Al-Sager: NBK’s profit for 2023 is highest ever in Group’s history

KUWAIT: Isam Al-Sager, the Vice Chairman and Group CEO of National Bank of Kuwait (NBK), said, “We have posted the highest annual profit ever in the Group’s history, continuing to deliver solid performance supported by our diversified business model, strategic investments and flexibility in the face of various economic conditions.

Isam Al-Sager.

On the sidelines of the analyst conference for the results of FY 2023, Al-Sager added, “We achieved a year-on-year growth of 15.6 percent in net operating income to reach KD 1.2 billion for the year. The increased momentum in the operational performance was achieved across key areas including most importantly international operations and wealth management.”

“We remain committed to creating value to our shareholders as our performance ratios continued to improve with return on average assets reaching 1.53 percent while our return on average equity reached 15.0 percent for the year,” he indicated. “In Kuwait, our strategy continues to focus on strengthening our position in key market segments, expanding our customer base through digital offerings and exceptional customer experience. While on the corporate side, we remain at the forefront of Kuwait’s infrastructure agenda. Our diversification plans continue to benefit from our Islamic banking arm, Boubyan Bank and our international operations, as both have continued to grow their contribution to the Group,” Al-Sager emphasized.

“Moreover, and in line with the Group’s strategic plans to expand and offer a holistic investment and wealth management solution, NBK Wealth emerged to provide our high-net-worth clients base with tailored offerings that meet their evolving needs,” he mentioned.

“The Group will continue executing its responsible growth strategy, investing in innovation and new technologies. Our digital investments are positioning the bank as a leader in advancing customer-centricity and prioritizing user experience,” he explained.

Housing law

On the updates of the housing law, Al-Sager said: “There is progress as there are some ongoing discussions involving all relevant stakeholders to improve the draft law and address the residential housing challenges. There are a lot of positive signs with the appointment of the new prime minister and his newly appointed cabinet. Also, the recent engagement and cooperation between the parliament and the cabinet ministers is positive and will lead to improvement in executing so many things that have been delayed mainly the mega projects that we feel will go ahead once there is better understanding between the two sides.”

On a question about NBK’s plans for branch expansion in KSA and the outlook of business growth, Al-Sager mentioned: “We continue with our successful execution of our strategy and expansion in growth markets including the Saudi market which is a key component of it. We operate currently in KSA through 3 branches, in Riyadh, Jeddah and Eastern Province and target to expand in the Saudi markets on the corporate banking front and wealth management; leveraging on the solid base we established in those areas of business in KSA, especially on the wealth management front.”

“Globally, we are also implementing our strategy to be in key markets with more focus on GCC as well as other international locations,” he added. On another question about his view for the project market in 2024, Al-Sager said: “The value of projects awards in 2023 reached more than KD 2.5 billion. In the meantime, because of the backlog of awards from pandemic time and the weakness in the project market in post pandemic years; last year represented a good rebound. The value of projects awards almost tripled year-on-year in 2023 to reach the levels before mentioned.”

“There is optimism for this year that the value of project awards would be doubled in 2024 forecasts point to more than KD 5-6 billion worth of project awards, mainly in the energy and oil sector. With the appointment of the new government, we are optimistic that it will remain committed towards accelerating the awards pipeline across various sectors.”

On his part, Sujit Ronghe, Group CFO commented on the year-end financial results saying, “We have announced a net profit of KD 560.6m for 2023, the highest ever in the Group’s history. This is a 10.1 percent increase in bottom line profit over the last year. These results stem from a strong operating performance by the Group and demonstrate the continued growth in our business.”

“Higher interest rate regime and an overall stable operating environment in Kuwait have benefitted the Bank during 2023. Inflationary conditions in the USA and some other advanced economies have gradually improved, although the risk of a possible recession cannot be ruled out completely. Geo-political developments in the region and beyond have affected the global operating environment unfavorably, especially in the last quarter of 2023,” he added.

“Looking forward, ongoing regional and international geo-politics, prospects of lower interest rates coupled with possibility of recessionary conditions, are likely to result in a macroeconomic environment which is less conducive to growth. We however remain cautiously optimistic that the overall operating environment, although challenging, will remain generally stable during 2024,” he elaborated. On the outlook for loan and deposit growth in 2024, Ronghe said, “The loan growth during the 2023 came mainly from corporate related activity in Kuwait and across our overseas locations. During the year we noted an increased demand credit in Kuwait, regionally and also in our locations in the western world. That said, considering the combination of geo-politics and macroeconomic factors both regionally and globally, we have given a guidance of a mid-single digit loan growth for the full year of 2024. The Group has a strong and well diversified pipeline of credit facilities.”

With respect to the total capital ratio, Ronghe said that the bank targets to maintain a buffer of 1.5-2.0 percent at the year-end; over the minimum regulatory capital requirement of 15 percent; targeting a capital adequacy ratio of 16.5-17 percent. We expect some flexibility of lower thresholds for CET1 and Tier 1 ratios but expect to be in the range of 1.5 percent over the minimum at the year-end.

On the expectations for credit cost trends in 2024, he said: “On the background of 2022, 2023 was a much more normal year for the bank on the provisions front, with the cost of risk averaging 36 basis points comprising both specific and general provisions, including the precautionary provisions. We can expect 2023 to be a good base for guiding the cost of risk. With the overall operating environment remaining stable, we can expect cost of risk for 2024 to range between 40 and 50 basis points.”

•We achieved increased momentum in the operational performance across key areas including international operations and wealth management

•Our strategy continues to focus on strengthening our position in key market segments and expanding our customer base

•We launched “NBK Wealth” to provide our high-net-worth clients with tailored offerings that meet their evolving needs

Sujit Ronghe

•Our results stem from the Group’s strong operating performance and demonstrate the continued growth in our business

•Higher interest rates and stable operating environment in Kuwait have benefitted the Bank during 2023.