ABK Document Classification: PUBLIC · This presentation does not constitute an offer or an...
Transcript of ABK Document Classification: PUBLIC · This presentation does not constitute an offer or an...
0ABK Document Classification: PUBLIC
Disclaimer
THE INFORMATION SET OUT IN THIS PRESENTATION AND PROVIDED IN THE DISCUSSION SUBSEQUENT THERETO DOES NOT CONSTITUTE AN OFFER OR SOLICITATION
OF AN OFFER TO BUY OR SELL SECURITIES. IT IS SOLELY FOR USE AT AN INVESTOR PRESENTATION AND IS PROVIDED AS INFORMATION ONLY. THIS PRESENTATION
DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS MATERIAL TO AN INVESTOR. This presentation has been prepared by (and is the sole responsibility of) Al Ahli
Bank of Kuwait K.S.C.P. (the “Bank”).
The information herein may be amended and supplemented and may not as such be relied upon for the purposes of entering into any transaction. This presentation may
not be reproduced (in whole or in part), distributed or transmitted to any other person without the Bank's prior written consent.
The information in this presentation and the views reflected therein are those of the Bank and are subject to change without notice. All projections, valuations and
statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. They may be based on subjective assessments and assumptions
and may use one among alternative methodologies that produce different results and, to the extent that they are based on historical information, they should not be
relied upon as an accurate prediction of future performance. These materials are not intended to provide the basis for any recommendation that any investor should
subscribe for or purchase any securities.
This presentation does not disclose all the risks and other significant issues related to an investment in any securities/transaction.
Past performance is not indicative of future results. Al Ahli Bank of Kuwait is under no obligation to update or keep current the information contained herein. No person
shall have any right of action against the Bank or any other person in relation to the accuracy or completeness of the information contained in this presentation. No
person is authorized to give any information or to make any representation not contained in and not consistent with this presentation, and, if given or made, such
information or representation must not be relied upon as having been authorized by or on behalf of the Bank.
This presentation does not constitute an offer or an agreement, or a solicitation of an offer or an agreement, to enter into any transaction (including for the provision of
any services). No assurance is given that any such transaction can or will be arranged or agreed.
Certain statements in this presentation may constitute forward-looking statements. These statements reflect the Bank’s expectations and are subject to risks and
uncertainties that may cause actual results to differ materially and may adversely affect the outcome and financial effects of the plans described herein. You are
cautioned not to rely on such forward-looking statements. The Bank does not assume any obligation to update its view of such risks and uncertainties or to publicly
announce the result of any revisions to the forward-looking statements made herein.
2ABK Document Classification: PUBLIC
Table of Contents
Section 1 ABK Introduction & Key Highlights
Section 2 Kuwait Country and Banking Snapshot
Section 3 ABK Strategy and Business Overview
Section 4 Financial Performance
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Section 5 Appendix 21
3ABK Document Classification: PUBLIC
USD million(1) 2015 2016 2017 2018 2019 CAGR 1H 2020 1H 2019
Net Loans & Advances 10,040 9,898 10,189 9,977 10,614 1.40% 10,529 10,388
Total Assets 14,363 14,000 14,452 14,995 16,116 2.92% 15,376 15,617
Customer Deposits 8,225 9,475 9,739 10,267 10,957 7.43% 11,076 10,386
Total Equity 1,831 1,816 1,895 2,230 2,281 5.65% 2,142 2,252
Total Operating Income 423 482 520 557 569 7.69% 224 287
Net Profit 100 106 118 139 95 -1.27% (15) 74
Non performing loans ratio (%) 2.3 2.6 1.7 1.8 1.5 5.7 2.0
Loans to Deposits ratio (%) 82.5 83.3 83.4 79.0 80.8 83.1 82.0
Cost / income ratio 32.0 39.4 37.7 38.6 38.9 47.3 38.4
Return on average equity 5.5 5.8 6.3 7.3 3.7 -2.8 6.6
Tier 1 ratio (%) 16.0 16.5 16.0 17.9 17.5 17.6 17.5
Total Capital Adequacy ratio (%) 17.2 17.7 17.2 19.2 18.6 18.8 18.7
Established on 23rd May 1967, Al Ahli Bank of Kuwait K.S.C.P. (“ABK”, or “the
Bank”) is a leading bank headquartered in Kuwait and regulated by the Central
Bank of Kuwait (“CBK”)
Operates through three major segments:
Commercial banking
Retail banking
Treasury and Investments
30 branches in Kuwait, 2 branches in the United Arab Emirates as well as a wholly
owned investment banking subsidiary in Kuwait and through the acquisition of
Piraeus Bank Egypt, now renamed as “ABK - Egypt”, it operates 43 full service
branches in Egypt
DIFC Branch opened in April 2018
Signed a Sale & Purchase Agreement in Jan 2020 with Bank & Clients PLC (B&C)
which is a licensed and registered Bank in UK, for a full acquisition. Received
approval from PRA in July 2020 and is now subject to the approvals of the
regulatory authorities in Kuwait
Ranked amongst the top 10 safest banks in the Middle East by Global Finance in
2017 and 2018
Established by the Behbehani family, with approximately 37.5% ownership (direct
and indirect)
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Al Ahli Bank of Kuwait (“ABK”) Overview
Consolidated IFRS Financials
The Bank’s Credit Ratings
Rating Agency Last affirmed Long Term Rating Outlook
May 2020 A2 Stable
August 2020 A+ Stable
Overview of Al Ahli Bank of Kuwait
Note: KD/USD Rates for 2015, 2016, 2017 , 2018 ,2019, June 20 and June 19 respectively – 0.3035, 0.3060, 0.3018, 0.3033,0.3030,0.3078,0.3031
Ownership Structure (as at 31st December 2019)
10.1%
9.5%
9.1%
8.8%
6.4%6.3%
5.0%
44.8%
Kuwait Investment Co.
Behbehani Telecommunications Co.
Wafra International Investments Co.
Behbehani Investment Co.(direct and indirect)Ali Murad Yousuf Behbehani
Heirs of Mohamed Saleh Yousuf Behbehani
Watani Investment Co
Others
ABK Document Classification: PUBLIC
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ABK Key Highlights
• 84% of the total liabilities consist of customer deposits • Liquidity coverage ratio 185% & Net Stable Funding Ratio
of 108%• Leverage of 12%, above the 3% required by the CBK Basel
III leverage ratio
• Total Assets reached KD 4.7 billion , down 3% from Dec 2019
• Customer Deposits at KD 3.3 billon , up 3% from Dec 2019
• NPL ratio at 5.66% and provision coverage at 118%• Excess credit provisions of KD 32.3 million over and
above CBK prescribed IFRS 9 requirements• One of the highest NIM’s among all conventional banks
in Kuwait • Second best rated conventional bank in Kuwait
• Tier 1 ratio of 17.6% & CAR of 18.8% • In September 2018 the Bank issued a US$ 300 Million
Perpetual Tier 1 capital bond on the International Capital Markets, which was oversubscribed with very strong interest from investors outside the MENA region
• Established in 1967 by the Behbehani family, ABK has retained the same core shareholder base since then
• Has a strong and stable Board and a long-serving executive team with a proven track record in Kuwait
• Kuwait represents one of the strongest macro profiles with solid fundamentals in the GCC, Aa2/AA rating
• Stable banking sector with prudent regulatory environment
• Highly liquid banking system supported by government spending, enabling healthy operating conditions
Robust capitalizationStable funding base & good liquidity buffers
Committed shareholder base and a well-experienced management team
Strong Balance sheet & second best credit rating Stable macro environment & solid banking system
ABK Document Classification: PUBLIC
Agenda
Section 1
Section 2
Section 3
Section 4
Section 5
Introduction to ABK & Key Highlights
Kuwait Country and Banking Snapshot
ABK Strategy and Business Overview
Financial Performance
Appendix
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6ABK Document Classification: PUBLIC
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Overview of Kuwait
Key Economic Indicators
Under
review
StableAA
NegativeAA
Rating Outlook
Aa2
Current Account Balance (USD billions)Stable Production, amongst the top 10 globally
Source: (1) Public Authority for Civil Information (2) Kuwait Central Statistical Bureau (3) Rating agencies (4) Organization for petroleum Exporting countries (5) Sovereign Wealth Fund Institute
Population 4.4 million
Real GDP Growth (2019E & 2020E) 1.0%/-6.0%
Nominal GDP (2019E) USD 144 billion / KD 44 billion
Oil Revenues as % of GDP (2019 E) 44.7%
Oil Reserves (2018)
5th largest in the world at 101.5bn barrels; more than 8% of the world’s total oil
reserve
Public Debt/GDP (2019E) 11.0%
Sovereign Wealth Fund AUM USD 527 billion
2.9 2.9 2.9 3.02.7 2.7 2.7
2013 2014 2015 2016 2017 2018 2019
Average Crude Oil production (millions bbl/day)
-5.10
7.60
22.00 22.10
2016 2017 2018 (P) 2019 (P)
Kuwait
ABK Document Classification: PUBLIC
23Banks
All banks regulated by the Central
Bank of Kuwait 12
foreign bank branches
USD
235 bn(1)
of banking assets
100%(2)
Principal Deposit
Guarantee Law in effect
Stringent
Basel III requirements
5 local
Islamic Banks
6Conventional
Banks
• The Kuwaiti banking sector comprises of 23 banks, including sixconventional banks ( one specialised bank), five Shari’a-compliantlocal banks and branches of 12 international banks which includes anon-Kuwaiti Islamic bank.
• Highly regulated sector by the CBK with a number of regulations andsupervisory practices in place monitoring interest rates charged,lending limits and concentrations, investment limits, liquidity andcapital adequacy.
• The government’s financial strength underpins its capacity toprovide support to the banking sector with historical evidence ofsupport. Most recently, in 2008, the State of Kuwait offered capitalsupport to a bank as well as introduced a guarantee on customerdeposits under the Deposits Guarantee Law following the globalfinancial crisis.
• Capital adequacy standards under the Basel III framework wereimplemented by CBK In June 2014. The Tier I ratio and the total capitaladequacy ratio required by the CBK are 11% and 13% respectivelyfrom December 31, 2016. ABK has been designated as a domesticallysystemic important bank (“D-SIB”) with an additional Common EquityTier 1 D-SIB surcharge of 0.5% required from December 31, 2016.
Kuwaiti banking sector snapshot
Overview of KuwaitBanking Sector
(1) Central Bank of Kuwait , KD/USD = 0.3078 as of 30 June 2020(2) The Kuwaiti government passed Law No.30 of 2008 (the “Deposits Guarantee Law”) to guarantee deposits held with local banks. Under the Deposit Guarantee Law, the Kuwaiti
government has undertaken to guarantee the principal, but not interest, of all deposits held with local banks in Kuwait, including savings and current accounts 8ABK Document Classification: PUBLIC
Peer ComparisonA well established Kuwaiti Bank
9
16.8%
16.8%
16.2%
17.9%
18.8%
NBK
GBK
BB
CBK
ABK
Total Assets (USD billions) Loans and Advances (USD billions)
Customer Deposits (USD billions) Capital Adequacy Ratio
96.4
23.1
19.6
15.4
14.4
57.1
13.8
12.7
11.1
7.6
57.1
14.3
13.8
10.5
7.5
All financials are as of 30 June ’20Using KD/USD = 0.3040, as of 30 June 2020 ABK Document Classification: PUBLIC
Agenda
Section 1
Section 2
Section 3
Section 4
Section 5
Introduction to ABK & Key Highlights
Kuwait Country and Banking Snapshot
ABK Strategy and Business Overview
Financial Performance
Appendix
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10ABK Document Classification: PUBLIC
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ABK’s Strategy
The Group’s Vision is “reimagining a simpler bank” and itsMission is “to consistently provide experiences that simplify and enrich people’s lives”
Transparency Integrity Simplicity Excellence| | |
SimplificationNew Productsand Segments
Retail Banking
• SME & Wealth Management• Cross Border offerings• Footprint expansion ( ATMs, Kiosks,
Direct Sales agents)• Introduce Digital Wallet
Wholesale Banking
• Cash Management and Global TradeServices
• Corporate Finance and Advisory
• UAE Commercial Business
Redefine our core competencies
• Exit or curtail non-core businesses
• Outsource non-core activities
• Rationalize retail product offerings
• Remodel ACIC around Issuers andInvestors
Re-engineer our credit approval process
• Redesigned CAR and CreditApproval process
• Standardized ORR and FRR models
Best-in-class turnaround times “make banking easy”
• Account Opening
• Loans and Cards
• All other services at Branch levels
Growing regional and domestic business
• Investing outside Kuwait fordiversification and increased revenues
• DIFC Branch
• Cross border products
• Wealth/Private Bank
Key Enablers
Upgrade our Infrastructure:
• AML System, Risk Monitoring & Reporting Tools
Empower our People:
• Performance Management (“Pay for Performance”)
• Talent Management (“Promote the High Potential”)
Digital Transformation :
• Data Repository & Analytics
• Robotic Process automation
• Best in Class cyber- security
ABK Document Classification: PUBLIC
12
Overview of ABK’s Business Segments
comprises a full range of products and servicesto retail customers, including loans, credit cards,deposits and wealth management services
Retail
Banking
comprises treasury services provided tocustomers and balance sheet managementactivities, including money market, derivatives,proprietary investment activities and theresidual impact of inter-segment fund transferpricing
Treasury &
Investment
Breakdown by Assets1,2 (KD million)
64% 64% 61% 56% 56% 56% 59%
12% 13% 14% 15% 15% 15% 15%
24% 23% 25% 29%29% 29% 26%
4,280 4,215 4,281 4,4774,795 4,625 4,615
2015 2016 2017 2018 2019 June 19 June 20
Commercial banking Retail banking Treasury & Investments
comprises a full range of credit, deposit andrelated banking services provided to itscorporate and institutional customers
Commercial
Banking
Note: (1) International results included under Commercial Banking, Retail Banking and Treasury & Investment based on segmental regrouping undertaken by the bank in 2017(2) Excludes unallocated assets for 2015, 2016, 2017, 2018 ,2019 , June 19 and June 20 respectively - KD 79 million, KD 70 million, KD 80 million, KD 71 million , KD 88 million, KD 109
million and KD 117 million respectively
Breakdown by Operating Income
55%36%
9%
KD 168.8 million
FY 2018
56%37%
7%
FY 2019
KD 172.5 million
52%37%
11%
1H 2020
KD 69.1 million
ABK Document Classification: PUBLIC
Segment Assets1 (KD million)
Corporate Banking:• Split into 8 specialized business units, each with a broad product range for
corporate clients
• Services range from traditional working capital finance to complex structuredfinancial products for large projects and multinational companies
International Banking:• Operates from the Group’s head office in Kuwait is responsible for the Group’s
relationship with major international banks and correspondent banks aroundthe world, including the Nostro and Vostro accounts for and within the Group
• The international banking division manages the Group’s institutional and multi-national corporate loan portfolio through relationship managers
Operating Income1 (KD million)
13
Commercial & Retail Banking
Commercial Banking
70% 66% 63%
61%
60%
62% 58%
30% 34% 37% 39% 40%
38%42%
116
146 144 153 160
77 62
2015 2016 2017 2018 2019 1H 2019 1H 2020
Commercial banking Retail banking
84% 83% 81% 79% 79% 79% 79%
16% 17% 19% 21% 21% 21% 21%
3,235 3,247 3,193 3,187 3,379 3,268 3,418
2015 2016 2017 2018 2019 June 19 June 20
Commercial banking Retail banking
• Target additional growth through acquisition of retail portfolios, enhanced digitalofferings & continued focus on simplicity
• Co-branding arrangement with Emirates Airlines in place for its credit and prepaidcards as well as the first bank in Kuwait to offer a single multi-currency card
Key Stats - Kuwait• 30 branches , 160 ATMs & 3 ITMs (interactive teller machines) as of 30 June 2020• 176,475 Retail Banking customers as of 30 June 2020• 162,592 active cards in circulation with a total spend of KD 957mn in 2019• 103,841 registered SMS and mobile application banking customers• 358,957 transaction executed for such subscribers till 30 June 2020• 812,374 telebanking calls till 30 June 2020• 23-member direct sales force in Kuwait
Key Stats - Egypt• 43 branches and 108 ATMs across major cities as of 30 June 2020
Retail Banking
Note: (1) International results included under Commercial Banking, Retail Banking and Treasury & Investment based on segmental regrouping undertaken by the bank in 2017
ABK Document Classification: PUBLIC
14
Treasury and Investments & Ahli Capital
Treasury and Investments
• The Group’s Treasury manages the Group’s assets and liabilities and liquidityrequirements under the supervision of the Assets and Liabilities Committee
• Manages the money market books and money market funding positions forthe Group’s own account to fund its domestic and international foreign-currency assets;
• Undertakes a range of foreign exchange business, across both spot andforward markets, largely on behalf of the Group’s customer base, andconducts a limited amount of proprietary foreign exchange trading withinthe constraints of what the Group considers to be prudent risk guidelines;
• Maintains a portfolio of Kuwaiti government treasury bills and bonds tomeet relevant CBK requirements and to manage surplus domestic currencyliquidity
• The Group’s investment unit is responsible for managing the Group’s fixedincome proprietary portfolio with the objective of realising income whileminimizing the risk of default
Segment Assets1 (KD million)
Ahli Capital• Established in June 2006 to be the main investment arm of the Group• Currently manages the Al Ahli Kuwaiti Fund , Al Ahli International Multi asset holding fund, Al Ahli Gulf Fund and also manages client investment
portfolios. As at 30 June 2020, Ahli Capital had KD 479 million of assets under management• The Al Ahli Kuwait Fund aims to achieve capital growth through active investment management, targeting the securities of companies listed on
the Kuwait Stock Exchange• The Al Ahli Gulf Fund aims to achieve capital growth through investment in the securities of companies listed on GCC stock exchanges• Ahli Capital has partnered with BlackRock to manage Ahli International Multi – Assets Holding Fund which aims to provide long term capital
appreciation while diversifying risk globally with International investment spread across different asset classes
1,046 969 1,089
1,290 1,416 1,357
1,197
2015 2016 2017 2018 2019 June 19 June 20
Source: ABKNote: (1) International results included under Commercial Banking, Retail Banking and Treasury & Investment based on segmental regrouping undertaken by the bank in 2017ABK Document Classification: PUBLIC
The Group’s International operations encompass the operations of its UAE branches and its ABK Egypt subsidiary contributing around 41% of Operating income and 27% of assets
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International operations
• Acquired Piraeus Bank Egypt in November 2015, since renamed Al Ahli Bank of Kuwait –Egypt
• Provides revenue and asset diversification and an opportunity to leverage economic linksbetween Kuwait and Egypt
• Higher margins and growth rate potential in Egypt vis-à-vis Kuwait
• 43 Branches and 108 ATMS spread across major cities in Egypt as of 30 June 2020
• Over 191,000 retail customers as of 30 June 2020
• Retail Banking accounts for 36% of total deposits and 34% of total loans as of 30 June 2020
• Corporate Banking accounts for 64% of total deposits and 66% of total loans as of 30 June2020
• Assets attributable to ABK Egypt constituted 16.0% of the Group’s total assets as of 30June 2020
• First Kuwaiti bank in the UAE and currently has three branches, located in Dubai, AbuDhabi and DIFC, respectively
• Operating for over 40 years in Dubai where its branch was originally opened to supportthe needs of Kuwaiti businesses in Dubai
• Abu Dhabi branch opened in 2009, since then the Group has expanded its UAE activities toprovide retail deposit taking services to customers in the UAE, as well as a range offinancing and treasury solutions to corporate customers
• DIFC Branch opened in April 2018
Al Ahli Bank of Kuwait - UAE
Al Ahli Bank of Kuwait - Egypt
Total Assets1 (KD million)
Operating Income1 (KD million)
15
3732
3949
2328
2015 2016 2017 2018 2019 1H 2019 1H 2020
835 875 909 1,013
1,168 1,059
1,281
2015 2016 2017 2018 2019 June 19 June 20
Note: (1) International results included under Commercial Banking, Retail Banking and Treasury & Investment based on segmental regrouping undertaken by the bank in 2017
ABK Document Classification: PUBLIC
Agenda
Section 1
Section 2
Section 3
Section 4
Section 5
Introduction to ABK & Key Highlights
Kuwait Country and Banking Snapshot
ABK Strategy and Business Overview
Financial Performance
Appendix
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16ABK Document Classification: PUBLIC
Equity
17
Loans portfolio, Funding and Liquidity
Loan Growth (KD million)Gross Maximum Exposure by Credit Risk1
(as at 31 December 2019)
2,538 2,493 2,488 2,399 2,544 2,508 2,577
509 536 587 627 672 641 664
2.28% 2.55%
1.67%1.78% 1.96%
5.66%6.5%
7.1% 6.8%
7.8%
6.2%6.2%
7.2%
2015 2016 2017 2018 2019 June 19 June 20Corporate RetailNon Performing Loans Ratio Provision for credit losses
Funding Profile (KD million)
2
Maturity Profile for Liabilities
31%
45%
24%
Less than one month One month to one year Over one year
FY 2018
Due to banks and other financial institutionsCustomer Deposits
Medium term notes
Note: (1) Gross Maximum Exposure includes Loans and advances, Inter bank placement, Investments and Un-funded exposures(2) Attributable to shareholders of the Bank excluding non-controlling interests and includes Perpetual Tier 1 capital securities of KD 91m issued in Sep 18
2,496 2,900 2,939 3,115 3,320 3,149 3,409
1,199 735 596 501600 634 390151
151151 154556 555 572 676
690 683 6594,251 4,190 4,258 4,443
4,761 4,617 4,613
2015 2016 2017 2018 2019 June 19 June 20
30%
45%
25%
FY 2019
FY 2018 FY 2019
18%
16%
19%18%
13%
16%18%
19%
20%
15%
12%
16%
Personal Government and related entities
Construction and real estate Banks and financial institutions
Trading and manufacturing Others
ABK Document Classification: PUBLIC
18
Operating Performance
Note: (1) Includes Net foreign exchange gain, Net (loss)/gain on investment securities , Dividend income, Share of results of associate & Other income
128.5147.5 157.0 168.8 172.5
87.1 69.1
32.0%
39.4% 37.7% 38.6% 38.9% 38.4%
47.3%
2015 2016 2017 2018 2019 1H 2019 1H 2020
Operating income Cost to income ratio (%)
Profitability (KD million) Operating metrics (%)
Operating Income (KD million) & Cost to Income (%) Breakdown of Operating Income
30.4 32.5 35.742.1
28.722.6
23.6% 22.0% 22.7%25.0%
16.6%
26.0%
-6.6%
2015 2016 2017 2018 2019 1H2019 1H2020
Net profit Net profit margin-4.6
72% 73% 74% 72% 71%
71% 73%
20%20% 21%
19% 20%
18%19%
8%7%
5%10%
9%
11% 8%
2015 2016 2017 2018 2019 1H 2019 1H2020
Net interest income Net fee and commission incomeOther income¹
0.80% 0.80% 0.82% 0.95% 0.47% 0.84%-0.34%
5.5% 5.8%6.3%
7.3%
3.7%
6.6%
-2.9%
2015 2016 2017 2018 2019 1H 2019 1H 2020
RoAA RoAE
ABK Document Classification: PUBLIC
Basel III
Capital Adequacy Ratio Regulatory Capital (KD, million)
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Capitalisation Overview
• *Including D-SIB charge. The Group has been designated as a domestically systemic importantbank (“D-SIB”) with an additional Common Equity Tier 1 D-SIB surcharge of 0.5 per cent. requiredfrom 31 December 2016. As a result, the Group’s total minimum capital requirement from thatdate is 13.5 per cent., which includes a capital conservation buffer.
• The principal factor behind the Group’s falling capital ratios in 2015 was the significant increasein its risk weighted exposures, reflecting the increase in its portfolio of loans and advances in2015 and to a lesser extent a decrease in the available capital as a result of the acquisition ofPireaus Bank Egypt. 2018 Capital ratio increase is driven by issuance of Additional Tier 1 capitalsecurities of KD 91m
10.5%11.0% 11.5% 11.5% 11.5% 11.5% 11.5%
12.5%13.0% 13.5% 13.5% 13.5%
13.5% 13.5%
16.0% 16.5% 16.0%
17.9% 17.5%17.5% 17.6%
17.2% 17.7% 17.2%
19.2% 18.6% 18.7%18.8%
2015 2016 2017 2018 2019 June 19 June 20
Min Required Tier 1 Min. Required CAR* Tier 1 CAR
508 524 535
640 660 646 659
38 38
40
43 44
546 562
576
450
500
550
600
650
2015 2016 2017 2018 2019 June 19 June 20
Tier 1 Tier 2 capital
705 690
Key Central Bank of Kuwait Regulations & Requirements*
Common Equity Tier 1 9.5%
Tier 1 Capital Ratio 11.0%
Capital Adequacy Ratio 13.0%
D-SIB surcharge 0.5%
Net Stable Funding Ratio Equal to at least 100% on an ongoing basis
effective from 1st January 2018
Liquidity Coverage RatioMinimum of 70% which will later reach 100%
by 2019
Loan to Deposit Ratio Capped at 90%
Investment LimitsTotal ratio of securities portfolio excluding
government bonds shouldn’t exceed 50% of bank’s capital base
Increase is because of issuance of Additional Tier 1 capital of USD 300m in September 2018
705
45
683
45
ABK Document Classification: PUBLIC
Agenda
Section 1
Section 2
Section 3
Section 4
Section 5 Appendix
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Introduction to ABK & Key Highlights
Kuwait Country and Banking Snapshot
ABK Strategy and Business Overview
Financial Performance
20ABK Document Classification: PUBLIC
21
Awards and Accolades
‘Bank of the Year’ by Arabian Business for four consecutive years
‘Best Commercial Bank in Kuwait’ for three consecutive years and‘Best New Brand in Egypt 2017 ’ & Fastest Growing Bank in Egypt 2017
‘Best Bank Transformation in the Middle East’ by Euromoney
‘Deal of the Year’ 2017 & 2019 by The Banker – an FT Affiliate
‘Best Retail Bank in Kuwait’ by Asian Banker for three consecutive years
‘Employer of the Year’ by NASEBA for three consecutive years
One of the top 10 safest banks in Middle East by Global Finance for two consecutive years
‘Most Innovative Bank in Egypt 2018’ and ‘Fastest Growing Bank in Egypt 2018 & 2019’ by International Finance Magazine
‘Best Digital Transformation 2019’ by International Finance Magazine
‘Deal of the Year Asian Banking & Finance - 2019
‘Best Digital Transformation ’ by Asian Banker
‘Most innovative bank in Egypt ’ by The European’ a Thomson Reuters Affiliate
‘ Best Retail Bank ’ by The European a Thomson Reuters Affiliate for two consecutive years
Best Mobile Banking – Kuwait 2018
‘ Fastest Growing Bank – Egypt’ by International Finance Magazine
ABK Document Classification: PUBLIC
22
4Junw Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 CAGR June 20 June 19
(KD, 000) (%)
Assets
Cash and balances with banks 432,173 494,678 495,519 702,233 883,129 19.56% 746,411 769,255Kuwait Government treasury bonds 204,246 223,142 344,590 257,161 173,235 -4.03% 134,860 229,214Central Bank of Kuwait bonds 179,713 173,715 125,595 127,646 136,621 -6.62% 138,068 136,035Loans and advances 3,047,143 3,029,384 3,075,065 3,025,992 3,215,696 1.36% 3,240,860 3,149,262Investment securities 343,809 237,905 182,545 289,917 302,165 -3.18% 297,893 287,744Investment in an associate 16,572 18,263 19,556 21,896 23,830 9.51% 24,989 22,405Premises and equipment 53,125 46,695 53,675 55,710 65,615 5.42% 65,080 65,448Intangible assets 41,217 17,698 17,294 16,865 18,340 -18.33% 18,764 17,848Other assets 41,066 43,333 47,887 51,008 64,464 11.93% 65,744 57,170Total assets 4,359,064 4,284,813 4,361,726 4,548,428 4,883,095 2.88% 4,732,669 4,734,381Liabilities and shareholders’ equity
Liabilities
Due to banks and other financial institutions 1,199,192 734,771 596,444 501,134 600,057 -15.89% 390,424 634,132Customers’ deposits 2,496,278 2,899,908 2,939,349 3,114,504 3,319,771 7.39% 3,409,274 3,148,654Medium-term borrowing — — 149,712 150,612 151,230 - 153,666 151,214Other liabilities 107,135 94,331 103,482 105,813 121,076 3.11% 120,128 117,611Total liabilities 3,802,605 3,729,010 3,788,987 3,872,063 4,192,134 2.47% 4,073,492 4,051,611Shareholders’ equity
Share capital 161,917 161,917 161,917 161,917 161,917 0.00% 161,917 161,917Share premium 108,897 108,897 108,897 108,897 108,897 0.00% 108,897 108,897Treasury shares (4,528) (4,958) (5,053) (5,053) (5,135) 3.19% (5,135) (5,053)Reserves 289,314 289,301 306,249 319,042 333,435 3.61% 301,498 325,300
Equity attributable to shareholders of the Bank 555,600 555,157 572,010 584,803 599,114 1.90% 567,177 591,061
Perpetual Tier 1 Capital Securities - - - 90,750 90,750 - 90,750 90,750Non-controlling interests 859 646 729 812 1,097 6.30% 1,250 959Total equity 556,459 555,803 572,739 676,365 690,961 5.56% 659,177 682,770Total liabilities and shareholders’ equity 4,359,064 4,284,813 4,361,726 4,548,428 4,883,095 2.88% 4,732,669 4,734,381
Balance SheetBased on consolidated IFRS financials
ABK Document Classification: PUBLIC
23
2015 2016 2017 2018 2019 CAGR 1H 20 1H 19
(KD, 000)%
Interest income 127,003 179,408 188,965 221,067 247,889 18.20% 106,397 121,421Interest expense (32,610) (70,222) (76,533) (99,285) (120,258) 38.58% (55,250) (57,445)Net interest income 94,393 109,186 112,432 121,782 127,631 7.83% 51,147 63,976Net fee and commission income 25,228 30,317 29,047 31,148 32,387 6.44% 12,190 16,672Net foreign exchange gain 3,134 3,970 4,625 5,053 4,910 11.88% 4,500 2,272Net (loss)/gain on investment securities (1,008) (2,549) 4,943 3,922 2,103 *Nm (1,334) 1,014Dividend income 3,478 2,162 1,999 2,614 1,739 -15.91% 1,033 1,179Share of results of associate 2,506 2,571 2,173 3,220 2,894 3.66% 1,160 1,469Other income 801 1,860 1,773 1,076 840 1.20% 398 469Operating income 128,532 147,517 156,992 168,815 172,504 7.63% 69,094 87,051Staff expenses (25,608) (34,236) (34,161) (35,327) (37,222) 9.80% (16,947) (18,817)Other operating expenses (13,849) (19,435) (21,182) (24,882) (22,582) 13.00% (12,162) (11,236)Depreciation and amortisation (1,729) (4,417) (3,835) (4,932) (7,219) 42.95% (3,541) (3,342)Operating expenses (41,186) (58,088) (59,178) (65,141) (67,023) 12.95% (32,650) (33,395)Operating profit for the year 87,346 89,429 97,814 103,674 105,481 4.83% 36,444 53,656Net gain from business combination 8,005 — — — — — — —
Provisions on
Credit Facilities (58,679) (50,813) (57,522) (56,261) (71,134) 4.93% (37,835) (28,317)Net (impairment)/release on investment securities and others
(2,750) (1,626) (431) 82 (507) -34.47% (14) (171)
Profit for the year 33,922 36,990 39,861 47,495 33,840 -0.06% (1,405) 25,168Directors’ fees (480) (375) (495) (593) (395) -4.76%
Taxation (3,074) (4,103) (3,616) (4,693) (4,620) 10.72% (3,137) (2,517)Net profit for the year 30,368 32,512 35,750 42,209 28,825 -1.30% (4,542) 22,651Attributable to:
Shareholders of the Bank 30,360 32,472 35,661 42,115 28,678 -1.41% (4,648) 22,571Non-controlling interests 8 40 89 94 147 106 80
Income StatementBased on consolidated IFRS financials
* Not measurableABK Document Classification: PUBLIC