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NBK reports net profits of KD 78.9 million for 1Q 2016

NBK reports net profits of KD 78.9 million for 1Q 2016


National Bank of Kuwait (NBK) reported net profits of KD 78.9 million (USD 262million) for the first quarter of 2016 compared with KD 96.5 million (USD 320million) for the same period in 2015. Adjusting for gains recognized in 1Q 2015 from the sale of NBK’s 30% stake in International Bank of Qatar (IBQ), net profits recorded a growth of 6.7% year on year.

Net operating income grew at 7.6% year on year to reach KD 179.2 million (USD 594 million) after adjusting for the sale of NBK’s stake in IBQ.

Total assets as of end of March 2016 reached KD 24.7 billion (USD 81.7 billion) up 5.8% compared to end of March 2015, while total shareholders’ equity increased by 1.7% to KD 2.6 billion (USD 8.8 billion). Customer loans and advances reached KD 13.6 billion (USD 44.9 billion) as of end of March 2016, growing at 9.6% year-on-year, while customer deposits grew by 4.9% for the same period to reach KD 12.3 billion (USD 40.6 billion).

NBK asset quality remained exceptionally strong with NPLs/Gross loans improving to 1.32% as of end of March 2016 from 1.47% a year ago, and NPL coverage increasing to 335% from 281% in March 2015.

Provision charges remained relatively high in 1Q 2016 resulting mainly from additional precautionary provisions in light of the ongoing uncertainty in global economic outlook and as oil prices remain under pressure.

Nasser Al-Sayer, NBK Chairman, said “NBK’s first quarter profits reflects NBK’s strong financial position, high asset quality, conservative management and the bank’s successful strategy as well as its conservative policy”
Al-Sayer affirmed that the strong set of results in 1Q 2016 are driven mainly by the solid growth of the core banking activities. Adjusting for the exceptional gains from the sale of IBQ, NBK’s net operating income grew at 7.6% year-on-year to KD179.2 million (USD 594.0 million) confirming the Bank’s strong position to seize growth opportunities locally and regionally.

Al-Sayer also added that “The impact of the large drop in oil prices on the domestic operational environment remains limited compared to other regional economies. Kuwait has ample buffers making the impact of lower oil prices relatively less and allowing the government to move forward with its expansionary policies and the execution of its development plan.”

Isam Al-Sager, NBK’s Group Chief Executive Officer said “NBK continues with its strategy that aims to better diversify the sources of income and strengthen the Bank’s position at the local and regional level. At the local level, NBK continues to defend its market share, achieving growth across all business lines. Moreover, NBK continues to reap the benefits from its acquisition of 58.4% of Boubyan Bank in 2012. Boubyan Bank has achieved strong growth and high performance since its acquisition increasing its market share year on year.”

Al-Sager also added that the performance of NBK’s international operations remains very lucrative despite the challenges that came with lower oil prices and uncertainty in global economic outlook. NBK Group generated 28.3% of the year’s profits from its branches, associates and subsidiaries outside Kuwait affirming the banks’ successful strategy of regional and international diversification.

“NBK enjoys a wide regional presence as an extension of the Kuwaiti market and continues to strengthen its position in those markets to focus on promising growth opportunities to achieve complementarity and integration across international operations” Al-Sager added.

It is worth mentioning that during 1Q 2016 NBK’s General Assembly approved increasing the bank’s authorized capital to KD 600 million. More recently, the Board of Directors approved increasing the bank’s issued and paid-in capital by 6.5% through a rights issue, issuing 344 million shares priced at 400 fils per share (a nominal value of 100 fils/share in addition to a premium of 300 fils/share).

This issuance aims to boost NBK’s capital base and enhance the Bank’s leading role in financing mega projects. The capital increase is a significant addition to NBK’s position being the largest financial institution in Kuwait with the most systemic importance. As of end-March 2016, NBK’s capital adequacy ratio (CAR) reached 16.4% exceeding regulatory requirements.

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).