0 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.
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2 Table of Contents
Page # Section 1 ABK Introduction & Key Highlights 4x
Section 2 Kuwait Country and Banking Snapshot 7x
Section 3 ABK Strategy and Business Overview 11x
Section 4 Financial Performance 17x
Section 5 Appendix 21
3 Al Ahli Bank of Kuwait (“ABK”) Overview
Overview of Al Ahli Bank of Kuwait Consolidated IFRS Financials Established on 23rd May 1967, Al Ahli Bank of Kuwait K.S.C.P. (“ABK”, H1 H1 USD million(1) 2014 2015 2016 2017 2018 CAGR the “Issuer” or “the Bank”) is a leading bank headquartered in Kuwait 2019 2018 Net Loans & Advances 8,273 10,040 9,898 10,189 9,977 4.8% 10,387 10,237 and regulated by the Central Bank of Kuwait (“CBK”) Total Assets 11,950 14,363 14,000 14,452 14,995 5.8% 15,615 14,793 Operates through three major segments: Customer Deposits 6,620 8,225 9,475 9,739 10,267 11.6% 10,385 10,178 Commercial banking Total Equity 1,907 1,831 1,816 1,895 2,230 4.0% 2,252 1,881 Retail banking Total Operating Income 402 423 482 520 557 8.5% 287 277 Treasury and Investments Net Profit 128 100 106 118 139 2.0% 75 63 Non performing loans ratio (%) 2.5 2.3 2.6 1.7 1.8 1.96 1.76 31 branches in Kuwait, 2 branches in the United Arab Emirates as well Loans to Deposits ratio (%) 84.6 82.5 83.3 83.4 79.0 82.0 81.0 as a wholly owned investment banking subsidiary in Kuwait and through Cost / income ratio 29.8 32.0 39.4 37.7 38.6 38.4 38.4 the acquisition of Piraeus Bank Egypt, now renamed as “ABK - Egypt”, it Return on average equity 6.8 5.5 5.8 6.3 7.3 6.6 6.8 operates 42 full service branches in Egypt Tier 1 ratio (%) 22.7 16.0 16.5 16.0 17.9 17.5 15.1 Total Capital Adequacy ratio (%) 23.7 17.2 17.7 17.2 19.2 18.7 16.3 DIFC Branch opened in April 2018
Ranked amongst the top 10 safest banks in the Middle East by Global Ownership Structure (as at 31st December 2018) Finance in 2017 and 2018
Established by the Behbehani family, with approximately 37.5% Kuwait Investment Co. ownership (direct and indirect) 10.1% Behbehani Telecommunications Co. The Bank’s Credit Ratings 9.5% Wafra International Investments Co.
9.1% Behbehani Investment Co. Rating Agency Last affirmed Long Term Rating Outlook 49.8% (direct and indirect) Ali Murad Yousuf Behbehani 8.8% July 2019 A2 Stable Heirs of Mohamed Saleh Yousuf Behbehani 6.3% Oct 2018 A+ Stable 6.4% Others
Note: KD/USD Rates for 2014, 2015, 2016, 2017 , 2018, Q2 2019 and Q2 2018 respectively – 0.2928, 0.3035, 0.3060, 0.3018, 0.3033, 0.3032 & 0.3028 4 ABK Key Highlights
Stable macro environment & solid banking system Strong Profitability & sound asset quality
• 18% Growth in Net Profit & 4% Growth in Operating • Kuwait represents one of the strongest macro profiles Income with solid fundamentals in the GCC, stable Aa2/AA rating • Total Assets reached KD 4.7 billion, up 4% from Dec • Stable banking sector with prudent regulatory 2018 environment • Customer Deposits at KD 3.1billion , up 1% from Dec • Highly liquid banking system supported by government 2018 spending, enabling healthy operating conditions • Low NPL ratio at 1.96% • Pre-provision income to average assets ratio at 2.3% • One of the highest NIM among conventional banks in Kuwait Stable funding base & good liquidity buffers Robust capitalization & strong balance sheet
• 78% of the total liabilities consist of customer deposits • Tier 1 ratio of 17.5% & CAR of 18.73% • Liquidity coverage ratio 160% & Net Stable Funding Ratio • In September 2018 the Bank issued a US$ 300 Million of 107% Perpetual Tier 1 capital bond on the International Capital • Leverage of 12%, above the 3% required by the CBK Basel Markets, which was oversubscribed with very strong III leverage ratio interest from investors outside the MENA region
Committed shareholder base and a well-experienced management team
• 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
5 Agenda
Page # Section 1 Introduction to ABK & Key Highlights 4x
Section 2 Kuwait Country and Banking Snapshot 7x
Section 3 ABK Strategy and Business Overview 11x
Section 4 Financial Performance 17x
Section 5 Appendix 21x
6 Overview of Kuwait
Key Economic Indicators
Population 4.4 million Rating Outlook Nominal GDP (2018E) USD 130 billion / KD 43 billion Oil Revenues (2018) USD 65.7 billion AA Stable
Oil Revenues as % of GDP (2018) 46.6% th 5 largest in the world at 101.5bn barrels; AA Stable Oil Reserves (2018) more than 6% of the world’s total oil reserve Public Debt/GDP (2018) 15.4% Aa2 Stable Sovereign Wealth Fund AUM USD 592 billion
Stable Production, amongst the top 10 globally Current Account Balance (USD billions)
Kuwait 22.00
7.60 2.9 2.9 3.0 2.9 2.7 2.7
-5.10
2013 2014 2015 2016 2017 2018 2016 2017 (P) 2018 (P)
Average Crude Oil production (millions bbl/day)
Source: (1) Public Authority for Civil Information (2) Kuwait Central Statistical Bureau (3) Rating agencies (4) International Monetary fund (5) Sovereign Wealth Fund Institute 7 Overview of Kuwait Banking Sector
Kuwaiti banking sector snapshot
• The Kuwaiti banking sector comprises of 23 banks, including six All banks conventional banks ( one specialised bank), five Shari’a-compliant regulated by local banks and branches of 12 international banks which includes a the Central non-Kuwaiti Islamic bank. Bank of Kuwait • Highly regulated sector by the CBK with a number of regulations and 6 12 supervisory practices in place monitoring interest rates charged, Conventional foreign bank lending limits and concentrations, investment limits, liquidity and Banks branches capital adequacy.
• The government’s financial strength underpins its capacity to provide support to the banking sector with historical evidence of 23 USD support. Most recently, in 2008, the State of Kuwait offered capital support to a bank as well as introduced a guarantee on customer 5 Banks 219bn(1) deposits under the Deposits Guarantee Law following the global local of banking financial crisis. Islamic Banks assets • Capital adequacy standards under the Basel III framework were
(2) implemented by CBK In June 2014. The Tier I ratio and the total capital Stringent 100% adequacy ratio required by the CBK are 11% and 13% respectively Principal from December 31, 2016. ABK has been designated as a domestically Basel III Deposit requirements Guarantee Law systemic important bank (“D-SIB”) with an additional Common Equity in effect Tier 1 D-SIB surcharge of 0.5% required from December 31, 2016.
(1) Central Bank of Kuwait , KD/USD = 0.3033 as of 31 December 2018 (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 8 Peer Comparison A well established Kuwaiti Bank
Total Assets (USD billions) Loans and Advances (USD billions)
91.9 52.9
23.0 13.8
19.8 13.2
15.6 10.2
15.4 7.6
Customer Deposits (USD billions) Capital Adequacy Ratio
1
51.0 ABK 18.7% * 13.8 CBK 18.5%
12.6 NBK 16.6%
10.4 GBK 16.5%
7.9 BB1 16.0%
All financials are as of 30 June ’19 Using KD/USD = 0.3032, as of 30 June 2019 9 * As of 31st March 2019 Agenda
Page # Section 1 Introduction to ABK & Key Highlights 4x
Section 2 Kuwait Country and Banking Snapshot 7x
Section 3 ABK Strategy and Business Overview 11x
Section 4 Financial Performance 17x
Section 5 Appendix 21
10 ABK’s Strategy
The Group’s Vision is “reimagining a simpler bank” and its Mission is “to consistently provide experiences that simplify and enrich people’s lives”
Transparency | Integrity | Simplicity | Excellence
Retail Banking Best-in-class turnaround times “make banking easy” • SME & Wealth Management • Cross Border offerings • Account Opening • Footprint expansion ( ATMs, Kiosks, • Loans and Cards Simplification Direct Sales agents) • All other services at Branch levels New Products • Introduce Digital Wallet and Segments Re-engineer our credit Wholesale Banking approval process • Cash Management and Global Trade • Redesigned CAR and Credit Services Approval process Key Enablers • Corporate Finance and Advisory • Standardized ORR and FRR models Upgrade our Infrastructure: • UAE Commercial Business • AML System, Risk Monitoring & Reporting Tools Growing regional and domestic Redefine our core Empower our People: business competencies • Performance Management (“Pay for Performance”) • Investing outside Kuwait for • Exit or curtail non-core businesses • Talent Management (“Promote the High Potential”) diversification and increased revenues • Outsource non-core activities Digital Transformation : • DIFC Branch • Rationalize retail product offerings • Data Repository & Analytics • Cross border products • Remodel ACIC around Issuers and • Robotic Process automation • Wealth/Private Bank Investors • Best in Class cyber- security
11 Overview of ABK’s Business Segments
Breakdown by Operating Income comprises a full range of credit, deposit and Commercial H1 2018 related banking services provided to its FY 2018 H1 2019 Banking corporate and institutional customers 10% 9% 7%
34% 36% 34% 56% 57% 57%
KD 168.8 million KD 83.8 million KD 87.0 million Retail comprises a full range of products and services to retail customers, including loans, credit cards, Banking deposits and wealth management services Breakdown by Assets1,2 (KD million) 4,480 4,631 4,280 4,215 4,281 4,406
24% 23% 25% 24% 27% 29% 12% 13% 14% 14% 14% 15% comprises treasury services provided to customers and balance sheet management 64% 64% 61% 62% 59% 56% Treasury & activities, including money market, derivatives, Investment proprietary investment activities and the residual impact of inter-segment fund transfer 2015 2016 2017 2018 Jun-18 Jun-19 pricing Commercial banking Retail banking Treasury & Investments
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 , June 18 & June 19 respectively - KD 79 million, KD 70 million, KD 80 million, KD 79 million , KD 68 million , KD 74 million and 12 KD 104 million Commercial & Retail Banking
Commercial Banking Corporate Banking: Operating Income1 (KD million) • Split into 8 specialized business units, each with a broad product range for corporate clients Commercial banking Retail banking • Services range from traditional working capital finance to complex structured 153 financial products for large projects and multinational companies 146 144 116 International Banking: 34% 37% 39% • Operates from the Group’s head office in Kuwait is responsible for the Group’s 30% 77 81 relationship with major international banks and correspondent banks around 37% 39% the world, including the Nostro and Vostro accounts for and within the Group 70% 66% 63% 63% 61% • The international banking division manages the Group’s institutional and multi- 61% national corporate loan portfolio through relationship managers 2015 2016 2017 2018 H1 2018 H1 2019 Retail Banking • Target additional growth through acquisition of retail portfolios Segment Assets1 (KD million) • Co-branding arrangement with Emirates Airlines in place for its credit and prepaid cards as well as the first bank in Kuwait to offer a single multi-currency card Commercial banking Retail banking Key Stats - Kuwait • 31 branches and 164 ATMs as of 30th June 2019 3,235 3,247 3,193 3,206 3,211 3,268 • 175,207 active cards in circulation with a total spend of KD 922mn in 2018 16% 17% 19% 21% 19% 21% • 89,530 registered SMS and mobile application banking customers • 220,193 transaction executed for such subscribers during 2018 • 253,891 telebanking calls in 2018 84% 83% • 36-member direct sales force in Kuwait 81% 79% 81% 79% Key Stats - Egypt • 42 branches and 104 ATMs across major cities as of 30th June 2019 2015 2016 2017 2018 Jun-18 Jun-19
Note: (1) International results included under Commercial Banking, Retail Banking and Treasury & Investment based on segmental regrouping undertaken by the bank in 2017 13 Treasury and Investments & Ahli Capital
Treasury and Investments
• The Group’s Treasury manages the Group’s assets and liabilities and liquidity 1 requirements under the supervision of the Assets and Liabilities Committee Segment Assets (KD million)
• Manages the money market books and money market funding positions for the Group’s own account to fund its domestic and international foreign- currency assets;
• Undertakes a range of foreign exchange business, across both spot and forward markets, largely on behalf of the Group’s customer base, and conducts a limited amount of proprietary foreign exchange trading within 1,274 1,362 the constraints of what the Group considers to be prudent risk guidelines; 1,089 1,195 1,046 969 • Maintains a portfolio of Kuwaiti government treasury bills and bonds to meet relevant CBK requirements and to manage surplus domestic currency liquidity
• The Group’s investment unit is responsible for managing the Group’s fixed 2015 2016 2017 2018 Jun-18 Jun-19 income proprietary portfolio with the objective of realising income while minimizing the risk of default
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 30th June 2019, Ahli Capital had KD 485 million 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 recently 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
Source: ABK Note: (1) International results included under Commercial Banking, Retail Banking and Treasury & Investment based on segmental regrouping undertaken by the bank in 2017 14 International operations
The Group’s International operations encompass the operations of its UAE branches and its ABK Egypt subsidiary contributing 22% of Operating income and 20% of assets
Al Ahli Bank of Kuwait - UAE Operating Income1 (KD million) • First Kuwaiti bank in the UAE and currently has three branches, located in Dubai, Abu Dhabi and DIFC, respectively • Operating for over 40 years in Dubai where its branch was originally opened to support the needs of Kuwaiti businesses in Dubai • Abu Dhabi branch opened in 2009, since then the Group has expanded its UAE activities to provide retail deposit taking services to customers in the UAE, as well as a range of financing and treasury solutions to corporate customers 37 39 • DIFC Branch opened in April 2018 32 23 15 18 Al Ahli Bank of Kuwait - Egypt • Acquired Piraeus Bank Egypt in November 2015, since renamed Al Ahli Bank of Kuwait – 2015 2016 2017 2018 H1 2018 H1 2019 Egypt • Provides revenue and asset diversification and an opportunity to leverage economic links Total Assets1 (KD million) between Kuwait and Egypt • Higher margins and growth rate potential in Egypt vis-à-vis Kuwait • 42 Branches and 104 ATMS spread across major cities in Egypt as of 30 June 2019 • Over 171,000 retail customers as of 30th June 2019 • Retail Banking accounts for 39% of total deposits and 30% of total loans as of 30th June 2019 1,013 1,048 • Corporate Banking accounts for 61% of total deposits and 70% of total loans as of 30th 835 875 909 895 June 2019 • Assets attributable to ABK Egypt constituted 12.8% of the Group’s total assets as of 30th June 2019 2015 2016 2017 2018 Jun-18 Jun-19
Note: (1) International results included under Commercial Banking, Retail Banking and Treasury & Investment based on segmental regrouping undertaken by the bank in 2017 15 Agenda
Page # Section 1 Introduction to ABK & Key Highlights 4x
Section 2 Kuwait Country and Banking Snapshot 7x
Section 3 ABK Strategy and Business Overview 11x
Section 4 Financial Performance 17x
Section 5 Appendix 21x
16 Loans portfolio, Funding and Liquidity
Gross Maximum Exposure by Credit Risk1 Loan Growth (KD million) (as at 31 December 2018) FY 2017 FY 2018 7.8% 7.3% 14.6% 7.1% 6.9% 16.0% 20.7% 6.5% 6.8% 22.1% 5.9% 8.8% 10.9% 509 536 587 627 595 641 363 2,538 2,493 2,488 2,399 13.1% 22.5% 2,059 2,505 2,508 13.0% 1.96% 22.1% 2.45% 2.28% 2.55% 1.76% 1.67% 1.78% 18.0% 18.2% 2014 2015 2016 2017 2018 Jun-18 Jun-19 Corporate and Banks Retail Personal Government and related entities Non Performing Loans Ratio Provision for credit losses Construction and real estate Banks and financial institutions Trading and manufacturing Others
Funding Profile (KD million) Maturity Profile for Liabilities
4,443 4,617 FY 2018 4,251 4,190 4,258 4,372 FY 2017 683 3,420 556 555 572 676 569 151 150 151 150 634 24% 735 596 501 570 28% 23% 558 1,199 31% 924 3,115 3,082 3,149 2,496 2,900 2,939 1,938
48% 46% 2014 2015 2016 2017 2018 Jun-18 Jun-19 Customer Deposits Due to banks and other financial institutions Less than one month One month to one year Over one year Medium term notes Equity 2
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 17 Operating Performance
Operating Income (KD million) & Cost to Income (%) Breakdown of Operating Income
39.4% 37.7% 38.6% 38.4% 38.4% 9% 10% 29.8% 32.0% 5% 20% 7% 21% 19% 8% 20% 20% 168.8 7% 147.5 157.0 12% 128.5 18% 19% 117.6 74% 72% 71% 83.8 87.1 72% 73% 70% 73%
2014 2015 2016 2017 2018 H1 2018 H1 2019 2014 2015 2016 2017 2018 H1 2018 H1 2019
Operating income Cost to income ratio (%) Net interest income Net fee and commission income Other income¹
Profitability (KD million) Operating metrics (%) 32.0% 7.3% 25.0% 6.8% 6.8% 6.6% 25.9% 6.3% 5.5% 5.8% 23.6% 22.0% 22.7% 22.8%
42.1 37.6 35.7 30.4 32.5 1.10% 0.95% 19.1 22.6 0.80% 0.80% 0.82% 0.87% 0.84%
2014 2015 2016 2017 2018 H1 2018 H1 2019 2014 2015 2016 2017 2018 H 1 2018 H1 2019
Net profit Net profit margin RoAA RoAE
Note: (1) Includes Net foreign exchange gain, Net (loss)/gain on investment securities , Dividend income, Share of results of associate & Other income 18 Capitalisation Overview
Capital Adequacy Ratio Regulatory Capital (KD, million)
Basel III 683 690 44 650 43
19.2% 600 576 18.7% 562 17.2% 17.7% 17.2% 546 40 17.5% 550 38 640 646 17.9% 38 16.0% 16.0% 16.5% 13.5% 13.5% 13.5% 500 535 13.0% 508 524 12.5% 450 2015 2016 2017 2018 June 19 11.0% 11.5% 11.5% 11.5% 10.5% Tier 1 Tier 2 capital 2015 2016 2017 2018 June 19 Key Central Bank of Kuwait Regulations & Requirements* Min Required Tier 1 Min. Required CAR* Tier 1 CAR Common Equity Tier 1 9.5%
• *Including D-SIB charge. The Group has been designated as a domestically systemic important Tier 1 Capital Ratio 11.0% bank (“D-SIB”) with an additional Common Equity Tier 1 D-SIB surcharge of 0.5 per cent. required Capital Adequacy Ratio 13.0% from 31 December 2016. As a result, the Group’s total minimum capital requirement from that date is 13.5 per cent., which includes a capital conservation buffer. D-SIB surcharge 0.5% Equal to at least 100% on an ongoing basis • The principal factor behind the Group’s falling capital ratios in 2015 was the significant increase Net Stable Funding Ratio st in its risk weighted exposures, reflecting the increase in its portfolio of loans and advances in effective from 1 January 2018 Minimum of 70% which will later reach 100% 2015 and to a lesser extent a decrease in the available capital as a result of the acquisition of Liquidity Coverage Ratio Pireaus Bank Egypt. 2018 Capital ratio increase is driven by issuance of Additional Tier 1 capital by 2019 securities of KD 91m Loan to Deposit Ratio Capped at 90% Total ratio of securities portfolio shouldn’t Investment Limits exceed 50% of bank’s capital
Increase is because of issuance of Additional Tier 1 capital of USD 300m in September 2018 19 Agenda
Page # Section 1 Introduction to ABK & Key Highlights 4x
Section 2 Kuwait Country and Banking Snapshot 7x
Section 3 ABK Strategy and Business Overview 11x
Section 4 Financial Performance 17x
Section 5 Appendix 21x
20 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
21 Awards and Accolades
‘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
22 Balance Sheet Based on consolidated IFRS financials
4 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 CAGR June 18 June 19 (KD, 000) (%) Assets Cash and balances with banks 144,825 432,173 494,678 495,519 702,233 48.39% 639,483 769,255 Kuwait Government treasury bonds 279,831 204,246 223,142 344,590 257,161 -2.09% 282,700 229,214 Central Bank of Kuwait bonds 221,228 179,713 173,715 125,595 127,646 -12.85% 104,870 136,035 Loans and advances 2,422,297 3,047,143 3,029,384 3,075,065 3,025,992 5.72% 3,099,835 3,149,262 Investment securities 345,011 343,809 237,905 182,545 289,917 -4.26% 218,302 287,744 Investment in an associate 14,865 16,572 18,263 19,556 21,896 10.17% 20,349 22,405 Premises and equipment 33,826 53,125 46,695 53,675 55,710 13.28% 54,750 65,448 Intangible assets — 41,217 17,698 17,294 16,865 n.m* 16,992 17,848 Other assets 37,156 41,066 43,333 47,887 51,008 8.24% 41,921 57,170 Total assets 3,499,039 4,359,064 4,284,813 4,361,726 4,548,428 6.78% 4,479,202 4,734,381 Liabilities and shareholders’ equity Liabilities Due to banks and other financial institutions 923,752 1,199,192 734,771 596,444 501,134 -14.18% 570,135 634,132 Customers’ deposits 1,938,297 2,496,278 2,899,908 2,939,349 3,114,504 12.59% 3,081,850 3,148,654 Medium-term borrowing — — — 149,712 150,612 - 150,300 151,214 Other liabilities 78,642 107,135 94,331 103,482 105,813 7.70% 107,440 117,611 Total liabilities 2,940,691 3,802,605 3,729,010 3,788,987 3,872,063 7.12% 3,909,725 4,051,611 Shareholders’ equity Share capital 161,917 161,917 161,917 161,917 161,917 0.00% 161,917 161,917 Share premium 108,897 108,897 108,897 108,897 108,897 0.00% 108,897 108,897 Treasury shares (2,303) (4,528) (4,958) (5,053) (5,053) 21.71% (5,053) (5,053) Reserves 289,837 289,314 289,301 306,249 319,042 2.43% 302,961 325,300
Equity attributable to shareholders of the Bank 558,348 555,600 555,157 572,010 584,803 1.16% 568,722 591,061 Perpetual Tier 1 Capital Securities - - - - 90,750 - - 90,750 Non-controlling interests — 859 646 729 812 - 755 959 Total equity 558,348 556,459 555,803 572,739 676,365 4.91% 569,477 682,770 Total liabilities and shareholders’ equity 3,499,039 4,359,064 4,284,813 4,361,726 4,548,428 6.78% 4,479,202 4,734,381
* Not measurable 23 Income Statement Based on consolidated IFRS financials
2014 2015 2016 2017 2018 CAGR H1 2018 H1 2019 (KD, 000) % Interest income 111,829 127,003 179,408 188,965 221,067 18.57% 104,143 121,421 Interest expense (27,469) (32,610) (70,222) (76,533) (99,285) 37.88% (45,435) (57,445) Net interest income 84,360 94,393 109,186 112,432 121,782 9.61% 58,708 63,976 Net fee and commission income 22,030 25,228 30,317 29,047 31,148 9.04% 15,072 16,672 Net foreign exchange gain 2,973 3,134 3,970 4,625 5,053 14.18% 2,040 2,272 Net (loss)/gain on investment securities 1,860 (1,008) (2,549) 4,943 3,922 20.50% 3,767 1,014 Dividend income 2,671 3,478 2,162 1,999 2,614 -0.54% 2,401 1,179 Share of results of associate 1,976 2,506 2,571 2,173 3,220 12.98% 1,673 1,469 Other income 1,740 801 1,860 1,773 1,076 -11.32% 185 469 Operating income 117,610 128,532 147,517 156,992 168,815 9.46% 83,846 87,051 Staff expenses (22,181) (25,608) (34,236) (34,161) (35,327) 12.34% (17,738) (18,817) Other operating expenses (11,524) (13,849) (19,435) (21,182) (24,882) 21.22% (12,026) (11,891) Depreciation and amortisation (1,366) (1,729) (4,417) (3,835) (4,932) 37.85% (2,417) (2,687) Operating expenses (35,071) (41,186) (58,088) (59,178) (65,141) 16.74% (32,181) (33,395) Operating profit for the year 82,539 87,346 89,429 97,814 103,674 5.87% 51,665 53,656 Net gain from business combination — 8,005 — — — — Provisions on credit facilities General (21,604) (43,993) (21,488) (25,336) (11,649) -14.31% (30,509) (28,488) Specific (20,196) (14,686) (29,325) (32,186) (44,530) 21.86% Net impairment on investment securities and (581) (2,750) (1,626) (431) others — -100.00% — — Profit for the year 40,158 33,922 36,990 39,861 47,495 4.28% 21,156 25,168 Directors’ fees (360) (480) (375) (495) (4,693) 90.01% - - Taxation (2,212) (3,074) (4,103) (3,616) (593) -28.04% (2,003) (2,517) Net profit for the year 37,586 30,368 32,512 35,750 42,209 2.94% 19,153 22,651 Attributable to: Shareholders of the Bank 37,586 30,360 32,472 35,661 42,115 2.89% 19,118 22,571 Non-controlling interests — 8 40 89 94 35 80
24