National Bank of Kuwait Financial Results – First Half 2019

National Bank of Kuwait announced the results of its operations for the first half of 2019 that ended in June 30th 2019, which indicate that the bank’s net profit (after tax deduction) scored KD 220.44 million, a rise by KD 23.70 million or by 12% versus KD 196.74 million in the first half of 2018. The bank achieved net profits for its shareholders by KD 209.09 million compared with KD 185.86 million in the same period in 2018, a rise by KD 23.24 million. The rise in the bank’s net profit is due to the decline in total provisions by 28.5% or by KD 26.81 million, compensating the rise in total operating income by a lower value than the rise in total operating expenses. 

In details, total operating income increased by KD 9.70 million or by 2.2% and scored KD 451.88 million versus KD 442.18 million in the same period of 2018. That resulted from the rise in item of interest income (excluding revenues from Islamic Financing) by KD 67.75 million, as well as interest expense (excluding Murabaha costs) that increased by KD 59.66 million. Therefore, net interest income increased by KD 8.09 million or by 2.9%. The bank achieved net income from Islamic Financing by KD 60.33 million versus KD 60.83 million for the same period of 2018. This raised the net interest income (in traditional and Islamic components) to KD 344.39 million compared with KD 336.81 million, a rise by KD 7.58 million or by 2.3%.  Likewise, item of net fees and commission rose by KD 2.24 million to KD 78.70 million versus KD 76.46 million.

Total operating expenses increased by a higher value than the rise in total operating income by KD 10.73 million or by 7.9% and scored KD 145.83 million compared with KD 135.11 million in the first half of 2018. Percentage of total expenses to total income scored 32.3% versus 30.6%. According to AlShall estimates, assuming the exclusion of the impact of aggregated Boubyan Bank results on operating expenses, we note an increase in operating expenses from KD 106.84 million to KD 117.17 million i.e. 9.7% increase. Total provisions scored KD 67.13 million dropping by KD 26.81 million i.e. 28.5% decline as mentioned previously, compared with KD 93.93 million.

Financial statements of the bank indicate the bank’s total assets increased by KD 442.6 million or by 1.6% compared with the end of 2018 and scored KD 27.870 billion. Total assets rose by KD 928.7 million, a 3.7% growth rate if compared with the total in the end of the first half of 2018 when it scored KD 26.942 billion. Excluding the impact of aggregated Boubyan Bank results, the growth rate would be 1.3%. Loans, advances and Islamic financing to customers, the largest component of the bank’s assets increased by 4.6%, i.e. KD 712.8 million, raising the total portfolio value to KD 16.216 billion (58.2% of total assets) versus KD 15.503 billion (56.5% of total assets) as of the end of 2018. It increased by KD 988.7 million, a 6.5% growth rate if compared with the first half of 2018 when it scored KD 15.228 billion (56.5% of total assets). If we exclude the impact of aggregated Boubyan Bank results in its Islamic financing side, the growth rate would score 4.8%. Percentage of defaulting loans to the total credit portfolio scored 1.4% in the end of June 2019 compared with an exact percentage of 1.4% in the end of 2018. Defaulting loans’ coverage percentage decreased to 234% versus 254%.

Figures indicate that the bank’s liabilities (excluding equities rights) increased by KD 367.7 million or by 1.5%, and reached KD 24.094 billion compared with the end of 2018. It increased by KD 672.8 million, a 2.9% rise rate when compared with the total in the same period of 2018.  Excluding the impact of aggregated Boubyan Bank results, the growth rate would score 1.1%. Percentage of total liabilities to total assets scored 86.5% versus 86.9%.

Results of analyzing financial statements calculated on annual basis indicate that all bank’s profitability ratios rose compared with the same period of 2018. The average return on assets (ROA) increased to 1.6% versus 1.5%. The average return on equities (ROE) relevant to the bank shareholders rose to 13.2% versus 12.3%.  Likewise, the average return on capital (ROC) rose to 69.2% versus 64.9%.  Earnings per share (EPS) also rose to 31 Fils compared with 28 Fils for the same period in 2018. (P/E) scored 15.8 times compared with 13.4 times, due to the rise in the market price of the share by 30.4%, against a lower rise of the EPS by 10.7% when compared with their levels on June 30th 2018. (P/B) scored 1.7 times compared with 1.3 times.