Kuwait lender NBK's third-quarter profit surges 45% on lower impairment losses

Gulf country's biggest bank posts profit of nearly $440m for three-month period

National Bank of Kuwait said its net interest income for the third quarter rose 23 per cent to 155.9 million dinars. Philip Cheung / The National

The National Bank of Kuwait reported a 45 per cent jump in its 2022 third-quarter profit as net interest income climbed and impairment losses dropped as the Gulf country's economic recovery from the Covid-19 pandemic continued.

Net profit attributable to the shareholders of the bank for the three-month period ending September 30 climbed to 136.4 million Kuwaiti dinars ($439.8m), from 94m dinars in the same period in 2021, the lender said on Wednesday in a filing to Boursa Kuwait, where its shares are traded.

Net interest income during the period rose by 23 per cent to 155.9m dinars while provision charges for credit losses and impairment losses dropped 22.3 per cent to 19.8m dinars.

The total earnings reported by the bank, the biggest lender in Kuwait by assets, beat an EFG Hermes estimate for the period.

NBK's non-interest income surged 25 per cent annually to 74.9m dinars. The bank’s operating expenses during the period rose 3 per cent to 99.2m dinars, according to the statement. NBK also reported higher income from Islamic financing.

Customer deposits by the end of September rose 11 per cent to 19.2 billion dinars compared with the same period last year. Loans, advances and Islamic financing to customers increased about 9 per cent to 20.6bn dinars.

The GCC's four biggest banking markets, the UAE, Saudi Arabia, Kuwait and Qatar are expected to “almost reach” pre-pandemic profitability levels by the end of 2022 as a result of high oil prices, rising interest rates and new public projects, according to a recent report by S&P Global Ratings.

“In the second half, we forecast a more visible strengthening of regional banks' interest margins and a manageable pick-up in cost of risk, amid lingering effects from the Covid-19 pandemic via loans that benefited from support measures and were then restructured,” S&P said. “Combined, these factors will be a net positive for banks' earnings.”

Last month, the central banks of the UAE, Saudi Arabia, Kuwait and Qatar raised their benchmark borrowing rates. This came after the US Federal Reserve raised its key interest rate for the fifth time this year to rein in surging inflation and restore price stability.

The Kuwait lender also said its nine-month profit climbed about 47 per cent to 374.2m dinars as net interest income increased about 10 per cent to 415.5m dinars and provision charges for credit losses and impairment losses fell about 67 per cent to 40.9m dinars.