Ahli: Business Growth and Asset Quality Preservation

Kuwait National Bank (KNB) held its analysts’ conference to present the results for the first nine months of 2026, with participation from Group Chief Executive Officer Gilles Jan van der Tol, Chief Financial Officer Shyamak Sonawala, Head of Strategic Planning and Monitoring Dr. Abdulaziz Jawad, and Assistant General Manager of Strategic Planning and Monitoring Osama Ezzaldin, to explain the recorded financial indicators and the Group’s future strategic plans.

On this occasion, van der Tol stated that Kuwait National Bank maintained its positive momentum during the first nine months of 2026. The bank continued to expand its lending operations, boost profits, and improve asset quality, supported by a disciplined approach to risk and balance sheet management.

Van der Tol added that the Group’s priorities as the fourth quarter of 2026 begins are selective business growth, maintaining asset quality, disciplined capital allocation, and executing plans according to strategic priorities. He noted, “During the first nine months of 2026, we focused on meeting customers’ financing needs, strengthening relationships with them, and selectively expanding the bank’s business in our markets.”

He highlighted that net profit attributable to shareholders rose by 16.2% year-on-year to KD 54.2 million, while earnings per share increased to 17.6 fils.

Van der Tol stated, “Credit quality indicators are strong, with the non-performing loan ratio declining to 1.19% from 1.29% in September 2025, while the provision coverage ratio reached 355%. Risk costs also improved to 0.82%, compared to 1.06% a year ago.” He emphasized that capital and liquidity remain robust, with the Group’s capital adequacy ratio recorded at 17.25% in September 2026, the Tier 1 capital adequacy ratio at approximately 13.65%, and the Common Equity Tier 1 (CET1) ratio at 11.94%. The liquidity coverage ratio stood at 184%.

He pointed out that the bank is working to expand its capital base to support future growth and implement its new five-year strategy. Shareholders approved in September an increase in KNB’s authorized capital from KD 274.9 million to KD 600 million, providing greater flexibility to meet future capital requirements and business opportunities.

Van der Tol continued, “We obtained the required approvals from the Central Bank of Kuwait and the Capital Markets Authority for an increase in issued and paid-up capital by KD 75 million, or 27.29%, bringing it to KD 349.9 million. This was achieved through the issuance of 750 million shares at a price of 200 fils per share, including an issue premium of 100 fils. The increase totals KD 150 million, comprising KD 75 million in nominal value and KD 75 million in issue premium. This increase is expected to improve the CET1 ratio and capital adequacy ratios by approximately 280 basis points, providing additional capacity to support growth while maintaining appropriate capital buffers.”

Van der Tol affirmed, “We continue to invest in digital infrastructure and develop artificial intelligence capabilities to enhance customer experience, improve operational efficiency, and support product development aligned with evolving customer needs across all markets in which we operate.”

He added, “Our credit ratings have remained stable. Moody’s confirmed Kuwait National Bank’s rating at A2 with a stable outlook, while Fitch confirmed the bank’s rating at A with a stable outlook. These strong ratings support the bank’s creditworthiness.”

He continued: “Our employees remain a pivotal element in the performance of Kuwait Finance House and the execution of its strategy. We continue to develop leadership capabilities and strengthen a culture of responsibility and high performance standards across the Group. Kuwaitis hold approximately 67% of leadership positions, while women constitute 41% of the workforce. Developing local talent and maintaining an inclusive work environment remain among our priorities, as we provide the necessary capabilities to support the Group’s growth plans.”

Van der Toel concluded: “Based on what has been achieved, 2027 will be a year of expansion in our business and the delivery of the best sustainable returns for our shareholders.”

Positive momentum

For his part, Shyamak Sunawalla said: “We maintained positive momentum during the first nine months of 2026, driven by profit growth and stable operational performance. Our performance demonstrates sustainable progress across the Group’s departments overall, amid rising profits and balance sheet growth, improved asset quality, while capital and liquidity remained at comfortable levels. We will continue to sustain this momentum and deliver sustainable returns to our shareholders.”

He noted that net profit attributable to shareholders grew by 16.2% year-on-year to reach KD 54.2 million, while earnings per share increased by 18.1% to 17.6 fils. Return on average shareholders’ equity improved by 87 basis points to 9.33%, supported by higher profits and the performance of our core banking activities.

Operating income rose by 7.5% year-on-year to KD 177.5 million, primarily driven by an 11.3% increase in net interest income. Meanwhile, lower funding costs widened the net interest margin by 24 basis points to 2.50%. This led to a 5.5% increase in operating profit to KD 100.3 million, maintaining positive operational momentum.

He added: “The cost-to-income ratio stood at 43.5%, an improvement of 30 basis points compared to 43.8% recorded at the end of 2025.”

Sunawalla stated that corporate banking remained the largest contributor to operating income at 44%, followed by retail banking at 34%, and treasury and investments at 22%, providing a diversified profit base across the Bank’s core activities.

Strong position

He highlighted the maintenance of a strong capital position, with a capital adequacy ratio of 17.25% and a Common Equity Tier 1 (CET1) ratio of 11.94%, both significantly above regulatory requirements, providing ample headroom to support the Bank’s business and strategic priorities.

He revealed further improvement in credit quality metrics during the quarter, with the non-performing loan ratio declining to 1.19%, reflecting a prudent approach to managing the financing portfolio.

Loan loss coverage increased to 355%, compared to 340% in the previous quarter. We maintained loan provisions in line with Central Bank of Kuwait directives and in excess of International Financial Reporting Standard 9 (IFRS 9) requirements by KD 200 million, providing a strong buffer against potential credit pressures.

Sunawalla added: “Our balance sheet has maintained a balanced growth pace since December 2025, with total assets growing by 8.6% to KD 7.5 billion. Loans and advances increased by 10.2% to KD 5 billion, while customer deposits rose by 5.5% to KD 4.3 billion.”

Sonalal concluded: “Our liquidity coverage ratio reached 184% and our net stable funding ratio stood at 118%, both significantly above regulatory requirements, providing us with ample liquidity margins.”

Speaking of resilience, Dr. Abdulaziz Jawad said: “Our core operational activities in Kuwait reflect strong performance and resilience despite the challenges posed by the operating environment. In corporate banking, the low-cost deposit portfolio recorded notable growth. We maintained our disciplined focus on asset quality, sustainable returns, pricing policies, and capital efficiency, despite the pressures exerted by regional conditions on trade flows.”

He added: “We expanded our core customer base of salaried employees and continued to grow the number of high-net-worth clients, adhering to prudent credit controls. We launched three new cards for corporates and small and medium-sized enterprises (SMEs), offering cashback benefits and the Visa Spend Clarity service, as well as virtual cards designed to complement our ‘Tajer’ and ‘Tajer Plus’ offerings, thereby enriching our solutions for the business sector.”

He noted that Kuwait Finance House (KFH) continues to develop its home financing program, “ABK Build,” to meet customers’ financing needs and enhance their end-to-end experience by providing all related services they may require. This proactive step underscores the bank’s readiness to fully capitalize on the new mortgage law, the draft of which was recently issued. The law approves two financing models for eligible beneficiaries seeking housing support: subsidized and non-subsidized financing, with the option to combine them according to regulations set by the Central Bank of Kuwait.

The key next step is the issuance of the executive regulations within six months of the law’s publication to define the detailed implementation framework, including the cap on subsidized financing and organized procedures. The law will enter into force immediately upon the publication of these regulations.

He clarified that ABK Wealth Management, the investment arm of the group, continued to develop solutions for its clients by launching a new digital application that enables seamless digital onboarding, provides investment dashboards and advanced analytics, and offers easy access to a broad portfolio of investment solutions. It also continued to expand its investment services business through active engagement in regional financial markets.

Regarding awards, Jawad pointed out that the bank received 10 awards this year, recognizing continuous progress in its digital banking services, customer experience, governance, and wealth management. These included four awards in digital banking from Global Finance, two awards from Global Brands for excellence in governance, and the best call center in Kuwait. Additionally, the bank received four awards from International Finance, including the Best Bank in Investor Relations award, as well as two awards for ABK Wealth Management.

On strategic initiatives, Jawad stated: “We continued to embed environmental, social, and governance (ESG) sustainability frameworks at Kuwait Finance House through two strategic initiatives. The first involved launching an ESG policy framework, which establishes a formal structure for implementing the strategy, enhancing accountability, and integrating sustainability standards across our various operational activities.”

He noted that “in parallel, we have integrated climate risks into the Bank’s risk management frameworks, reinforcing our commitment to monitoring, assessing, and managing emerging risks, and supporting the Bank’s resilience and long-term sustainable growth. These initiatives are designed to work together to strengthen governance structures and deliver long-term sustainable value for all our stakeholders.” Jwad clarified that Kuwait Finance House (KFH) has maintained its firm commitment to the State of Kuwait and its society, contributing US$3 million to the Emergency Response Fund to support national efforts during exceptional circumstances.

Approval of Capital Increase

Jwad stated: “The Capital Markets Authority approved, on October 21, the prospectus for the increase in KFH’s issued and paid-up capital. The timeline has been finalized, with the subscription period running from November 8 to November 22. The full timeline, including due dates and the trading of subscription rights, can be found in our disclosures published via the Kuwait Stock Exchange, the KFH website, and ABK Wealth Management. We look forward with confidence to the continued support of our shareholders, as the additional capital will drive the next phase of our growth.”

He added: “The Group is close to finalizing its updated five-year plan. The strategy has been enriched across all our markets and core businesses, with a steadfast focus on sustainable growth, disciplined capital allocation, and improved returns.”

Future Focus

Dr. Abdulaziz Jwad stated: “Our future focus remains on the disciplined execution of our strategy across the various markets in which we operate, developing our customer relationships, enhancing operational efficiency, and building capabilities that support growth. We will continue to adopt a selective approach in resource allocation and risk management tailored to each market.”

Jwad concluded: “The progress we have achieved so far provides us with a solid foundation and the confidence to continue implementing our priorities for the remainder of 2026 and through 2027.”