National Bank of Kuwait KP: Analyst Conference Transcript

PUBLIC

National Bank of Kuwait 3Q/9M 2022 Earnings Call

Sunday, October 23, 2022

Edited transcript of the National Bank of Kuwait Earnings Conference Call which took place on Thursday, October 20, 2022 at 3:00 p.m. Kuwait Time.

Corporate stakeholders:

Ms. Isam Al-Sager – Vice President and Group CEO, NBK

Mr. Sujit Ronghe – Group Finance Director, NBK

Mr. Amir Hanna – Head of Investor Relations and Communications, NBK

President :

Elena Sanchez – EFG Hermès

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This led the IMF to revise its global growth forecast for 2022 down to 3.2%; implying a risk of a slowdown in the global economy.

Despite difficult geopolitical unrest and a negative global economic outlook, GCC economies, including Kuwait, continued to exhibit positive sentiment supported by higher oil prices. Additionally, strong consumer and business sentiment is positively reflecting on non-oil activity, accelerating GCC growth. The IMF predicts growth of 6.5% for the region in 2022.

In Kuwait, the economy continues to show broadly positive signs despite concerns over the global outlook. The oil sector continues to be a key contributor to GDP growth, with oil production and prices posting gains large enough to translate into a significant fiscal surplus. Kuwait’s GDP growth is expected to reach 7.8% in 2022, driven by projected growth of 12.1% in the oil sector and 3.1% in the non-oil sector. With oil prices averaging $100 per barrel, we estimate that Kuwait’s fiscal balance will show a surplus of 10.2% of GDP in 2022/23 thanks to a slight increase in spending. We are convinced that these encouraging trends will provide a positive impetus to strengthen the outlook for the banking sector; while calls for increased investment spending are already dominating the scene.

On the political front, we remain optimistic that the newly formed cabinet and the elected parliament are committed to finding common ground to deliver a reset that will improve political cooperation and launch a period of political stability and create an environment conducive to economic growth and diversification. .

Moving to NBK, in the nine months ended September 2022, NBK built on its robust business model, recording a net profit of KD 374.2 million, growing 46.9% year-on-year. ‘other. For the three months ended September 2022, we recorded a 45.0% growth in net profit to reach KD 136.4 million; the highest quarterly profits recorded for the bank. This solid growth is explained by the increase in core banking revenues and a good improvement in the cost of risk.

The Bank continues to operate from a position of strength, relying on its strategy and financial strength. NBK’s prudent risk management, strong capital and liquidity positions and dynamic financial management enable the Group to weather headwinds effectively.

The Group will continue to implement its responsible growth strategy, investing in innovation and new technologies, while advancing its sustainable practices in all businesses and operations.

In Kuwait, we will leverage our market position to benefit from the anticipated recovery in activity which will positively impact wholesale banking, strong consumer sentiment and spending contributing to retail lending and our ability to provide innovative products and services. In addition, we continue to benefit from our

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