Banking Sector’s Aggregated Performance 2019

The banking sector (comprising 10 Kuwaiti banks) net profits in 2019 decreased compared with 2018. Net profits after deducting taxes and minorities’ rights scored KD 980.7 million, declining by KD 3.6 million or by 0.4% compared with KD 984.3 million in 2018. This resulted from the absolute rise in the total value of provisions and taxes by a higher value than the rise in total operating profit for some banks, which reflected directly on the decrease in the value of the total net profits of the banks. It is worth mentioning that the rise in total provisions is not comprehensive. It’s worth mentioning that the increase total provisions are not comprehensive, as figures indicate that 5 banks’ provisions dropped during the period, while the increase in provisions of 5 other banks, reduced the rise in net profits, leading to the outcome of decreased net profits for the whole sector. When comparing net profits with 2017, we notice a rise by 25.6% versus KD 780.5 million. The following graph shows the banks’ results from 2007-2019:

Profits of the fourth quarter of 2019 amounted to KD 236 million, dropping by 15.7% compared to KD 280 million in the fourth quarter of 2018. Also, it decreased by 6% from the third quarter profits of 2019 and by 4.8% from profits of the second quarter of 2019 and by 4% from profits of the first quarter of 2019.

The banks continued to adopt the policy of blocking provisions against irregular loans though. Total withheld provisions in 2019 scored KD 677 million versus KD 646.7 million in 2018, rising by 4.7%.

Profits of five traditional banks totaled to KD 578.3 million, forming 59% of the 10 banks’ total profits and declining by 6.1% compared with 2018, indicating that total traditional banks’ profits had been affected by the “Commercial Bank of Kuwait” not achieving any profits related to its shareholders, due to withholding a noticeable amount of provisions during 2019. Islamic banks’ share of the profits was KD 402.4 million, forming 41% of the 10 banks’ net profits and increasing by 9.2% from 2018. Indicating that Islamic banks’ performance is growing unlike the traditional ones.

P/E multiplier for the 10 banks scored 19.5 times versus 14.6 times in 2018. Profitability rations declined compared with 2018, return on assets dropped to 1.1% versus 1.2%; return on equity also dropped to 8.6% versus 9.6%. Total cash dividends for the ten banks scored KD 499.5 million versus KD 514.2 million, decreasing by 2.9%.

Comparing the performance of the 10 banks, “National Bank of Kuwait” continued to achieve the highest share value by KD 401.3 million (60 Fils EPS), or about 40.9% of the 10 banks’ net profits, a rise by 8.2% versus 2018. “Kuwait Finance House” achieved the second highest profits by KD 251 million (36.45 Fils EPS) or 25.6% of the 10 banks’ net profits and a growth rate of 10.4% compared with 2018. As such, 2 out of the 10 banks, “NBK” and “KFH” captured 66.5% of the total 10 banks’ profits. “Warba Bank” was the least in contributions of the total profits but the highest in growth by KD 16.5 million versus KD 12.7 million in 2018, a growth rate of 29.8%. “Commercial Bank of Kuwait” didn’t achieve any profits related to its shareholders during 2019 as mentioned previously, recording the highest declining rate amongst the banking sector. Followed by “Al Ahli Bank of Kuwait ” in which its profits dropped by 31.9% reaching KD 28.7 million versus KD 42.1 million, the second highest declining rate.