National Bank of Kuwait's fourth-quarter net profit rises more than 25% on revenue boost

Gulf country's biggest bank posts its highest annual profits on record

The National Bank of Kuwait is the country's biggest bank by assets. Photo: National Bank of Kuwait

The National Bank of Kuwait, the biggest lender in Kuwait, said its fourth-quarter profit jumped more than 25 per cent as its operating revenue climbed amid the country's continued economic recovery from the pandemic-induced slowdown.

Net profit attributable to the shareholders of the bank for the three-month period ended December 31 rose to 134.8 million Kuwaiti dinars ($441 million), from 107.4 million dinars in the same period of 2021, the lender said on Sunday in a filing to Boursa Kuwait.

Net operating revenue for the reporting period increased more than 17 per cent in the fourth quarter to 262.3 million dinars.

The lender's full-year profit in 2022 also rose to a record level despite a “challenging” global operating environment, it said.

Net profit attributable to the shareholders of the bank surged 40.5 per cent to 509.1 million dinars last year, from 362.2 million dinars in 2021, on higher operating income and lower provisions charges for credit losses, it said.

Full-year earnings were driven by a “solid” operational performance across all its business segments and the bank's strong financial position, Hamad Al Bahar, NBK's group chairman, said.

“Over the course of the year, new challenges emerged, including geopolitical tensions in Europe in the wake of the war in Ukraine, as well as tightened monetary policies pursued by most central banks around the world in a bid to curb high inflation, which threatens a global economic slowdown in 2023,” he said.

“Nonetheless, NBK rose above those challenges, thanks to its prudent risk management approach and diversification strategy.”

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.

Last year, 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 multiple times in 2022 to rein in surging inflation and restore price stability.

NBK's net interest income for the year climbed more than 15 per cent to almost 584 million dinars. It drove net operating income 12.2 per cent year higher on an annual basis to 1 billion dinars in 2022.

The bank's non-interest income rose to 234.9 million dinars last year from 230.5 million dinars in 2021. Its operating expenses, however, also rose to 386.1 million dinars in 2022, from 352.4 million dinars in 2021.

Customer deposits increased by 10.4 per cent year-on-year to 20.2 billion dinars. Total loans and advances grew by 6.5 per cent year-on-year to 21 billion dinars.

The ratio of non-performing loans to gross loans ratio was at 1.42 per cent during last year.

In 2022, international operations accounted for approximately 26 per cent of overall group profits, with Islamic banking operations accounting for more than 10 per cent.

“This stellar performance is a testament to the resilience of our business model and our ability to capture opportunities while it also reflects positively on our solid foundation that we continue to nurture to overcome challenges and drive sustainable growth,” said Isam Al-Sager, NBK's vice chairman and group chief executive.

The board of directors proposed a cash dividend of 25 fils per share for the second half of 2022, bringing the total cash dividend for the year to 35 fils, accounting for 52 per cent of the lender's profit.