National Bank of Kuwait (NBK), the largest Kuwaiti bank and the highest rated by Moody’s, Standard and Poor’s and Fitch Ratings in the Middle East and emerging markets, announced another record net profit of USD 704 million (KD 205.6 million) for 2005, up 37% from last year. The Bank also reported an improvement in return on average assets to 3.5% and return on equity to 36.6%. These results mark an outstanding performance by regional and international standards.
Mr. Ibrahim Dabdoub, CEO of NBK, commented on the 2005 results: "This was a remarkable year for NBK. Our financial results were outstanding, with record profits, exceptionally strong growth and superior returns to shareholders. They also validated the value of our discipline in managing risk and cost that was evident in the quality and diversification of our earnings, as well as in our ratings that are the highest in the ME and all emerging markets."
NBK's operating income topped one billion US dollars, rising by 35% from a year ago. Reported earnings do not include unrealized profits of USD 123 million that Dabdoub attributed to strategic long-term investments. The Bank's cost to income ratio dropped to 23.4% from 25.1% a year ago. The ratio of non-performing loans to total loans dropped to 1.4%, amongst the lowest worldwide, with provisions against such loans equivalent to 224% of their value. This confirms the Bank's reputation for having excellent asset quality and a long-standing, prudent credit culture.
Dabdoub added that the operating environment was on the whole very positive for banking services. Throughout the region, economic growth was particularly solid in 2005, confidence was high, and consumer spending and investment were strong, fuelling demand for credit. Capital markets were bullish and this created growth opportunities in investment banking and services. NBK's interest margins positively reflected the rise in interest rates, as well as its sound management and advantageous mix of liabilities.
"Our solid franchise and fundamental strengths allowed us to take advantage of the favorable business environment and expand our client base from all segments, thus generating balanced growth across business lines and regions," said Dabdoub. "Our success is propelled by a clear and focused vision of providing value to customers and maintaining strong relationships built on trust."
"Strategic initiatives aimed at deepening our market leadership and expanding our regional presence also produced positive results last year. We are very pleased with the strong results coming from our new markets in Qatar and Jordan alongside our established network in major financial centers. Our international network has long played an important role in supporting NBK's businesses from treasury, trade finance and corporate banking to private banking and wealth management," added Dabdoub.
In 2004, NBK acquired a 20% ownership stake in the International Bank of Qatar (formerly Grindlays Qatar Bank) together with full management control. Also in 2004, NBK opened a new branch in Amman, Jordan, and a tenth branch in Lebanon. "This year, we have added 4 branches to our network of 47 in Kuwait, opened a representative office in Shanghai - China, and started operations in Iraq through the newly acquired Credit Bank of Iraq. Our focus is to expand in markets with strong prospects and where we can leverage our fundamental strengths," said Dabdoub.
"To position ourselves for continued success in the future with our ambitious expansion strategy, we have embarked on a major transformation program that will provide us with a platform to operate on a larger scale, in a more open and competitive environment, and keep in step with the evolution of banking practices and converging technologies. We are investing heavily to develop our infrastructure and human resources. We also continue to support the national workforce and the share of nationals in our labor force has surpassed 50% this year", emphasized Dabdoub.
NBK has consistently earned the highest credit ratings in the Middle East by international agencies including Moody's, Standard & Poor's and FitchRatings, in recognition of its healthy performance, fine asset quality and solid capital base. Rating agencies also praise the depth and stability of NBK's management and its clear strategy as fundamental pillars for the Bank's superior ranking.
NBK's total assets reached USD 21.2 billion (KD 6.2 billion) at the end of 2005, while its shareholders' equity stood at USD 2.2 billion (KD 656 million).
© 2006 Al Bawaba (www.albawaba.com)
