NBK ‘a strong bank in any context’ says DB
Kuwait, June 4, 2012
National Bank of Kuwait (NBK) is a strong bank in any context, said Deutsche Bank (DB) in a report, adding that NBK’s capital strength, asset quality and liquidity should enable it to deploy its balance sheet quickly to capture growth.
“NBK is outstanding in the domestic context, with leading market shares, strong asset quality and coverage ratios. NBK has also stellar reputation amongst its clients and competitors alike,” said Deutsche Bank in its initiation of coverage on NBK with a Hold recommendation.
The report also highlighted that NBK boasts the highest credit rating of any Mena bank, reflecting the conservative approach to credit, strong liquidity, capital strength and balance sheet management.
Deutsche Bank in its report pointed out that NBK has been free of asset quality problems, and had instead been able to focus on housekeep during the crisis. Elsewhere in the sector, crisis management has been the norm rather than the exception.
The report added that NBK enjoys leading market shares, strong margins and best in class profitability. Despite severe challenges facing the Kuwaiti banking system, NBK has managed to remain consistent in terms of its market shares.
According to the report, NBK enjoys best profitability and returns amongst Kuwaiti peers. It has maintained relatively strong profitability in recent years. Both return on equity and return on assets are the sector’s best.
“We think this a tremendous competitive advantage relative to other banks, as when growth does show signs of sustainability; NBK is in our view the bank that will best be able to capitalize on opportunities”, the report said. “Credit demand remains elusive in Kuwait, but NBK is well positioned and should benefit more than most when growth returns.”
The report said that NBK’s balance sheet and capital structure are solid. NBK will benefit from its balance sheet to capture growth opportunities in markets such Qatar, the UAE and Saudi Arabia.
NBK’s Tier 1 ratio of 18.3 per cent is the strongest of any large cap bank in Kuwait and ranks very well within Mena and CEEMEA as well.
Deutsche Bank added that one of the important banking stories of the past decade in Kuwait has been NBK in relation to Islamic banking. Through its current stake of 47.3 per cent in Boubyan, NBK is the only bank in Kuwait to have access to both conventional and Islamic finance products and services, the report said. – TradeArabia News Service
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