NBK announced results of its operations for the year ending December 31st 2019, which indicated that the bank’s net profits (after tax deductions) scored KD 426 million, a rise by KD 32 million or by 8.1% compared with KD 394 million in 2018. The bank achieved net profits for its shareholders in the amount of KD 401.3 million compared with KD 370.7 million in the end of 2018, increasing by KD 30.6 million or by 8.2%. The rise in the bank’s profits was due to the decline in total provisions by KD 50 million or by 27.8%, compensating the rise in total operating expenses by a higher value than the rise in total operating income. The following graph displays the development in profits level relevant to shareholders from 2008-2019.
In details, net operating income increased by KD 12.3 million or by 1.4%, reaching KD 895.5 million compared with KD 883.2 million in the end of 2018. Item of interest income (excluding Islamic financing income) rose by KD 89.3 million alongside an increase in the item of interest expenses (excluding Murabaha costs) by KD 90.7 million. Therefore, item of net interest income decreased by KD 1.4 million, reaching KD 564.9 million versus KD 566.3 million. The bank achieved net income from Islamic financing by KD 124.3 million versus KD 124.1 million in the end of 2018. This increased net interest income (traditional & Islamic components) to KD 689.2 million compared with KD 690.4 million in 2018, a drop by KD 1.2 Million or by 0.2%.On the other hand, total operating expenses increased by a higher value than the rise in total operating income, rising by KD 27.9 million or by 10.1%, to reach KD 304.2 million compared with KD 276.3 million in the end of 2018. This was achieved as a result of the rise in all items of operating expenses, mainly item of staff expenses that increased by KD 15.7 million and item of depreciation of premises & equipment by KD 11.8 million. According to “AlShall” estimates, assuming the exclusion of the impact of the aggregated Boubyan Bank’s results on operating expenses, the increase in operating expenses would be from KD 219.6 million to KD 243.2 million, rising by KD 23.6 million or by 10.8%. Total provisions scored KD 129.7 million compared with KD 179.7 million, declining by KD 50 million or by 27.8% as mentioned previously.
Financial statements of the bank indicate the bank’s total assets increased by KD 1.843 billion or by 6.7%, reaching KD 29.271 billion compared with KD 27.428 billion in the end of 2018. Excluding the impact of aggregating Boubyan Bank, the growth rate would be 3.8% compared with 2018. Portfolio of loans, advances & Islamic financing to customers (the largest component of the bank’s assets) increased by 6.8% or by KD 1.049 billion, with a total portfolio valued at KD 16.553 billion (56.5% of total assets) versus KD 15.503 billion (56.5% of total assets) in 2018. If we exclude the impact of aggregating Boubyan Bank in its Islamic financing component, it will increase by 4.8%. Percentage of defaulted loans to the total credit portfolio decreased to 1.10% versus 1.38% in the end of 2018. Defaulted loans’ coverage percentage scored 272.2% compared with 228.1%.Figures indicate that the bank’s liabilities (excluding total equities) increased by KD 1.285 billion or by 5.4%, and scored KD 25.012 billion compared with KD 23.727 billion in the end of 2018. Excluding, the impact of aggregating Boubyan Bank, growth rate will score 2.5% compared with its level in the end of 2018. Percentage of total liabilities to total assets scored 85.4% compared with 86.5% in 2018.
Results of analyzing financial statements indicate that all bank’s profitability ratios rose compared with the same period of 2018. The average return on equities relevant to the bank shareholders (ROE) rose to 12.2% compared with 12%. Likewise, the average return on capital (ROC) rose to about 66.9% versus 65%. The average return on assets (ROA) increased slightly to 1.50% compared with 1.47%. Earnings per share (EPS) rose to 60 Fils compared with 55 Fils in the end of 2018. (P/E) scored 17.8 times compared with 16.7 times in 2018, due to the rise in EPS by 9.1% against a greater rise in the share market price by 28.3% compared with their levels in the end of 2018. (P/B) scored 1.6 times compared with 1.4 time for 2018.
The bank announced that it will distribute cash dividend by 35% of the nominal share value, i.e. 35 Fils and 5% bonus shares. This means that the share achieved dividend yield at 3.3% on the closing price in the end of 31/12/2019 at KD 1.070 per share.