National Bank of Kuwait SAKP (NBK) Q2 2025 earnings summary

Executive summary

• Net profit for 1H 2025 rose 7.8% year-on-year to KWD 315.3 million, with profit before tax up 17% to KWD 401.5 million, despite a higher effective tax rate due to new tax laws.

• Net operating income increased 3.1% to KWD 631 million, driven by both interest and non-interest income growth.

• Return on average equity improved to 15.1%, while return on average assets was 1.52%.

• The operating environment remains complex due to global trade dynamics, monetary policy shifts, and geopolitical tensions, but the GCC outlook is cautiously optimistic.

• No interim dividend declared for 1H 2025 to support capital for future growth; focus remains on year-end dividend.

Financial highlights

• Net profit: KWD 315.3 million for 1H 2025, up 7.8% year-on-year.

• Net operating income: KWD 631 million, up 3.1% year-on-year.

• Net interest income and Islamic financing: KWD 490 million, up 1.5% year-on-year.

• Non-interest income: KWD 142 million, up 8.9% year-on-year, with strong fee and FX income.

• Operating expenses: KWD 240 million, up 6% year-on-year; cost-to-income ratio at 38%.

Outlook and guidance

• Upgraded full-year 2025 loan growth guidance to high single digits, reflecting a strong pipeline.

• NIM expected to remain under pressure for the rest of 2025 due to asset mix and competition, projected at 2.46%.

• Annual cost growth expected in high single digits; cost-to-income ratio to remain in high 30s.

• Underlying cost of risk for 2025 projected around 40 basis points, normalizing after non-recurring provision releases.

• Effective tax charge for 2025 estimated at 16%-17% of pre-tax profit.