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Al Sager: NBK Not Only Overcomes Challenges — It Transforms Them into Opportunities for a Stronger, More Sustainable Future

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KUWAIT CITY, Apr 23: Mr. Isam Al-Sager, Vice Chairman and Group CEO of National Bank of Kuwait ‎‎(NBK), expressed unwavering confidence in the bank’s ability to swiftly adapt to the ‎evolving economic landscape, all while maintaining its leadership position in the local market.‎

On the sidelines of the analyst conference call for the first quarter of 2025, Al-Sager stated, ‎‎”We not only overcome these challenges, but we seize them as opportunities to build a ‎stronger and more sustainable future.” He emphasized that NBK continues to enhance its ‎flexibility, investment, and technology, all while maintaining a steadfast commitment to the ‎highest quality standards in addressing the evolving needs of its customers.‎

He highlighted that NBK’s regional and international presence remains a key factor in ‎mitigating risks, stabilizing revenue, and improving operational efficiency. He further stressed ‎that the Group’s ongoing goal is to drive value and profitability by strengthening the ‎integration of its businesses and expanding cross-selling opportunities across the various ‎markets in which it operates.‎

Al-Sager emphasized that the Group’s wealth management business will continue to leverage ‎its extensive experience in delivering a comprehensive approach to portfolio management, ‎advisory services, and investment opportunities. Meanwhile, its Islamic banking arm, ‎represented by Boubyan Bank, will further reinforce NBK’s distinctive position in the local ‎market and play a pivotal role in diversifying its sources of profitability.‎

He attributed the 8.5% year-on-year decrease in the bank’s net profit for the first three ‎months of 2025 primarily to the introduction of the new Domestic Minimum Top-up Tax ‎‎(DMTT), which took effect this quarter. This led to an increase in the effective tax rate to ‎‎16.3% in 1Q2025, compared to 9.2% in the corresponding period of 2024. He noted that, ‎excluding the impact of the new tax, pre-tax profit actually saw a 0.8% year-on-year increase, ‎reaching KD 173.4 million in the first quarter of 2025.‎

Al-Sager stated that the Group’s returns remained robust despite the impact of the new tax ‎system, with the return on average assets reaching 1.33% in the first quarter of 2025. ‎Meanwhile, the return on average shareholders’ equity stood at 13.1%. He also highlighted ‎that the Group’s loan portfolio is strategically allocated, with 70% originating from Kuwait ‎and 30% generated through its international presence.‎

‎“NBK reaffirms its unwavering commitment to sustainability and advancing its sustainable ‎financial agenda. The successful issuance of the first green bonds in 2024 stands as one of the ‎bank’s most significant achievements, attracting strong interest from international investors ‎and reaffirming the market’s confidence in our ESG strategy,” Al-Sager added.‎

He highlighted that the bank continues to make significant strides in integrating climate-‎related standards into its operations, with a particular focus on reducing the carbon footprint ‎of its investment portfolio and effectively managing climate risks. He noted that these efforts ‎align with leading international standards, strengthening NBK’s role as a key player in ‎supporting Kuwait’s commitment to achieving carbon neutrality, while also reflecting its ‎crucial role in driving the transition toward a low-emission economy.‎

Kuwait’s Economy

On the performance of the Kuwaiti economy, Al-Sager stated that despite the slowdown in ‎macroeconomic activity in 2024, the near-term growth outlook for 2025 remains optimistic. ‎He attributed this positive outlook to several key factors, including the anticipated easing of ‎voluntary production cuts by OPEC+, the gradual recovery of consumer spending, credit ‎growth, the resurgence of momentum in project market activities, and the potential ‎acceleration of public investment.‎

He explained that, supported by these factors, Kuwait’s GDP is expected to grow by 3.0% in ‎‎2025. ‎

Regarding the projects market, Al-Sager noted, “The market experienced some slowdown in ‎the first quarter of 2025, following a strong year of activity in 2024. The value of projects ‎awarded in the first quarter reached over KD 400 million. However, the outlook remains ‎promising, with projects in preparation estimated to exceed KD 10 billion, reflecting the ‎government’s strong commitment to advancing its development and reform agenda at an ‎accelerated pace”.‎

As for the short-term outlook for oil prices, Al-Sager remarked that as the government ‎continues to focus on implementing its development plan, oil price fluctuations have become ‎less impactful on capital spending. He explained that this type of spending now accounts for ‎less than 10% of the total government budget, reducing the likelihood of significant savings ‎should oil revenues face pressure. He also noted that the first two years of capital spending ‎will primarily focus on addressing infrastructure gaps, with the provision of basic services to ‎meet population growth remaining a key priority.‎

He stated that the recently approved Financing and Liquidity Law provides the government ‎with greater flexibility in managing its financial resources, enabling the issuance of debt ‎instruments worth up to KD 30 billion.‎

On the mortgage law, Al-Sager explained that several important meetings have recently been ‎held to approve the law, including discussions with the Public Authority for Population ‎Welfare to sign advisory service agreements with real estate developers. He indicated that the ‎law is expected to be approved due to its strategic importance, particularly given the more ‎than 100,000 pending housing applications and the growing population of Kuwaiti youth, ‎which adds approximately 10,000 new applications annually.‎

Furthermore, Al-Sager emphasized that the banking sector’s strong liquidity position ‎strengthens its ability to play a key role in addressing the housing problem in Kuwait.‎

The GCC & The Global Economy

Al-Sager pointed out that, supported by robust fiscal reserves, ambitious economic reform ‎programs, continued progress in major projects, and strong demand, the economies of the ‎GCC are expected to maintain relatively strong performance in 2025. However, he cautioned ‎that tightening global financial conditions could dampen investment and trade flows, increase ‎financing costs, and potentially lead to a decline in demand, along with volatile oil prices.‎

Regarding the global economy, Al-Sager noted that it has recently navigated a complex ‎environment marked by shifting monetary policies and escalating geopolitical tensions. He ‎pointed out that the recent trade war and tariffs imposed by the US administration have cast ‎a shadow over the economic landscape, potentially contributing to higher inflation rates and a ‎slowdown in growth, further deepening the uncertainty surrounding the global economic ‎outlook.‎

Robust Operational Performance

In the meantime, Mr. Sujit Ronghe, NBK Group Chief Financial Officer, stated that ‎despite the impact of the new tax regime, the Group maintained strong operating performance ‎in the first quarter of 2025, driven by significant growth in business activities, particularly in ‎lending and investment. He highlighted that the operating income mix remains well-balanced, ‎with non-interest income comprising 24% of total revenue sources.‎

Ronghe emphasized that NBK Group’s financial position remains robust, characterized by ‎high levels of credit quality, strong capitalization, and the bank’s ability to generate operating ‎profits that enhance its capacity to absorb credit losses. ‎

He further noted that the Group continues to leverage its unique advantage among Kuwaiti ‎banks, particularly through its broad geographical presence via a network of overseas ‎branches and subsidiaries, along with its ability to offer both conventional and Islamic ‎banking services.‎

He highlighted that operating income during the first quarter of 2025 was distributed across ‎key business segments, with overseas branches and subsidiaries contributing 26%, Islamic ‎banking 22%, consumer banking 20%, corporate banking 12%, and NBK Wealth 9%.‎

Ronghe further explained that overseas branches and subsidiaries accounted for 27% of the ‎Group’s net profit during the first quarter of 2025, while Islamic banking contributed 19%, ‎corporate banking 17%, consumer banking 16%, and NBK Wealth’s contribution reached ‎‎10%.‎

He also noted that IBG and Boubyan Bank collectively contributed 44% and 23%, ‎respectively, to the Group’s total assets, reinforcing the Group’s strategy of diversifying its ‎revenue sources.‎

Ronghe noted that the Group’s loans and advances saw impressive growth during the first ‎quarter of 2025, reaching KD 24.6 billion, reflecting a 9.9% increase compared to March ‎‎2024 and a 3.8% rise on a quarterly basis. This growth was driven by higher loan volumes in ‎both Kuwait and international markets, across conventional and Islamic banking services.‎

He further pointed out that, amidst the prevailing economic uncertainty, loan growth in 2025 ‎is expected to remain in the single-digit range. However, any improvement in global ‎conditions, a faster pace of project implementation, or the approval of the mortgage law in ‎Kuwait could significantly boost the growth of loan activities.‎

Regarding the recently implemented DMTT tax in Kuwait and its impact on the bank’s profits ‎for the current year, Ronghe stated: “The executive regulations of the law are expected to be ‎issued within six months of its adoption. In the absence of detailed regulations at this stage, ‎current estimates suggest that the effective tax rate for 2025 will range between 16% and ‎‎17% of pre-tax profits.‎

He pointed out that the net interest margin for the first quarter of 2025 was impacted, ‎reaching 2.45%, due to an unfavorable shift in the asset mix, along with the annual effect of ‎the depreciation of the Egyptian pound and the decline in historically high interest rates. ‎However, the recent approval of the Finance and Liquidity Law in Kuwait boosts ‎expectations for the upcoming issuance of sovereign debt instruments this year, which will ‎allow the bank to repurpose liquidity into interest-bearing assets.‎

He emphasized the bank’s capacity to provide the necessary financing for development ‎projects currently in the pipelines, supported by its diversified and stable financing base, ‎which aligns with NBK’s strategy for sustainable growth.‎

Regarding his outlook for the operating environment, Ronghe stated: “Despite the prevailing ‎uncertainty in the economic landscape, we remain cautiously optimistic that the overall ‎operating environment, although challenging, stabilize in due course during 2025”.‎

Business

CAPT sets Oct 27 for price talks on Jaber Al-Ahmad entrances project

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KUWAIT CITY, Oct 13: The Central Agency for Public Tenders (CAPT) has approved the request of the Ministry of Public Works to set Oct 27 as the date for negotiating prices with the four companies bidding for the establishment of entrances and exits at Jaber Al-Ahmad City. CAPT decided during its meeting last Wednesday. All bidders have been required to include detailed price and quantity tables in their bids. The agency excluded two companies for not meeting the conditions and specifications, and the bidding process closed on Feb 18.

The project includes the establishment of entrances and exits in two locations in Jaber Al-Ahmad Residential City — one is the southern entrance and exit linking to Jahra Road, and the other is the eastern entrance and exit linking to Doha Road. It is worth noting that the ministry has been holding negotiation sessions with the winning companies to determine the best and most cost-effective bid.

By Mohammad Ghanem Al-Seyassah/Arab Times Staff

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Companies and funds can own real estate in Kuwait under strict controls

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KUWAIT CITY, Oct 13: As part of the State’s efforts to regulate the ownership of investment and commercial real estate and ensure balance between attracting foreign investment and preserving the privacy of the local market, Decree No. 195/2025 on the controls for real estate ownership by companies, real estate funds, and investment portfolios was issued. This is in implementation of the provisions of Decree-Law No. 74/1979 regulating real estate ownership by non-Kuwaitis. Article One of the decree, which was published in ‘Kuwait Al-Youm’ recently, stipulates that subject to the provisions of the aforementioned law, companies with non-Kuwaiti partners and listed on licensed stock exchanges in Kuwait, as well as real estate funds and investment portfolios licensed by the competent authorities, may own real estate within the country, subject to specific controls. The decree indicates that one of the basic conditions is that the purpose of the company, fund or portfolio must include dealing in real estate.

It prohibits any form of dealing in real estate, plots or land designated for private housing in any location or within any project, in a move aimed at protecting the residential character and preventing speculation in this vital sector. Article Two of the decree clarifies that its provisions do not prejudice the right of entities subject to the supervision of the Central Bank of Kuwait or others to own real estate in accordance with the law. It affirmed that citizens of the Gulf Cooperation Council (GCC) countries shall continue to be treated the same as Kuwaitis regarding ownership of land and built property in the State of Kuwait. Article Three states that the ministers—each within their respective jurisdiction—shall be responsible for implementing the provisions of the decree, which shall take effect from the date of its publication in the official gazette.

By Marwa Al-Bahrawi Al-Seyassah/Arab Times Staff

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Factors behind the reversal of losses and profitability

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KUWAIT CITY, Oct 12: Kuwait Integrated Petroleum Industries Company (KIPIC) aims to raise its profits for fiscal 2025/2026 by increasing its sales in local and international markets, which have been robust since the beginning of the year, say reliable sources. Sources pointed out that KIPIC recovered from the losses it suffered in previous years through the growth of its net profits, which amounted to about KD52.2 million in the 2024/2025 budget. They cited five main factors behind this growth.

First is the increase in the refining capacity of Zour Refinery, which reached 615,000 barrels per day in May 2024, ranking seventh globally in terms of production quantities. They explained that the refining capacity of the refinery in the years prior to its operational opening ranged between 205,000 and 410,000 barrels per day. The second factor behind KIPIC’s profit growth over the past year is the commencement of the merger of oil companies, particularly the merger of KIPIC into the Kuwait National Petroleum Company (KNPC), to shake off the losses.

The third factor is the result of the implementation of the spending rationalization policy pursued by the CEO of KNPC, who also serves as the acting CEO of KIPIC, Wadha Al-Khatib. The KNPC spending rationalization committee implemented spending rationalization last year, achieving financial savings for KIPIC estimated at KD27 million through this approach. Sources explained that the implementation of rationalization coincided with the provision of better products. The fourth factor is the focus on stimulating KIPIC’s sales in global markets by opening new markets. In the first half of 2025, the company was able to expand its sales of sulfur and diesel, in addition to producing the best type of low-sulfur jet fuel, and then exporting all of its products that comply with international requirements.

The fifth factor is the company’s interest in digital transformation, focusing on developing all aspects related to global technologies, including artificial intelligence, as these technologies are extremely useful in detecting and anticipating errors before they occur, which contributes to stable production. Sources added that there are other important factors behind KIPIC’s profitability, such as the signing of numerous contracts with international companies specializing in smart energy, renewing contracts with the largest global platforms related to technological development in the field of oil refining, and strengthening relationships with major refining companies to mutually benefit from each other’s expertise.

By Najeh Bilal Al-Seyassah/Arab Times Staff

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