"The Group’s net profit rose 23% to KD 235.2 million (US$ 876 million), maintaining our record of consistent growth in profitability since the Bank's inception in 1952 and earnings per share rose 27.75% to 136 fils, compared to 111 fils in 2005. An increase of 27% saw operating income reach KD 395 million, up from KD 312 million in 2005. Similar improvement in the return on shareholder funds, which was already the highest in our industry, were also achieved, while return on equity increased to 38.6% from 36.6% in 2005, and return on average assets rose to 3.6% from 3.5% in 2005," Mr. AlBahar added
Successful Capital Increase..
Mr. AlBahar reiterated that NBK's forward-looking strategy was behind the decision to raise the Bank's capital base by 10% during 2006 through a rights issue, adding that the subscription was quickly covered, giving a clear indication of shareholders' great confidence in NBK's capability and strong prospects. The Board of Directors has also proposed the distribution of a cash dividend equal to 75% of the nominal value of shares, or 75 fils per share, together with a 5% bonus share distribution for those shareholders registered at the time of the General Assembly.
NBK also maintained the highest credit ratings in the Middle East for the 7th consecutive year. In 2006, Moody's upgraded NBK's long-term credit rating to Aa3 with a stable outlook, from A2, AlBahar added.
Opportunities for Expansion..
On his part, NBK's Chief Executive Officer, Mr.Ibrahim Dabdoub explained that NBK is well positioned to capitalise on the broad opportunities presented by the ongoing economic boom in the region, and therefore, NBK is pursuing an ambitious expansion strategy in both domestic market and across the region.
"In 2006, we opened our first branch in Jeddah, Saudi Arabia. NBK’s associate, International Bank of Qatar, which we are actively involved in managing, opened three new retail branches in Doha to support a growing business and enable it to be a more active player in that business segment. We increased the capital of our Jordan branch to fund future expansion. Credit Bank of Iraq, in which we have a 75% controlling share, has also seen steady growth. Meanwhile, we have been working actively on expanding into several new markets during the forthcoming year," Mr. Dabdoub said.
Mr. Dabdoub explained that NBK Capital, the Bank’s investment banking subsidiary, completed its first full year of operations and rapidly established itself as a regional leader in leveraged finance, and mergers and acquisitions. " The company established offices in Dubai and Turkey, and presently plans to go into the Saudi market. Other plans include expanding its service offering by broadening its portfolio to include investment banking, advisory, and private equity services," Mr. Dabdoub added.
"During 2006, we opened six new branches in Kuwait, keeping NBK the bank with the largest distribution network in the country, while continuing with updating our branches in line with contemporary brand standards." He stated.
Transformation Journey..
Last year, we launched a transformation program aimed at enhancing our capabilities to meet the challenges posed by globalization and a dynamically changing industry. The transformation is taking place at three levels: people, processes and technology. It will touch all aspects of our business – the way we interact with customers, how we develop products, and the efficiency and value added of our services.
Mr. Dabdoub explained that one of the recently launched initiatives aimed at keeping NBK at the forefront of technological advancement was the replacement of the legacy core IT system with a number of new state-of-the-art solutions. Significant investments are also being made to upgrade the bank operating systems and branch IT framework, card switch and debit card information systems, trade finance system and various other components of the technology infrastructure."
Our People..
Mr. Dabdoub said pointed out that harnessing human talent is critically important to NBK’s success and indicated that a number of initiatives were introduced in 2006 to enhance employee productivity and development. Separately, reiterating that NBK continues to diligently support the country’s aim for young Kuwaiti men and women to assume an active role in the private sector.
"In 2006, the Bank hired about 400 Kuwaiti graduates, raising the share of nationals to 52% of NBK's workforce. NBK’s efforts have been recognised with an elite award from the Ministry of Labour and Social Affairs for achieving such a high level of national hiring
and offering opportunities for career development to young Kuwaiti graduates. The Bank also continues to provide summer training programmes and internships for students from Kuwait University and the Public Authority for Applied Education and Training (PAAET), training more than 700 individuals over the last three year." He concluded.
Social Responsibility..
In his opening address, Mr. AlBahar also stated that NBK has always considered active participation in the community as an essential part of its role. Through involvement with a wide variety of humanitarian and charitable causes, the Bank seeks to engage individuals on a deeper societal level, achieving progressive change for the well-being of the communities it serves.
He added that humanitarian efforts in 2006 concentrated on providing assistance to Lebanon during the war, as well as emergency crisis relief to victims of the India and Pakistan earthquakes, not to mention NBK continual support extended to Beit Abdullah Centre, a charitable organisation that helps children and their families cope with the trauma of hospitalisation.
" NBK was honoured to host a number of high profile events during the year. The first was an international symposium entitled The Outlook for the Global Oil Industry: Implications for the GCC Economies. The second was the Institute of International Finance (IIF) forum to discuss challenges facing the Middle Eastern economies, while the third was a symposium entitled Leveraging the GCC Boom: A view towards Asia, at which Lee Kwan Yew, Singapore’s Minister Mentor and former Prime Minister, delivered the keynote speech." He concluded.
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