Al-Sager: We are more confident in continuation of the gradual recovery seen year-to-date

NBK Group CEO, on the sidelines of the Analyst Conference for 1H 2021

Mr. Isam Al Sager

Mr. Isam Al Sager

  • We are committed to embed ESG strategies in the heart of our business
  • S&P's affirmation of our ratings despite the downgrade of Kuwait's ratings proves our strong banking franchise
  • We are making rapid steps in strengthening our digital excellence and leadership in digital banking
  • NBK has an unwavering commitment to support the Kuwaiti economy and the business sector for rapid recovery from the pandemic
  • We proved resilient in defending and growing our margins by efficiently managing cost of funds
  • The mortgage law will help meet the growing residential housing demand in Kuwait
  • We are working on initiatives to measure and assess the environmental impact as climate change risks continue to emerge


  • 1Q profits reflect the Group’s solid performance and continued growth in its business volumes
  • The results of the first six months reflect continued recovery and strong balance sheet
  • Loan growth during 1H was strong, mainly driven by consumer and corporate

Mr. Isam Al-Sager, the CEO of National Bank of Kuwait (NBK) Group, said: “Our profitability in 1H 2021 was mainly driven by increased business volumes, growth in core banking fees as well as an improvement in cost of risk.”

On the sidelines of the Analyst Conference for the results of 1H 2021, Al-Sager added: “NBK posted a net profit of KD 160.8 million during the first half of 2021, growing by almost 45% year-on-year. For the three months ending 30 June 2021, we reported a net profit of KD 76.5 million; a year-on- year increase of 129%.”

Although the low interest rate environment continues to post some challenges, the Bank proved resilient in defending and growing its margins through efficiently managing cost of funds, Al-Sager noted.

Al-Sager emphasized that NBK Group’s strategy remains focused on the diversity of its operations, with various business segments making solid contributions to bottom line. Our scope to increase digitalization has achieved further success in delivering efficiencies within the organization and improving the convenience and quality of our products and services to customers.

“We continue to focus on accelerating our drive towards digital excellence as we look forward to becoming the leader in digital banking,” he added.

Al-Sager pointed out that NBK remains committed to supporting the economy of Kuwait, its businesses, citizens, and residents. By delivering on our social as well as economic responsibilities to the country, we are helping to build a stronger future for all.


NBK Group CEO mentioned that ESG generally is becoming a top priority across the Group and for its operations in various markets. In recent years, we have expanded our sustainability disclosures and have been issuing a detailed sustainability report since 2017.

We are more committed than ever before to integrating impactful ESG strategies across all aspects of our business, Al-Sager noted.

The Bank expects to announce initiatives being taken to better measure ESG impacts, with the highest priorities focused on assessing direct and indirect environmental impact, as climate change risks continue to emerge.

Credit ratings

On the recent S&P Kuwait’s sovereign rating and its impact on the bank’s operations, Al-Sager said that we know that Kuwait’s ratings have been on a negative outlook by S&P for some time and for the same obvious reasons that we all know, most importantly the lack of reforms and lack of funding strategy for politically driven reasons. Usually, there is a direct impact on the bank’s ratings from any sovereign rating action.

However, Al-Sager noted that all rating agencies have clearly stated in their comments, the banking sector in Kuwait is very strong and enjoys very comforting levels of profitability, liquidity, capitalization and asset quality.

Although our rating outlook was changed to negative following the action taken on Kuwait’s ratings but the ratings themselves were affirmed confirming our solid fundamentals and accordingly we do not expect any impact on our operations, he added.

Mortgage Law

On the latest updates about mortgage law, Al-Sager mentioned that there is a pressing need for this law, as the existing housing finance mechanism by Kuwait Credit Bank will hinder the efforts to resolve the growing residential housing demand, especially considering the young population of Kuwait.

If a mortgage law is passed, the banks will benefit, as they will offer a new product that is expected to have large demand in the Kuwaiti market similar to what we have seen in other GCC countries, he added.

Regarding the increase in NPLs in the second quarter, Al-Sager highlighted that this increase is the result of the bank’s decision to take legal proceedings against a group of clients. This is a normal activity that the bank undertakes to maintain the strength of its legal and financial position against different exposures.

On his part, Mr. Sujit Ronghe, Acting Group CFO said that the increase of the bank’s net profit by 44.7% reflects a solid recovery by the Group, demonstrated by continued growth in business volumes, increased operating surplus and lower impairment losses and credit provisions.

Ronghe added that the first half of 2021 saw continued recovery and gradual improvement in underlying operating drivers, as well as a healthy balance sheet, comfortable liquidity levels and a solid capital base.

Loan growth

Ronghe pointed out that loan growth during the first half was very strong at 5.7%, almost a KD 1 billion on Dec-2020, mainly driven by consumer lending and corporate in Kuwait, international banking which contributed significantly to the growth and of course Boubyan Bank, which continued its pattern of strong growth quarter-on-quarter and year-on-year.

We expect the growth to continue in the coming 6 months, supported by a large pipeline of loans within international locations and at Boubyan, as well as on the consumer side. We may also witness growth on the consumer side as well. We are quite bullish with on the continuation of growth in loans at mid to high single digit for the full year 2021, he added.

On the funding cost side, Ronghe indicated that NBK had a major benefit since 1Q 2021, as the funding cost was at 0.79%, expecting funding cost to remain more or less stable or there could be small improvement. A large part of improvement is dependent on the continuation of CASA deposits and how long the benefit from these deposits would continue.

Ronghe noted that the cost of risk in 1H 2021 was lower than the first half of last year and also for the full year of 2020, and it is seeing a gradual reduction.

“We expect the cost of risk for 2021 to be lower than that of 2020. At the same time, the bank continues to prudently keep provisions as necessary to reflect current uncertainties given that we are not out of the COVID pandemic. That said, we expect cost of risk for 2021 to be lower than last year, but it is difficult to quantify at this point of time,” he added.


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