Al-Ahli Bank of Kuwait Group holds Q1 2025 analyst conference call

14/05/2025 05:56 AST

Al-Ahli Bank of Kuwait (ABK) recently hosted its Q1 2025 analyst conference attended by Abdulla Al-Sumait, Acting Group Chief Executive Officer; Shiamak Soonawalla, Group Chief Finance Officer; Abdulaziz Jawad, Chief Strategy Officer; and Osama Ezzeldin, Assistant General Manager of Strategy and Follow Up.

Al-Sumait began with discussing the financial highlights for Q1 2025. "ABK achieved a healthy net profit growth of 8 percent to KD 15.7 million. Earnings per share remained stable at 5 fils, and our capital adequacy ratio stood robustly at 16.78 percent."

"On the lending side, ABK's loan portfolio expanded by 10 percent year-on-year, supported by our disciplined credit underwriting standards. Asset quality remains strong, with our NPL ratio well controlled at 1.38 percent, reflecting our continued focus on maintaining strong asset quality," Al-Sumait said.

He added, "Our diversified footprint continues to drive our growth momentum. Our international operations, including our UAE branches and ABK-Egypt, contributed a solid 40 percent of operating income and accounted for 37 percent of total assets, highlighting the strength of our regional diversification strategy."

Al-Sumait shared that ABK launched key strategic initiatives during the quarter to reinforce its competitive advantage and enhance customer experience. Major achievements in Q1 2025 included the launch of its new mobile banking app in Kuwait, featuring enhanced features and a new design, the introduction of a free international call service for customer support, and an enhanced customer service model with virtual service available in branches.

He concluded, "As we look ahead, ABK remains focused on delivering sustainable, long-term value. We will continue to pursue strategic expansion opportunities, strengthen our regional presence, and introduce innovative financial solutions tailored to meet the evolving needs of our customers."

Financial indicators
On his part, Soonawalla discussed ABK's financial highlights for Q1 2025. He said, "We achieved a healthy net profit growth of 8 percent year-on-year, with KD 15.7 million net profit attributable to shareholders. Earnings per share remained stable at 5 fils, and our operating income for the period reached KD 50.4 million, while operating profit stood at KD 29.3 million. This was supported by proactive cost management and continued revenue momentum across business lines."

ABK's asset quality remains robust, with the Group's non-performing loan (NPL) ratio maintained at a healthy 1.38 percent. The Group's loan loss coverage ratio held firm at 433 percent, confirming strong credit quality. Furthermore, provisions exceeded the IFRS 9 requirements, in accordance with Central Bank of Kuwait guidelines, as ABK continues to apply a prudent provisioning policy.

Soonawalla added, "We managed to maintain our net interest margin at 2.1 percent levels, although operating income marginally declined due to funding cost pressures and lower fees and commission income. Return on Average Equity (ROAE) delivered a healthy 8.1 percent, underlining ABK's strength in sustaining returns and driving long-term shareholder value. Liquidity continues to be a key strength for us, as evidenced by a liquidity coverage ratio of 255 percent and a net stable funding ratio of 109 percent, both comfortably above regulatory thresholds. Customer deposits remained resilient, totaling KD 4.4 billion, which represents 66 percent of our total liabilities. This further reinforces the strength and stability of our funding base."

He highlighted that the Group's strong start to 2025 reflects ABK's effective execution of strategic priorities and the leveraging of our core banking franchise alongside diversified income streams to drive sustainable growth. Notably, operating profit grew by 5 percent, highlighting the Group's enhanced operational efficiency. Commercial Banking remained the largest contributor to our operating income during the quarter, accounting for 49 percent, followed by Retail Banking at 39 percent, and Treasury and Investments at 12 percent. Our asset allocation remains strategically balanced, with 55 percent allocated to Commercial Banking, 12 percent to Retail Banking, and 33 percent to Treasury and Investments.

He added, "Our focus on operational excellence, digital transformation, and strategic investments continues to yield meaningful improvements. During Q1 2025, ABK's cost-to-income ratio significantly improved to 41.9 percent, down from 46.4 percent year-on-year, reflecting greater efficiency and disciplined cost management across the Group. As of Q1 2025, total assets expanded to KD 7.4 billion, delivering strong year-on-year growth of 13 percent. Net loans and advances increased by 10 percent to KD 4.7 billion, demonstrating healthy lending activity and prudent balance sheet expansion."

Soonawalla closed, "Our Q1 2025 results highlight our solid profitability, disciplined risk management, and strengthened balance sheet. ABK remains firmly positioned to deliver sustainable growth and create enduring value for shareholders. With a strong foundation and a clear strategic focus, we are confident in our ability to sustain momentum throughout 2025."

The local and global economy
Jawad mentioned that the sharp escalation in trade tensions and high policy uncertainty are expected to weigh heavily on global economic activity. According to the latest IMF projections, global GDP growth is now projected at 2.8 percent in 2025 and 3.0 percent in 2026. This marks a downward revision from the earlier forecast of 3.3 percent for both years. Global headline inflation is expected to decline at a slightly slower pace than what was expected in January, reaching 4.3 percent in 2025 and 3.6 percent in 2026.

When it comes to Kuwait, the IMF has revised its 2025 GDP growth forecast for Kuwait to 1.9 percent. The adjustment reflects a more measured recovery pace, although domestic demand remains strong and oil output continues to recover. Inflation is expected to stabilize at 2.5 percent, supported by effective monetary policy by the Central Bank of Kuwait. Jawad highlighted, "In March, Kuwait introduced a new public debt law, setting a borrowing ceiling of KD 30 billion and permitting the issuance of financial instruments with maturities up to 50 years. The move aims to strengthen financial stability, support Kuwait Vision 2035, diversify funding sources, and enhance Kuwait's position as a regional financial hub."

Exceptional results
Jawad continued, "Our strategic focus continues to be on salaried Kuwaitis and high-income expatriates, while placing growing emphasis on youth, who represent the future. We are continuously enhancing our youth offering to further strengthen our overall value proposition. As a result, our retail loan portfolio grew 1.75 times faster than the market in Q1 2025. We also enhanced our cards portfolio with a new prepaid card featuring a dual rewards program."

Furthermore, he affirmed, "ABK maintains strong credit ratings of 'A' from Fitch and 'A2' from Moody's, reflecting its robust financial position, prudent risk management, and commitment to long-term stability."

Egypt and the UAE
Regarding Egypt's macroeconomic landscape, the country is making progress on its macro-economic reform agenda despite regional challenges. The IMF completed the fourth review of Egypt's Extended Fund Facility (EFF), disbursing $1.2 billion and approved an additional $1.3 billion under the Resilience and Sustainability Facility (RSF). Although Egypt's inflation rose slightly to 13.9 percent in April 2025, up from 13.6 percent in March, the rise remains in line with market expectations, reflecting stability despite seasonal demand pressure. GDP growth accelerated to 4.3 percent in Q2 FY 2024/25.

Moving on, Jawad shed light on the UAE stating, "ABK, through its DIFC branch, has successfully closed a landmark $1 billion global syndicated term loan facility for a period of over three years, marking its largest debt facility to date. This significant achievement affirms ABK's robust standing in the financial markets." The syndication was initially launched at $750 million; however, due to excessive oversubscription by 60 percent, the facility was upsized to $1 billion. This positive response highlights the strong liquidity position and confidence that both regional and international lenders, including those from the Middle East, US, Europe, and Asia, have in ABK. Jawad affirmed, "This achievement reflects the trust and confidence that our lenders have in our financial stability and strategic vision. We are committed to utilizing these funds to enhance our service offerings and continue to foster sustainable growth."

"Alongside our funding activities, ABK-UAE continued to advance its strategic agenda in the real estate sector. As a continuation of our Q4 2024 update, ABK-UAE successfully onboarded its first real estate escrow customer, marking a key milestone as the first Kuwaiti bank to offer this service in the UAE. With additional clients in the pipeline, we are now assessing the extension of these services to Abu Dhabi. This aligns with our strategy to strengthen our footprint and competitiveness in the UAE financial sector," Jawad continued. Complementing the real estate escrow rollout, a dedicated UAE mortgage service for Private Banking clients in Kuwait was also launched. To enhance this service, real estate brokers are being brought on board as key partners, ensuring a more streamlined client experience.

ESG
ABK continued to build momentum around its ESG agenda, laying the groundwork for future initiatives and enhancements. The Bank remains committed to further integrating ESG principles into key business areas. Looking ahead, ABK plans to publish its updated sustainability report, assess its ESG maturity, strengthen internal capabilities, and explore opportunities that support sustainable value creation. Building on a strong start to 2025, ABK remains committed to accelerating momentum, executing its strategic agenda with discipline, and creating long-term shareholder value.

Kuwait Times