Al Ahli Bank of Kuwait Group to Hold 9-Month Analyst Conference Call in 2024

KUWAIT CITY, November 2: Al Ahli Bank of Kuwait (ABK) recently hosted the 2024 9-month analyst conference attended by Abdulla Al Sumait, Acting Group Chief Executive Officer; Shiamak Soonawalla, Financial director of the group; Abdulaziz Jawad, Chief Strategy Officer; and Yaqoub Almulla, Senior Manager of Investor Relations.

Al Sumait began by discussing the key financial achievements of this period, stating: “We recorded a 19% increase in net profit attributable to shareholders, rising from KD 32.6 million in the first 9 months of 2023 to 38.8 KD million in the first 9 months. in 2024. In addition, earnings per share increased 23%, rising from 13 fils to 16 fils, supported by a robust capital adequacy ratio of 17%.”

In addition, in mid-September, the Bank successfully issued additional Tier 1 Perpetual Bonds with a value of USD 300 million at a fixed rate of 6.5%, which was oversubscribed 4.5 times, demonstrating the confidence international investors in ABK’s solvency and performance.

He added, “Our adaptability to the evolving economic landscape is reflected in our successful strategic execution,as evident in our KPIs. Over the past nine months, ABK has maintained positive momentum as seen in our improved profitability and asset quality metrics, with a non-performing loan ratio of 1.30% showing stability, along with credit growth of 6 % per year.

Development of objectives

The Bank continuously advances its strategic objectives and supports excellence in digital transformation across all sectors. This is highlighted by a major overhaul and near completion of our mobile banking application to provide our customers with state-of-the-art services. Al Sumait said: “Both our corporate and retail portfolios have grown significantly and are closely monitored using real-time data analytics.”

He added: “Looking forward, ABK is well-positioned to capitalize on emerging growth opportunities by capitalizing on its financial strength and customer-centric strategies. We remain committed to maintaining the highest standards of corporate governance and transparency, aiming for a positive outcome by the end of 2024.”

Financial indicators

On his part, Soonawalla revealed, “Our Operating Income increased by 11% to KD 150.8 million, while Operating Profit increased by 13% to KD 80.6 million. Following the successful issuance of $300 million Tier 1 (AT1) Perpetual Notes, our capital adequacy ratio strengthened to 17%, well above regulatory benchmarks.”

On asset quality, he was pleased to report: “Our loan loss coverage ratio is also impressive at 467%, reflecting our prudent provisioning strategies and sound lending practices. Additionally, as of September 2024, our provisions exceed IFRS requirements by KD 226 million, providing a substantial buffer against potential risks.”

Soonawalla stated: “Profitability continues to be a priority as indicated by our Net Interest Margin of 2.2%, an improvement from 2.1% in the previous year. Moreover, the ratio of operating profit to average assets increased by 11 basis points to 1.61%. These figures highlight the Group’s strong performance. Additionally, the average return on equity increased to 8.4%, an impressive 35% increase over the same period in 2023.“

For the first nine months of 2024, the Group achieved KD 108 million in net interest income, marking a 7% increase of KD 6.7 million compared to the same period in 2023. This increase is largely driven by increased levels of assets and loan volumes. .

Turning to the group’s total assets, Soonawalla said: “They grew by 13% to KD 7.1 billion, while our loan book grew by 6% from KD 4.3 billion to 4, KD 6 billion. In addition, total deposits amount to KD 4.3 billion, representing 68% of our total liabilities. In terms of liquidity, we are well positioned with a net stable funding ratio of 116% and a liquidity coverage ratio of 378%, both well above regulatory requirements.”

In addition, operating profit increased 13% year over year due to improved margins and higher non-interest income. Major contributions to our operating income of KD 150.8 million for the 9-month period came from Corporate Banking (46%), Retail Banking (39%) and Treasury Operations (15%). Our asset allocation shows 56% in Commercial Banking, 12% in Retail and 32% in Treasuries.

Soonawalla clarified: “Fees and commissions contributed significantly to our operating income, growing 15% year-on-year to KD 29 million in the first nine months of 2024. These are widely diversified across different regions and business sectors , stemming primarily from core banking. operations. Furthermore, our cost-to-income ratio improved to 46.6% from 47.6% last year, underscoring our continued commitment to cost optimization and efficiency.”

He concluded, “The 9 months of 2024 were marked by significant improvements in profitability, operational efficiency, asset quality and capital strength. We remain optimistic that this positive trajectory will continue throughout the rest of the year.”

A positive impact

Turning to Jawad, he stated: “Despite the challenging global and regional conditions of late, ABK has impressively grown its profitability and balance sheet size while maintaining its asset quality. ABK’s organic growth strategy remains focused on its key pillars of targeting youth and high-value customers on the corporate and retail banking front, while optimizing our operating model. In parallel, ABK Group is selectively exploring and evaluating different avenues and opportunities for inorganic growth.“

He emphasized: “As we move forward, our dedication to creating long-term value for our shareholders remains constant at ABK. We are strategically investing in our future while maintaining a prudent approach to risk management, which has earned us strong credit ratings of ‘A2’ and ‘A’ from Moody’s and Fitch, respectively.”

Furthermore, Jawad stated that ABK is honored to have received six distinguished awards from the esteemed Global Finance institution in 2024. This is in addition to ABK-Egypt being named the best retail bank in Egypt at the award ceremony of the banking excellence awards organized by MEED this year. which reflects ABK-Egypt’s commitment to realize its long-term vision, thus establishing a prominent and distinguished position in the banking sector in Egypt.

Reflecting on the group’s commitment to sustainability, he revealed: “We recently published ABK-Egypt’s first Annual Sustainability Report and Carbon Footprint Report for 2023, complying with GRI standards.”

Jawad also revealed that strategically, ABK-UAE has achieved significant milestones, particularly the launch of the corporate services office to streamline operations and improve customer experience. On the consumer banking side, ABK has enhanced its UAE mortgage product by expanding cash collateral financing, which expands our customer base and addresses short-term cash flow needs. He said: “Our special mortgage rate program is in the final stages of development and is expected to drive mortgage growth in the UAE, hand in hand with a new personal loan product to be launched soon, diversifying our banking offerings for consumers”.

Moreover, Jawad said global economic growth is expected to remain stable at 3.2 percent, according to the IMF’s latest October report. He continued: “From a monetary perspective, the Central Bank of Kuwait reduced the discount rate by 25 basis points from 4.25% to 4% effective September 19, 2024, which was in parallel with the implementation of to the Federal Reserve (Fed) of a 50% program. -reducing the rate of base points.“

He explained that the region’s geopolitical and macroeconomic landscapes have been fluid with much volatility over the past 12 months, which has and continues to impact oil prices and GCC economies. In the GCC region, market performance showed encouraging economic progress, characterized by strong non-oil growth, despite uncertainties and fluctuations in oil prices.

He added that while Kuwait’s economic activities have undergone moderate growth recently, the IMF is projecting a 2.8% GDP rebound in 2025, and activity is expected to increase in the energy, water and constructions. Such an outlook will have positive effects on the banking sector as a whole and on ABK in particular.

Finally, moving on to ABK’s international footprint and starting with Egypt, he revealed “The IMF Executive Board completed the third review of Egypt’s Extended Fund Facility (EFF) in July 2024, noting that recent efforts Egypt’s reform programs have shown positive results and made improvements. in macroeconomic stability.”

Concluding his statement, Jawad stated: “As we move through the remainder of 2024, we will continue to address the execution of ABK’s strategy with determination, ensuring that we pave a successful path for our full-year results..”