The strength and sustainability of our earnings from core activities support increased dividends
– “Public debt” is a necessity, even if oil improves and its absence threatens the classification
Two-thirds of the population is young and a mortgage law is needed amid the increasing housing demand
– More than 90 percent of our operations are via mobile and the Internet
The CEO of the National Bank of Kuwait Group, Issam Al-Sager, confirmed that the operating environment in Kuwait improved during the second half of last year, which was reflected in the increase in consumer spending, and the improvement in commercial activity as a result of easing restrictions and improving the financial position of the government due to the rise in oil prices, which supported the achievement of Strong growth in the loan portfolio, with an annual increase of 12.7 percent, and the growth of net operating income was boosted by 7.6 percent.
He said that this coincided with a decrease in provisions amid an improvement in the operating environment and the return of life to normal, pointing to the reclassification of some loans to regular again.
Al-Sager added, during an interview with CNBC Arabia, that these factors were reflected in the growth of NBK’s annual profits by 47%, indicating that as a result of the strength of its financial position and its ability to generate profits from operating activities, the Board of Directors recommended an increase in cash dividends by 50 percent. percent compared to last year to 30 fils in cash per share, which confirms its keenness to enhance the added value of shareholders.
Regarding the possibilities of “Al-Watani” expansion after the end of the crisis, Al-Sager said, “Our expansion does not stop and we constantly focus on expanding our business within the main markets in which we operate, especially in the Egyptian and Saudi markets, with the aim of integrating our services, and relying on our digital superiority to enhance our market share locally. internationally and penetrating all business sectors in the markets in which we operate.”
Al-Sager added, “We aim to expand wealth management activities in all of the group’s markets by combining private banking services and NBK Capital’s products and services under one leadership. We are also developing wealth management products by increasing reliance on artificial intelligence and digitization.”
digital stage
In response to a question about the launch of Weyy as the first digital bank in Kuwait, Al-Sager said that the launch of Weyy is considered the beginning of a new phase in NBK’s digital journey, during which it will increase its investments in developing its digital platforms, and increase its reliance on artificial intelligence in its operations.
Al-Sager explained that Weyi represents an important station in NBK’s journey of digital transformation, as a platform that supports its leadership in the Kuwaiti market, by targeting the youth segment, especially since two-thirds of Kuwaitis are less than 34 years old.
Al-Sager pointed out that NBK has developed a roadmap for digital transformation years ago, and that the necessary investments have been allocated to build a huge infrastructure, which contributed to its digital superiority, and to provide services and pioneering digital payment solutions.
Regarding competition with “Fintech” companies, and the need for a legal framework regulating their business, Al-Sager stressed that the “Central” took the initiative to launch a regulatory framework for an experimental control environment that allows testing innovative banking services and products for financial technology companies, and setting rules for regulating electronic payments, pointing to what banks have achieved. Kuwait is one of the great advances in providing services and digital payment solutions
Regarding NBK’s strategy in this regard, Al-Sager said, “Our strategy aims to build a partnership with (Fintech) companies, benefiting from the huge technological infrastructure, and in return we benefit from their platforms in creating advanced banking products that contribute to keeping pace with the continuous change in customer behavior in a better way, pointing to the launch of The first digital lab in Kuwait represents an incubator and a center for cooperation between the bank and talented individuals and emerging financial technology companies.”
Mashhad variable
Regarding the changes that the banking sector is experiencing two years after the pandemic, Al-Sager stressed that the banking industry is witnessing changes before the pandemic, mostly related to technological development, and that “Corona” came to accelerate the pace of those changes so that customers increased their demand for digital channels.
He expected that digital transactions would become a culture among customers that would continue after the pandemic, noting that banks were quick to keep pace with these changes, develop their digital channels and spend to accelerate the digital transformation.
Al-Sager continued, “We anticipate the changes and were prepared through a huge technological infrastructure and digital channels ready to meet the needs of our customers, and more than 90 percent of our banking operations were implemented through (Al-Watani via mobile) and (Al-Watani via the Internet) services in 2021, and the number of people increased The operations that took place via mobile 30%.”
Banks… are stronger
Al-Sager stressed that the banks have become much stronger than before, despite the severity of the economic repercussions of the Corona crisis, which coincided with a sharp drop in oil prices, pointing out that they entered the crisis with strong levels of capitalization and asset quality, thanks to the conservative directions of the Central Bank of Kuwait, in managing risks and building provisions on Over the years after the 2008 crisis.
Al-Sager pointed to the banks’ success in providing the necessary credit to meet the needs of all economic sectors in the face of the repercussions of the pandemic, with the support of the “Central” easing the regulatory requirements, which provided the necessary liquidity, at a time when it supported the initiatives of the government, civil society and the “Central” in combating the repercussions of the spread of the epidemic from Postponing loan and corporate installments and supporting small and medium enterprises.
Necessary laws
Al-Sager expressed his optimism about the calm witnessed in the political arena and the success of the national dialogue and cooperation between the government and the National Assembly, which increases the possibility of passing the laws that the government has set at the top of its legislative agenda, foremost of which are public debt and mortgages.
Al-Sager stressed that Kuwait has been suffering from a budget deficit for seven years, at a time when the liquidity of the General Reserve Fund is no longer sufficient to fill it, indicating that withdrawing from the Generation Fund is not economically feasible.
He said that the public debt law must be passed even if oil prices improve, because it represents a financing mechanism that can be resorted to, noting that its absence threatens to lower the credit rating and raise the cost of borrowing in the future, stressing the need to coincide with the adoption of the public debt law with the speedy implementation of reform fiscal, in order to avoid the continuation of the fiscal deficit in the long term.
Al-Sager indicated that Kuwait is still one of the few countries in the world that does not have a mortgage law, and that there is a need for a new financing mechanism, especially since most of the population is young, which increases the demand for housing.
He stated that banks will be major beneficiaries of the adoption of the mortgage law, expecting a great demand for the new banking products that they will launch at that time.
Sustainability Approach
Al-Sager explained that institutions in general face challenges regarding the application of sustainability standards, especially in the absence of a clear framework and standards that represent goals that need to be achieved, indicating that the situation in banks is more difficult because the application of their sustainability standards is linked to all economic sectors that are linked to activities with them, including borrowers, suppliers and others.
“The application of sustainability standards in banks has extended to financing activities and their impact on the environment, and we need to update our approach to include the impact of the financing provided by banks,” Al-Sager said.
He added that NBK was one of the first institutions in the region that was concerned with implementing sustainability standards, especially in terms of its social responsibility towards youth, as it played a major role in empowering young people and developing their skills, by launching training programs in cooperation with leading institutions such as the Tamkan program and job qualification programs. for university students, pointing to the start of a new phase in applying sustainability standards and integrating them into all the Bank’s operational operations while making them a mainstay in plans and strategies.