National Bank Group... Business Growth and Maintaining Asset Quality

Analysts Conference on First Nine Months Results Confirms Execution of Plans According to Strategic Priorities

Gil Jan van der Tol: We will build on the progress achieved this year and continue to deliver sustainable returns to shareholders

Shyamak Sunawala: We maintained positive momentum during the first nine months... and our performance shows sustainable progress across the Group’s divisions

Dr. Abdulaziz Jawad: Our focus is on the disciplined execution of our strategy in various markets and developing our customer relationships

The National Bank of Kuwait (NBK) Group held its analysts conference regarding the results of the first nine months of 2026, with participation from Group CEO Gil Jan van der Tol, CFO Shyamak Sunawala, Head of Strategic Planning and Follow-up Dr. Abdulaziz Jawad, and Assistant General Manager of Strategic Planning and Follow-up Osama Ezzeldin, to explain the recorded financial indicators and the Group’s future strategic plans.

Selective Business Growth

In this regard, van der Tol stated that NBK 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 at the start of the fourth quarter of 2026 include 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 pointed out that net profit attributable to shareholders rose by 16.2% year-on-year to reach 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 loans ratio declining to 1.19% from 1.29% in September 2025, while the provision coverage ratio reached 355%. Additionally, the cost of risk improved to 0.82%, compared to 1.06% a year ago.” He emphasized that capital and liquidity are in a solid position, 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 ratio at 11.94%, while the liquidity coverage ratio stood at 184%.

New Five-Year Strategy

He indicated 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 the authorized capital of NBK from KD 274.9 million to KD 600 million, granting it greater flexibility to meet capital requirements and future business opportunities.

He added, “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, representing a 27.29% increase, 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, divided into KD 75 million nominal value and KD 75 million issue premium. This increase is expected to improve the Common Equity Tier 1 (CET1) ratio and capital adequacy ratios by approximately 280 basis points, providing additional capacity to support growth while maintaining appropriate capital buffers.”

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

Bank’s Creditworthiness

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

He continued, “Our employees remain a pivotal element in the National Bank of Kuwait’s performance 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 represent 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 delivering the best sustainable returns for our shareholders.”

Positive Momentum in the First Nine Months

For his part, Sonawala 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, 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 strong performance in core banking activities.

He pointed out that operating revenues 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 profits 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.”

Sonawala noted that corporate banking remained the largest contributor to operating revenues at 44%, followed by retail banking at 34%, and treasury and investment at 22%, providing a diversified profit base across the bank’s core activities.

Strong Capital 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 cushion to support the bank’s business and strategic priorities.

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

He stated, "Loan loss provisions coverage rose to 355%, compared to 340% in the previous quarter. We maintained loan provisions in accordance with Central Bank of Kuwait directives, exceeding the requirements of International Financial Reporting Standard 9 (IFRS 9) by 200 million Kuwaiti dinars, thereby providing a strong buffer against potential credit pressures."

Sonawala added, "Our balance sheet has maintained a steady growth pace since December 2025. Total assets grew by 8.6% to KD 7.5 billion, with loans and advances increasing by 10.2% to KD 5 billion, and customer deposits rising by 5.5% to KD 4.3 billion."

He said, "The liquidity coverage ratio stood at 184%, and the net stable funding ratio was 118%, both significantly higher than regulatory requirements, providing us with ample liquidity margins."

High Resilience Despite Operational Environment Challenges

For his part, Dr. Abdulaziz Jawad said, "Our core operational activities in Kuwait reflect high performance and resilience despite challenges in the operating environment. In corporate banking, the low-cost deposit portfolio recorded notable growth. We continued our disciplined focus on asset quality, sustainable returns, pricing policies, and capital efficiency, despite the pressures imposed by regional conditions on trade flows."

He added, "We expanded our core customer base of salaried employees and continued to increase the number of high-net-worth clients while adhering to prudent credit guidelines. We launched three new cards for corporates and small and medium-sized enterprises (SMEs), offering cashback features and the Visa Spend Clarity service, as well as virtual cards designed to complete our 'Tajer' and 'Tajer Plus' offerings, thereby enriching our business-oriented solutions."

He noted that National Bank of Kuwait (NBK) continues to develop its home financing program, "ABK Build," aiming to meet customers' financing needs and enhance their end-to-end experience by providing all related services they may require.

Mortgage Law

This move comes as a proactive step by the bank to confirm its full readiness to benefit from the new mortgage law, the draft of which was recently issued. The law approves two forms of financing for eligible beneficiaries seeking housing care: subsidized financing 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 operational framework, including the cap on subsidized financing and organized procedures. The law will enter into force immediately upon the publication of the executive 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 allows for seamless digital onboarding. The platform provides investment dashboards and advanced analytics, alongside easy access to a wide range of investment solutions. He also noted that the firm continued to expand its investment services business through active engagement in regional financial markets.

10 Awards in One Year

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

Two Strategic Initiatives

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

He explained that, concurrently, the bank integrated climate risks into its risk management frameworks, reinforcing its commitment to monitoring, assessing, and managing emerging risks. This supports the bank’s resilience and long-term sustainable growth, ensuring these initiatives complement each other to strengthen governance structures and deliver long-term sustainable value for all stakeholders.

Jawad clarified that the National Bank of Kuwait has maintained its firm commitment to the State of Kuwait and society, contributing $3 million to the Emergency Response Fund to support national efforts during exceptional circumstances.

Approval of Capital Increase

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

He added, “The Group is nearing completion of 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.”

Jawad noted, “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 exercise selectivity in resource allocation and manage risks specific to each market.” He concluded, “The progress we have achieved so far provides us with a solid foundation and confidence to continue implementing our priorities through the remainder of 2026 and into 2027.”