National Bank of Kuwait (NBK), the biggest lender in the Gulf country by assets, posted a 38 per cent jump in its 2022 first-quarter profit on lower impairment losses.
Net profit attributable to the shareholders of the bank for the three-month period ending March 31 climbed to 116.6 million Kuwaiti dinars ($382m) over the same period in 2021, the bank said in a statement on Tuesday to Boursa Kuwait, where its shares are traded.
The provision charge for credit losses and impairment losses during the period declined 71 per cent annually to 12.5m dinars, NBK said.
Profit also jumped as NBK's net interest income and non-interest income climbed amid the continued recovery of the country’s economy from the coronavirus pandemic.
Net interest income rose about 3 per cent to 125.3m dinars, while non-interest income surged 15 per cent to 68m dinars. Net income from Islamic financing also increased during the period.
The lender's total operating revenue in the three-month period reached 236.5m dinars from 221.5m dinars a year earlier.
NBK's total assets, meanwhile, grew 9 per cent annually to 33.7 billion dinars, while customer deposits rose to 18.3bn dinars from 17bn dinars in the first quarter of last year, it said.
GCC economies continue to recover from the pandemic and are expected to grow 4.5 per cent this year, buoyed by the increase in oil prices, the World Bank said in a report last week.
Brent, the global benchmark for two thirds of the world's oil, is up more than 40 per cent since the start of this year after falling from a 14-year high when it nearly touched $140 per barrel last month, amid the Russia-Ukraine conflict.
The operating environment in Kuwait continued to witness signs of recovery during the first quarter of 2022 due to the improvement in the pace of consumer spending and the steady increase in oil production that coincided with the rise in its prices, Isam Al-Sager, vice-chairman and group chief executive of NBK, said.
“The hike in oil prices strengthened the fiscal position of the government which reflected positively on business sentiment and activity. We are expecting an acceleration in the pace of project activities during the year, given the government's commitment to implementing its strategic objectives and increasing the spend on infrastructure development.”
The continuous improvement in the operating environment is also expected to "reflect positively on corporate credit growth", he said.
The operating environment for Kuwait banks is expected to improve this year on the back of higher oil prices and continued recovery from the pandemic but some challenges remain due to the “uncertain” fiscal funding strategy of the government, according to a report by S&P Global Ratings on Monday.
“The macroeconomic outlook, higher oil prices and rising interest rates are smoothening the recovery path for Kuwaiti banks,” the rating agency said.
Funding conditions, meanwhile, remain favourable in the Gulf country, supported by stable deposits from the retail sector and government-related entities, it said.
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