National Bank of Kuwait (NBK), Kuwait’s largest lender, posted a 17 per cent rise in fourth quarter net profit, boosted by increased spending on infrastructure in the Arabian Gulf, higher income from Islamic financing and a rise in fees and commissions.
Net profit for the last three months of 2018 grew to 98.3 million Kuwaiti dinars (Dh1.2 billion) from the year-earlier period, NBK said in a regulatory filing on Thursday. The results beat the highest estimate of analysts polled by Bloomberg.
The bank said net profit for 2018 climbed 15 per cent to 371 million dinars compared with the year earlier. Net operating revenue for the year jumped 7.4 per cent to 883 million dinars while operating profit climbed about 9 per cent to 607 million dinars. Total assets grew by 5.4 per cent to 27bn dinars.
"While the local and regional banking sector faced challenges due to a high level of liquidity putting pressure on credit growth, NBK recorded another set of exceptional results, as the breadth of its operations and the scale of our international footprint mitigated risk," said NBK Group CEO Isam Al-Sager.
"Our strategic pathway remains essentially unchanged," Mr Al-Sager added. "Having achieved particularly robust performance in Egypt, we will look to consolidate and build upon recent growth in that market; while in Saudi Arabia we will seek to grow the client-base and assets under management of the recently launched Al Watani Wealth Management Company."
Kuwait banks are expected to post 15 per cent increase in annual earnings this year driven by more lending as the government presses ahead with project spending and consumer confidence improves, according to Egyptian investment bank EFG-Hermes.
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"The story for Kuwait remains compelling in 2019," EFG-Hermes said in a report last month. "Public investment continues, and we expect double-digit growth in 2019-20, with positive trickle down for corporate activity and private consumption."
Kuwait's banking sector delivered the strongest earnings growth among its Arabian Gulf peers, posting a 19 per cent increase in the first nine months of the year compared to 14 per cent for UAE banks and 10 per cent for Saudi banks, according to the investment bank.
The outlook for 2019 is boosted by Kuwait's monetary policy which is expected to continue aiding lending recovery and government capital expenditure that is more insulated to oil price changes than elsewhere in the GCC. Index provider MSCI will decide in June whether to reclassify its Kuwait index with emerging-market status.
Kuwaiti banks' loan growth could get an extra boost after the Central Bank of Kuwait raised the limit for consumer loans in November. Banks may also see average margins expand by seven basis points next year, assuming there are two interest rate hikes in the next 12 months, one in December and another in 2019, according to EFG.
Kuwait's non-oil gross domestic product is expected to increase 2.8 per cent in 2018 and 3.2 per cent in 2019 from 2.2 per cent in 2017, according ot the investment bank.
The increase in government spending since 2015 and the focus on infrastructure investment is expected to trickle down to the rest of the economy and boost non-oil GDP growth.
