuwaiti conventional banks.
to expand market shares
and to maintain discipline in
managing both risks and Within the private banking sector, NBK aims to continue to provide a unique proposition to high net worth clients in
costs collaboration with its investment arm. NBK also aims to provide superior customer service through its highly
Private Banking experienced bankers. The Bank also aims to leverage off its existing brand and experience (particularly in
Switzerland) to provide access to leading funds and broaden its product portfolio.
The Bank’s geographic diversification strategy is to leverage its fundamental strengths and capabilities, including its
Expand Regional international reach and strong regional relationships, to build a regional platform and support growth in key markets.
Business NBK focuses on markets with long-term potential through a combination of high growth economies, sound
Presence
diversification Geographical, and demographic trends and opportunities aligned with the Bank’s competitive advantages.
leveraging product and service
digital diversification
The Bank’s strategy, in relation to its Islamic subsidiary, is to differentiate it from other domestic Islamic banks
disruption through a clear focus on high net worth and affluent clients and large and mid-market corporate customers.
Includes expanding Establish an
regional presence, Islamic Franchise
establishing an Islamic
banking franchise and
building a leading regional NBK looks to establish its business as a leading regional investment banking, asset management, brokerage and
Build Regional
investment bank. research operation and to leverage the Group’s strong regional position to cross sell these products across the
powerhouse in
Wealth MENA region.
Management
National Bank of Kuwait 8Kuwait Operations
NBK is a universal bank and the industry leader in all key business segments in Kuwait with an average market share of 30%
Overview and strategy
Corporate Banking Consumer Banking Private Banking
Remain the primary banker for most of the local blue-chip Maintain undisputed leadership in retail banking with Continue to provide a unique proposition to HNW clientele
companies, and an active player in the mid-market leading market share and the highest customer in collaboration with NBK Capital and the bank’s
Remain bank of choice among foreign corporations and penetration among conventional banks international network
continue serving 75% of them active in the Kuwaiti market Maintain focus on customer service Provide access to best of breed international funds
Maintain current market share in excess of 30% in trade Expand client base with focus on profitable consumer leveraging NBK Banque Privee’s wealth management
finance in Kuwait segments such as affluent and mass affluent, and aim to expertise
Offer differentiated services to large corporate clients attract new bankable clients such as SMEs Provide the best service with a dedicated team of over 30
leveraging other NBK units Achieve lowest cost of funds among Kuwaiti commercial well qualified and experienced private bankers
Increase market share in medium corporate segment banks Leverage NBK’s strong brand to acquire new clients and
through focused teams and relationship management Pioneer innovative multi-channel solutions including state retain onshore relationships
Focus on Government mega projects benefiting from of the art internet, mobile banking and call center Broaden the product portfolio to accommodate growing
NBK’s large capital base services needs
Maintain asset quality with emphasis on credit control and Focus on the evolution to segment of one by providing
risk management tailor-made propositions aiming at better cross-sell,
increased product penetration, proactive attrition
management utilizing the latest tools and technologies
NBK is a full-service bank that offers a broad suite of financial services and products
to clients, meeting their ever growing and evolving demands
National Bank of Kuwait 9International Operations
Established or
NBK’s international operations has been traditionally contributing up to circa 30% of the Group’s Branches Legal structure
acquired
bottom line with the Bank aspiring to increase this contribution.
The Bank generally aims to maintain a majority stake in its subsidiaries or at least maintain a decision International
making role.
NBK’s international presence is a differentiating factor for the Bank and an extension of the MENA London 1983 2 Subsidiary
franchise enabling better service and strengthening client relationships.
Specifically within the MENA region, the Bank is focused on growing its business in existing and new New York 1984 1 Branch
markets through attracting increased corporate and private customers.
Meanwhile, across the international locations, the Bank’s focus is on servicing its private and corporate Geneva 1984 1 Subsidiary
customers who are active internationally and growing its business with international companies that
are active in the MENA region. Singapore 1984 1 Branch
Within its international network, NBK is focused on managing risks and costs to improve efficiency and
achieve long-term cost savings and productivity gains. Paris 1987 1 Subsidiary
Shanghai 2005 1 Branch
Overview of Performance MENA region
Revenue Trends (USD mn) Balance Sheet Trends (USD mn) Bahrain 1987 2 Branch
Net Operating Income Net Profit Segment Assets Lebanon 1996 2 Subsidiary
36,601
728
690 680
Jordan 2004 1 Branch
Iraq 2005 5 Subsidiary
372 33,467
370
32,227 Saudi Arabia 2006 3 Branch
165
Egypt 2007 52 Subsidiary
2018 2019 2020 UAE 2008 2 Branch
2018 2019 2020
National Bank of Kuwait 10Boubyan Bank (59.9% owned subsidiary)
Market share of Total Assets(%) Highlights
Islamic banking has been gaining ground in the Kuwaiti market, representing
more than 40% of assets and deposits at year-end 2020.
7.6% After a series of gradual share acquisitions since 2009, NBK’s stake in Boubyan
6.5% bank reached 58.4% in 2012. Through Boubyan, NBK aims at diversifying its
5.5% 5.7%
5.1%
income stream, complementing its product offering as well as targeting a new
segment of clients.
The size and market share development of Boubyan relative to other Islamic
2016 2017 2018 2019 2020
banks leaves significant room for repositioning the bank and acquiring market
share.
Market share of Total Deposits (%) As the largest single shareholder, NBK is committed to the future growth and
transformation of Boubyan Bank and establishing a strong presence in the
growing Islamic banking segment.
Leading international consulting firms have assisted Boubyan in developing a
new strategy aiming to differentiate the bank from other players with a clear
focus on HNWI, affluent and mid/large companies.
The Bank’s transformation and strategy implementation is led by a highly
9.6%
7.9% 8.5% 8.9% proficient management team with extensive regional banking experience, with
7.4%
key positions filled by NBK veterans aligned with the NBK culture.
2016 2017 2018 2019 2020
Notes: Market share data based on the consolidated data of all banks operating in Kuwait. National Bank of Kuwait 11Maintaining Course with Our Sustainability Directions
NBK Sustainability Pillars
Respecting
Contributing Giving Back Caring for
Serving Leading in and
to Economic to Our Our
Customers Governance Developing
Development Community Environment
People
National Bank of Kuwait 12Close Alignment With International Frameworks and ESG Raters
National Bank of Kuwait 13NBK’s 2020 ESG Highlights
Environmental Social Governance
With leadership in business and
Caring for our environment is a Wellbeing of external and internal
governance among our sustainability
priority as we actively measure and stakeholders is of critical importance
priorities, NBK continues to strive to
assess the environmental impacts of as we remain committed to show our
integrate sustainable practices into
our business and operations. values to our people.
its corporate governance practices.
Completion of our new LEED Gold 45.8% Female employee Ratio Reformation of Board Risk Committee
Headquarters to Board Risk and Compliance
72.7% Kuwaitization
Committee
Inclusion in Refinitiv AFE Low Carbon 51.9 k Employee training hours
Select Index MENA
77% Local Procurement Appointment of two independent Board
840 Kgs Plastic collected and recycled of Directors (March 2021)
Supporting nationalization programs in
from branches
Kuwait including NBK Academy
Updated and published various policies
98 tons of paper recycled Provided training center facilities for 110 and statements including:
participants in LOYAC
Total GHG emissions of 5,152 MT
Human rights statement
CO2e Organized training courses for 141
candidates (Ministry of Justice)
Advertising Code policy
Sponsoring TAMKAN graduate training
scheme (32 fresh graduates) Brand protection policy
National Bank of Kuwait 14Contents
Section 1 Overview of NBK
Section 2 Strategy and Business Overview
Section 3 Operating Environment
Section 4 Financial Performance Highlights
Section 5 Appendix
National Bank of Kuwait 15Overview of Kuwait
Overview Fiscal breakeven oil price
The State of Kuwait is a sovereign state on the coast of the
90 90
Arabian Gulf with a population of 4.7 million 84
85 Excl inv inc Incl inv inc 85
80 80
Kuwait is a constitutional monarchy, headed by His Highness the 73
75 75
Emir, Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah 72
70 70
68 66
65 65
Kuwait enjoys an open economy, dominated by the government 60
61
60
62 62
sector. Its economy is primarily dependent on the oil industry, but 55
57 54 54 55
54
has witnessed growing contribution from non-oil sectors 50 48 50
46
45 45 45
Kuwait has one of the lowest industry breakeven oil prices in the 40
45
40
13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21
world and a fiscal breakeven lower than some other GCC
countries, making it more resilient to low oil prices. It has one of
the world’s largest sovereign wealth funds and very low debt, Key economic indicators
which underpins the investment grade sovereign credit rating
Key Indicators 2020 2021F
Kuwait has a long-term policy vision under the banner of
Sovereign Ratings A1 / AA- / AA (M / S / F)
“Kuwait Vision 2035”. It encompasses six strategic aims:
increasing GDP growth; encouraging the private sector; Current Account $33.5 bn $28.8 bn
supporting human and social development; promoting Gov Revenues* (% GDP) 32% 39%
demographic policies; enhancing and improving the
Public Debt* (% GDP) 12% 17%
effectiveness of government administration and consolidating the
* Financial year. Debt projections assume debt law is approved in FY21/22
country’s Islamic and Arab identity
Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, NBK estimates National Bank of Kuwait 16Kuwait’s Economy
Recent Developments Real GDP (% y/y)
GDP declined by 8.8% in 2020 due to sharply lower oil production as Kuwait
Total Non-oil
adhered to OPEC+ cuts and reduced non-oil activity resulting from the
coronavirus pandemic. Headline growth could rebound to 0.5% in 2021 as 10 10
5.7 4.2
GDP Growth these cuts are partially reversed. 3.0
5 3.2 2.5 2.6 5
1.1 1.3
Non-oil GDP contracted 8.8% in 2020 after mobility restrictions were imposed 0.5 0.6 0.0
to contain the pandemic. Growth could rebound 3.0% in 2021 as private 0
2.4
0
consumption recovers. 2.9 -0.6 0.5
-5 -5
-4.7 -8.8
After cutting spending in FY20/21 to address the fiscal deficit, the FY21/22
budget outlined a 7% rise in outlays, including a targeted 20% rise in capex. If -10 -8.9 -10
Public 2013 2014 2015 2016 2017 2018 2019 2020 2021f
implemented, this would help spur the recovery in economic growth.
Finance and
Inflation Inflation accelerated to 2.1% in 2020, mainly on higher food prices, and is
expected to average 2.5% in 2021; there is some downside risk from potential Private credit (change, %y/y)
softness in residential real estate rents.
10 10
Month end 12 month average
Consumer spending took a major hit during the lockdown months, but has 8 8
bounced back appreciably. Total spending (POS/ATM) was up 49% y/y in June
Consumer 2021, albeit boosted by weakness at the same time last year. 6 6
Sector
Loan payment deferrals, the number of nationals in stable public sector jobs 4 4
and reduced overseas travel have supported spending.
2 2
0 0
Private credit growth has slowed so far this year, up 2.9% y/y in April 2021. But Apr-17 Apr-18 Apr-19 Apr-20 Apr-21
household borrowing is strong and business credit should benefit from the
economy returning to a more normal footing. The policy interest rate is at 1.5%.
Credit Growth Real estate sales 12m average (KD mn)
Deposits were down 1.2% y/y in April, but the reinstatement of loan repayment
deferrals should be positive; government deposit growth (-7.5% y/y) should get
200 200
a boost from higher oil prices this year, helping liquidity. Commercial Residential Investment
150 150
Property sales have returned to pre-Covid levels having been hard-hit in 2020.
Recent strength is mostly from the residential sector which could hold up well 100 100
Real Estate given the solid demand base and potentially get a further boost if the mortgage
Activity law is approved. 50 50
0 0
May-17 May-18 May-19 May-20 May-21
Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, Refinitiv, NBK estimates National Bank of Kuwait 17Kuwait’s Banking Sector
Snapshot
The Kuwaiti banking sector comprises 23 banks, including 11 domestic banks (five conventional, five Shariah-compliant and one specialized), and branches of 12 international banks
(11 conventional and one Islamic).
The sector is well regulated by the Central Bank of Kuwait (“CBK”) with a number of regulations and supervisory norms to ensure the safety of the banking sector including through
strict supervision and imposition of prudential ratios, such as lending limits and concentrations, investment limits, liquidity and capital adequacy.
The banking sector has demonstrated strong resilience and elevated levels of financial soundness over the past 10 years. In fact, the sector is very well capitalized, with an
average Capital Adequacy Ratio of 19.0% in 4Q20, 8.5% higher than the required minimum of 10.5%. Non-performing loans to total loans stood at 2.0% in 4Q20.
Key indicators (USD bn, end year) 1 Development of the Discount rate (%, end year2)
Loans Deposits
122.1 122.0 126.6 129.9 3.5 3.5
119.4 121.9
110.7 108.0 114.2 110.8 109.8 113.6 113.0 116.6 116.7
102.1 3.0 3.0
2.5 2.5
2.0 2.0
1.5 1.5
1.0 1.0
2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Sources: Central Bank of Kuwait / Refinitiv
National Bank of Kuwait 18
1Loans refers to total credit facilities to residents and deposits refer to private resident deposits, all as reported by the Central Bank of Kuwait. 2 Latest figure is for end-June 2021Dominant Kuwaiti Franchise
NBK is the leading banking group in Kuwait with a market leading position across its business segments
Total Assets (USD million) Customer Deposits (USD million)
National Bank of Kuwait 97,996 National Bank of Kuwait 56,403
Kuwait Finance House 70,906 Kuwait Finance House 50,511
Burgan Bank 23,433 Boubyan Bank 16,843
Gulf Bank 21,227 Burgan Bank 13,492
Boubyan Bank 20,157 Gulf Bank 13,302
Al-Ahli Bank of Kuwait 16,002 Al-Ahli Bank of Kuwait 11,494
Commercial Bank of Kuwait 14,472 Ahli United Bank 9,920
Ahli United Bank 14,411 Commercial Bank of Kuwait 7,812
Warba Bank 11,460 Warba Bank 7,761
Kuwait International Bank 9,239 Kuwait International Bank 5,424
0 20,000 40,000 60,000 80,000 100,000 120,000 0 10,000 20,000 30,000 40,000 50,000 60,000
Customer Loans & Advances (USD million) Net Profit attributable (USD million)
National Bank of Kuwait 57,722 National Bank of Kuwait 812
Kuwait Finance House 35,441 Kuwait Finance House 489
Boubyan Bank 15,905 Boubyan Bank 114
Burgan Bank 14,328 Burgan Bank 111
Gulf Bank 14,208 Ahli United Bank 98
Al-Ahli Bank of Kuwait 10,279 Gulf Bank 95
Ahli United Bank 10,268 Warba Bank 19
Warba Bank 8,235 Kuwait International Bank 0
Commercial Bank of Kuwait 7,515 Commercial Bank of Kuwait -
Kuwait International Bank 6,526 Al-Ahli Bank of Kuwait (230)
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 -250 -50 150 350 550 750 950
Sources: Bank’s annual reports. All data as of 31 December 2020 for Balance Sheet items and Income Statement Items.
Note: Kuwait Finance House, Boubyan Bank, AUB, KIB and Warba Bank are Islamic banks while Burgan Bank, CBK, Gulf Bank, Al-Ahli Bank of Kuwait are conventional banks.
National Bank of Kuwait 19Contents
Section 1 Overview of NBK
Section 2 Strategy and Business Overview
Section 3 Operating Environment
Section 4 Financial Performance Highlights
Section 5 Appendix
National Bank of Kuwait 20Operating Performance & Profitability
Profitability (USD mn) Operating Income Composition (USD mn)
Net Operating Income Net Profit
NII & NI from Islamic financing Non-interest income
2,953
2,778 2,953
2,778
23%
25%
1,503 1,503
1,323 1,377 1,377
23% 26%
812 77% 75%
534
369 74%
77%
2019 2020 1H 2020 1H 2021 2019 2020 1H 2020 1H 2021
Return on average assets (%) Return on average equity (%)
1.42% 12.3%
1.05% 9.2%
0.82% 7.0%
0.75% 6.3%
2019 2020 1H 2020 1H 2021 2019 2020 1H 2020 1H 2021
National Bank of Kuwait 21Operating Performance & Profitability (cont’d)
1H 2021 Op. income by type (%) 1H 2021 Op. income by business line (%) Cost to income (%)
Others, 5% Consumer
FX, 3% & Private
Banking, Corporate,
16% 37.0% 37.2% 37.6%
33%
Fees, 18%
34.0%
Inv Bkg &
AM, 4%
Others,
1%
Net Interest Islamic
Income, Banking,
74% Intern'l,
21%
25%
2019 2020 1H 2020 1H 2021
Net Interest Margin (%) Net Interest Margin Drivers
2.56%
2.21% 2.25% 2.28% -0.37% +0.82%
2.25% 2.28%
-0.42%
2019 2020 1H 2020 1H 2021 1H 2020 Loans Others Deposits 1H 2021
National Bank of Kuwait 22Balance Sheet Parameters
Net loan portfolio (USD bn) Loans to assets (USD bn)
Net Loans Net loan growth YoY (%) Total Assets Loans/Assets
61.5 104.9
57.7 58.4
54.6 98.0 98.6
96.5
56.5% 58.9% 59.2% 58.6%
8.4%
6.8%
5.7% 5.3%
Dec-19 Dec-20 Jun-20 Jun-21 Dec-19 Dec-20 Jun-20 Jun-21
Loan exposure by sector (%) (as at 30 June 2021) Low loan concentrations (as at 30 June 2021) Assets by Type (as at 30 June 2021)
Crude Oil & Goodwill and
Gases, 7% other Other, 2% Cash and ST
Manufacturing, Other, 12% Top 20 Customers intangible funds, 14%
8% assets, 2%
Others CBK Bonds
Inv. and Kuwait
Financial ,
16% securities, Tbills, 4%
7% Real Estate,
15%
20% Deposits with
Trade & banks, 4%
Commerce, Construction,
7% 3% 84%
Purchase of
Securities, Loans,
Personal, 4% advances
33% and Islamic
financing to
customers,
59%
National Bank of Kuwait 23Funding and Liquidity Positions
Customer Deposits (USD bn) Funding Mix (Total Liabilities)
Due to banks and other Fis Customer Deposits
Certificates of deposit Other borrowed funds
56.4 58.3 57.8
52.5
64% 68% 64%
67%
30% 23% 25% 26%
Dec-19 Dec-20 Jun-20 Jun-21 Dec-19 Dec-20 Jun-20 Jun-21
Overview of Investment Securities1 – USD 15.6 bn
As at 31 December 2020
Other, 5% Amortized Cost
FVPL
18%
Equities, 1% 5%
Non-Gov't Debt,
38% Gov't Debt (non
Kuwait), 56% FVOCI
77%
Notes:1Excludes investments in Central Bank of Kuwait Bonds and Kuwait Government Treasury Bonds National Bank of Kuwait 24Capitalization and Asset Quality
Total Equity1 Breakdown (USD mn) Prudent capitalization (%)
Share capital Statutory reserves Tier 1 Tier 2
Retained Earnings Other Reserves & Treasury Shares
18.4% 18.2%
17.8%
16.8%
11,323 10,915 11,107 1.9% 2.4% 2.5%
10,229 1.9%
3,382 3,134 2,719
2,229
4,715 4,392 4,641 4,861 15.9% 16.0% 14.9% 15.7%
1,076 1,129 1,084 1,138
2,151 2,259 2,275 2,389
Dec-19 Dec-20 Jun-20 Jun-21 Dec-19 Dec-20 Jun-20 Jun-21
Prudent Provisioning (USD mn) Provisions and Impairments (USD mn) Asset Quality Ratios (%)
Specific Provisions General Provisions Provisions for Credit Losses Other Impairment Losses Loan Loss Coverage Ratio NPL Ratio
813
2,266
95
1,668 1,678
1,702 428 421
24 272% 186% 2.45%
718 91 323
1,269 1,309
10 220%
404 1.77% 152%
330 313 1.72%
564 1.10%
398 368
2018 2019 2020 2019 2020 1H 2020 1H 2021 Dec-19 Dec-20 Jun-20 Jun-21
Notes:1Equity here refers to total equity attributable to the shareholders of National Bank of Kuwait S.A.K.P. National Bank of Kuwait 25Expected Credit Losses (ECL) 1H 2021
Financial Statements ECL Disclosure (USD mn) Total Gross Loans (USD bn)
Stage 1 Stage 2 Stage 3
30 June 2021 Stage1 Stage 2 Stage 3 Total
60.3 60.0 63.8
2% 2% 3%
Loans, advances and Islamic 7% 10% 9%
financing to customers 56,449 5,791 1,603 63,843
91% 88%
88%
Contingent liabilities 12,078 2,554 107 14,740
ECL allowance for credit
facilities 443 525 1,128 2,096
Jun-20 Dec-20 Jun-21
ECL Allowance for Credit Facilities CBK Credit Provisions vs IFRS 9 ECL (USD mn)
CBK Provision ECL* Excess over ECL
2,504
2,387
2,080
Stage 1 Stage 1 Stage 1 408
21% 392
25% 21%
337
Stage 3
Stage 2 47%
Stage 3 Stage 2 Stage 3 Stage 2
54% 21% 25%
32% 54%
1,995 2,096
1,743
June-20 (USD 1,743 mn) Dec-20 (USD 1,995 mn) June-21 (USD 2,096 mn)
Jun-20 Dec-20 Jun-21
* ECLs as per CBK guidelines
National Bank of Kuwait 26Contents
Section 1 Overview of NBK
Section 2 Strategy and Business Overview
Section 3 Operating Environment
Section 4 Financial Performance Highlights
Section 5 Appendix
National Bank of Kuwait 27Kuwait Selected Mega Projects
Project Sector Value (KD bn) Scope Status
Underway: The infrastructure works have progressed up to 93% on Plots N2 & N3 and up to 67% on Plots N1 & N4. Roads
South Al Mutlaa City Housing 2.33 30,000 residential units, schools and other facilities construction has progressed up to 52% and is scheduled to be completed by Mar-2023. Likewise, construction works have
commenced on water distribution network.
Housing Underway: Infrastructure works completed. Project was in the execution stage as per latest update in May-2020 and scheduled to
Jahra & Sulaibiya Low Cost Housing City 0.6 Low cost housing project north of Kuwait City; 824 Hectares
complete in 2030.
New Refinery Project Underway: Construction works are complete on P-1 to P-5. The project is to operate by end-2021 from June-2021. Final
Oil & gas 3.90 New 615,000 bpd refinery by KNPC
(NRP) consultancy contract yet to be awarded.
Clean Fuels Project Specification upgrade and expansion of 2 existing refineries to produce Complete: Overall progress 100%. Construction works completed. The project is currently under operation and the time for its
Oil & gas 3.70
(CFP) 800,000 b/d. shutdown mechanical maintenance is still unknown.
Jurassic Non Associated Oil & Gas Reserves Production of 120,000 b/d of wet crude and more than 300 million cubic Underway: Construction activities completed on West and East Raudhatain field, Sabriyah and Umm Niqa and commissioning is
Oil & gas 1.22
Expansion: Phase 2 feet a day (cf/d) of sour gas underway. JPF-4 & 5 bids submitted. The invitation to bid for JPF-6 and 7 are not yet issued and tendency towards cancellation.
Planning: FEED works completed. Project Engineering and Management Services for 6 years contract has been awarded. ITB
Petrochemical Facility at Al-Zour Oil & gas 2.0 Petrochemical plant to be integrated with Al-Zour refinery.
expected by 4Q2021 for 7 qualified bidders.
4 full containment LNG tanks each with a working capacity of 225,500 Underway: Progress at 97%. Dredging works have been completed and undertaken while construction works are still progressing
LNG Import and Regasification Terminal Oil & gas 0.80 3
m and a regasification plant with capacity of 1500 BBTU/day and expected to be completed by 2022.
Complete/Planning: Overall progress 55%. P-1 is complete. KAPP obtained approval to award the Transaction Advisory Services
1800 MW of power generation capacity and 464,100m3 /day of
Al-Zour North (IWPP) – P2 to P5 Power & water 0.5 contract for P-2 & P-3. P-4 & P-5 are under study.
desalination capacity
Net capacity of a min 1,500 MW of power and a min 125 MIGD of Bidding/Planning: KAPP obtained approval to award the Transaction Advisory Services contract . P-2 & P-3 are still in the study
Al-Khairan Power & Desalination Plant (IWPP) Power & water 0.51
desalinated water phase.
3
Initial treatment capacity of 500,000 m /d. Plant may replace Riqqa Underway: KAPP signed final agreements and financial closure has been achieved for the project. Construction works commenced
Umm Al Hayman Waste Water (PPP) Power & water 0.47
WWTP in future and set to be completed by Jan-2024.
Waste to energy facility; 50% of all the municipal solid waste produced
Kabd Municipal Solid Waste Project Power & water 0.3 On Hold: The project has been put on hold and the client is likely to cancel the project.
in Kuwait will be processed at the facility
Planning: Feasibility study for the project has been completed stating the PPP models is more economically viable than the
Kuwait Metropolitan Rapid Transit Transport 5.4 165 km transit line running across Kuwait.
traditional tendered approach.
To increase the annual handling capacity of the airport to 20 million Underway/Planning: Overall progress at 41%. Construction works ongoing on Terminal. P-2 contract for landside works is yet to be
Airport Expansion (New Passenger Building) Transport 1.90 passengers and new runways and infrastructure expansion awarded. Crossroads contract bid submission deadline ended Jun-2021. The main contract tender is yet to be issued on P-1 of
Package 1. The Cargo City (Package 4B) is still in its initial stage of development.
National Bank of Kuwait 28Consolidated financials 1H 2021 (USD million)
YoY Growth YoY Growth
Income Statement (USD million) 1H-2020 1H-2021 Balance sheet (USD million) June-2020 June-2021
(%) (%)
Interest Income 1,391 1,083 (22%) Cash and short term funds 12,527 14,476 16%
Interest Expense 558 247 (56%) Central Bank of Kuwait bonds 2,757 2,757 0%
Net Interest Income 833 836 0% Kuwait Government Treasury bonds 1,927 1,488 (23%)
Deposits with banks 3,698 4,282 16%
Murabaha and other Islamic financing income 379 374 (1%)
Loans, advances and Islamic financing to customers 58,366 61,461 5%
Distribution to depositors and Murabaha costs 154 102 (34%)
Investment securities 14,963 15,726 5%
Net Income from Islamic financing 225 272 21% Investment in associates 21 14 (34%)
NII and NI from Islamic financing 1,058 1,108 5% Land, premises and equipment 1,488 1,461 (2%)
Net fees and commissions 238 270 14% Goodwill and other intangible assets 1,936 1,929 0%
Other assets 907 1,300 43%
Net investment income (9) 60 NM
Total Assets 98,589 104,895 6%
Net gains from dealing in foreign currencies 85 53 (38%) Due to banks and other financial institutions 21,049 23,144 10%
Other operating income 6 12 NM Customer deposits 58,342 57,798 (1%)
Non-interest income 319 395 24% Certificates of deposit issued 1,667 4,655 NM
Net Operating Income 1,377 1,503 9% Other borrowed funds 1,977 2,724 38%
Other liabilities 2,597 2,422 (7%)
Staff expenses 282 314 11%
Total Liabilities 85,631 90,744 6%
Other administrative expenses 173 192 11%
Share capital 2,275 2,389 5%
Depreciation of premises and equipment 55 56 2% Proposed bonus shares - - NM
Amortisation of intangible assets 3 3 0% Statutory reserve 1,084 1,138 5%
Operating Expenses 513 565 10% Share premium account 2,667 2,667 0%
Treasury shares (130) - NM
Pre-provision profits (and impairments) 865 938 9%
Treasury share reserve 83 116 39%
Provision charge for credit losses and impairment losses 421 323 (23%) Other reserves 4,250 4,796 13%
Equity attributable to shareholders 10,229 11,107 9%
Operating profit before taxation 444 615 39%
Perpetual Tier 1 Capital Securities 1,456 1,458 0%
Taxation 51 55 6%
Non-controlling interests 1,272 1,586 25%
Non-controlling interest 24 27 13% Total equity 12,958 14,151 9%
Profit attributable to shareholders of the Bank 369 534 45% Total liabilities and equity 98,589 104,895 6%
National Bank of Kuwait 29Consolidated Statement Of Income (USD million)
USD million 2018 2019 2020
Interest Income 2,959 3,253 2,496
Interest Expense 1,091 1,390 880
Net Interest Income 1,868 1,863 1,617
Murabaha and other Islamic financing income 614 697 742
Finance cost and Distribution to depositors 204 287 270
Net Income from Islamic financing 409 410 472
Net interest income and net income from Islamic financing 2,277 2,273 2,089
Net fees and commissions 495 518 481
Net investment income 7 28 7
Net gains from dealing in foreign currencies 129 130 126
Other operating income 5 5 75
Non-interest income 636 680 689
Net Operating Income 2,913 2,953 2,778
Staff expenses 528 579 575
Other administrative expenses 325 326 337
Depreciation of premises and equipment 48 87 110
Amortisation of intangible assets 10 11 5
Operating Expenses 911 1,003 1,027
Op. profit before provision for credit losses and impairment losses 2,001 1,950 1,751
Provision charge for credit losses 558 404 718
Impairment losses 34 24 95
Operating profit before taxation 1,409 1,522 938
Taxation 110 117 85
Non-controlling interest 77 81 41
Profit attributable to shareholders of the Bank 1,222 1,323 812
National Bank of Kuwait 30Consolidated Statement Of Financial Position (USD million)
USD million 2018 2019 2020
Cash and short term funds 9,783 12,489 12,782
Central Bank of Kuwait bonds 2,671 2,715 2,738
Kuwait Government treasury bonds 2,876 2,184 1,527
Deposits with banks 7,796 6,295 3,388
Loans, advances and Islamic financing to customers 51,124 54,584 57,722
Investment securities 12,129 13,898 15,594
Investment in associates 104 116 17
Land, premises and equipment 1,196 1,430 1,408
Goodwill and other intangible assets 1,909 1,922 1,919
Other assets 859 891 812
Total Assets 90,447 96,524 97,996
Due to banks and other financial institutions 26,679 25,002 19,725
Customer deposits 47,449 52,533 56,403
Certificates of deposit issued 1,488 1,776 3,030
Other borrowed funds 1,137 1,161 2,667
Other liabilities 1,488 2,007 2,516
Total Liabilities 78,241 82,478 84,341
Share capital 2,049 2,151 2,259
Proposed bonus shares 102 108 113
Statutory reserve 1,024 1,076 1,129
Share premium account 2,648 2,648 2,648
Treasury shares (216) (129) -
Treasury share reserve 46 83 115
Other reserves 4,777 5,387 4,650
Equity attributable to shareholders of the bank 10,431 11,323 10,915
Perpetual Tier 1 Capital Securities 695 1,446 1,446
Non-controlling interests 1,079 1,276 1,295
Total equity 12,205 14,045 13,656
Total liabilities and equity 90,447 96,524 97,996
National Bank of Kuwait 31Contact
Contact Investor Relations Useful information
E: Investor-Relations@nbk.com
Download copies of NBK’s:
National Bank of Kuwait (NBK)
PO Box 95, 13001 Safat Kuwait • Financial statements
Al Shuhada Street, Block 7, Sharq • Earnings release
State of Kuwait • Annual report
National Bank of Kuwait 32National Bank of Kuwait
Investor Presentation
July 2021
National Bank of Kuwait 33You can also read
