Kuwait International Bank K S C P : Transcript of the Analysts Conference – 1Q'2024

1Q 2024 Kuwait International Bank KSCP - Earnings Call

Edited transcript of KIB's earnings call conducted on Wednesday, 8 May 2024 at 13:00 (Kuwait) and 10:00 (London - UK)

Corporate Participants:
Mr. Raed Jawad Bukhamseen	Vice Chairman and Chief Executive Officer
Mr. Mohamed Said El Saka	Deputy Chief Executive Officer
Mr. Ajai Thomas	General Manager - Financial Control & Planning/ CFO
Mr. Abdullah Alasousi	Deputy General Manager - Financial Control (Investor Relations)

Host:
Ms. Ahmad El-Shazly	EFG Hermes

	1Q 2024 KIB - Earnings Call
Ahmad El-Shazly	Good morning and good afternoon everyone, thank you for joining with us
	today.
	This is Ahmad from EFG Hermes, I am pleased to welcome you to KIB's first
	quarter 2024 earnings conference call and webcast.
	I have with me here today Mr. Raed Jawad Bukhamseen, Vice Chairman &
	Chief Executive Officer, Mr. Mohamed Said El Saka, Dy. Chief Executive Officer,
	Mr. Ajai Thomas, General Manager Financial Control and Planning/Chief
	Financial Officer and Mr. Abdullah Al Asousi, DGM - Financial Control.
	I will now turn the call over to Abdullah, without further delay.
Abdullah Al Asousi	Thank you, Ahmad, Good morning and good afternoon everyone.
	Please allow me to start this call today by reading a brief disclaimer while full
	disclaimer is available to read on the screens in front of you.
	Disclaimer: Statements included or incorporated by reference in this
	presentation, other than statements or characterizations of historical fact, are
	forward-looking statements. Such forward-looking statements are based on KIB's
	current expectations, predictions and estimates and are not guarantees of
	future performance, achievements or results.
	This presentation contains certain data based on internal management
	estimates, which may have not been independently verified by a third party.
	In addition to the disclaimer I have just read, I request you all to read the full
	disclaimer text on slide #2 of our presentation.
	Allow me to go through the format for today's call:
	Our Vice Chairman & Chief Executive Officer Mr. Raed Jawad Bukhamseen, will
	brief upon strategy update and first quarter financial performance for 2024
	followed by Ajai, our CFO, who will take you through with the presentation pack
	for the financial review in detail.

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	1Q 2024 KIB - Earnings Call
	After concluding the presentation, we will address your questions received
	through webcast platform. As the case may be, we will make every effort to
	answer the questions received. However, if any questions are left unanswered
	due to time constraints, or for any follow up questions that you might have,
	please feel free to contact us through the KIB's Investor relations email address,
	which you can find on our website or on the last page of the presentation pack.
	The presentation pack is also available for download from KIB website and will
	also be published through Boursa Kuwait.
	Now, handing over the call to KIB's Vice chairman & CEO - Mr. Raed Jawad
	Bukhamseen.
Raed Bukhamseen	Thank you, Abdullah, Good morning and good afternoon, everyone.
	Thank you for joining.
	I'm pleased to welcome all the participants to our earnings call to elaborate on
	the financial performance for the first quarter of 2024.
	On the strategic front, we've successfully executed key elements of our 2022-
	2024 plan. Our extensive technology upgrades have empowered us to deliver
	cutting-edge products, enhance operational efficiencies, and provide
	targeted digital solutions across retail and corporate segments. We've also
	prioritized talent development, attracting and empowering skilled national
	individuals to propel our future success.
	Now, as we craft our 2024-2028 strategic blueprint, our focus is on achieving
	profitability leadership by cultivating a distinctive market position and
	strengthening customer relationships. This will be driven by revitalized
	performance across our core banking operations and strategic expansion into
	new growth sectors. Innovation and digital transformation will remain at the
	heart of this strategy, enabling us to deliver superior value to our clients and
	stakeholders. We will announce the key pillars of our new strategic plan in the
	upcoming periods.
	KIB launched several significant initiatives in the first quarter of 2024 that
	reinforced its role as a leader in community development, as part of its
	comprehensive social responsibility program.

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1Q 2024 KIB - Earnings Call

In April 2024, KIB successfully issued USD 300 million 5.5 Year Perpetual No Call AT1 perpetual Sukuk eligible for classification under Tier 1 capital as per Basel III and CBK guidelines. The Sukuk was priced at an annual profit rate of 6.625%. KIB received high demand from investor, as evidenced by an oversubscription rate of over 2 times. The final pricing represents the tightest spread ever achieved on an AT1 Sukuk globally with 195 bps spread over US Treasuries. This issuance of perpetual No Call 5.5 year Sukuk, is based on "Mudarabah" structure and compatible with the Islamic Sharia' principles.

The exceptional demand for KIB's Sukuk is a clear indication of the confidence shown by both local and international investors in our strategy, as well as our consistent financial performance.

Moving to financial performance for 1Q 2024.

KIB reported impressive financial performance during the first quarter of 2024. KIB reported net profit attributable to shareholders of KD 6 million in first quarter of 2024 from KD 3.5 million for comparable quarter of last year, an increase of 74%. This was supported by higher net financing income and operating income compared to similar period last year.

Financing income registered a growth of 15% reaching 44.5 million KD compared to 38.7 million KD in 1Q 2023.

Profit from operations improved to 6.4 million dinars compared to 3.7 million dinars in 1Q 2023, an increase of 74%.

Total assets increased to reach 3.46 billion KD, from KD 3.43 billion for comparable period of last year.

KIB's financing receivables as of 31 March 2024 was KD 2.44 billion and customer deposits stood at KD 2.08 billion.

Asset quality matrices was at similar levels compare to YE 2023. NPL ratio stood at 1.83% and total coverage ratio was at 239% as at 31 March 2024.

I would like to conclude my short briefing, and hand over to Ajai to take you through our financial results in detail and answer any questions that you may have.

Thank you very much.

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	1Q 2024 KIB - Earnings Call
Ajai Thomas	Thank you, Mr. Raed.
	Good morning and good afternoon everyone.
	Thank you for joining and welcoming all to our 1Q 2024 earnings webcast.
	Fitch Ratings affirmed KIB's long term ratings at 'A' with a stable outlook. The
	Stable outlook reflects that on the Kuwaiti sovereign ratings.
	Taking you through the presentation.
	Slide #5 & #6 of the presentation pack provides a snapshot of our strategy
	updates. We are pleased with the outcome our AT1 Sukuk transaction, which is
	the third issuance by KIB, the first AT1 sukuk issuance was in 2019 and the second
	Tier 2 sukuk issuance was in 2020.
	Slide#7 of the presentation pack provides a snapshot of the external ratings'
	update, and some of the recognitions during 2023.
	Slides #9 to #13 provides details of the Bank's financial performance during the
	first quarter of 2024.
	Coming to slide #9 & 10:
	KIB reported net profit of KD 6 million attributable to shareholders for the first
	quarter ended 31 March 2024 compared to KD 3.5 million for 31 March 2023, an
	increase of 74%, mainly due higher net financing income and higher operating
	income during first quarter of 2024.
	KIB does not operate an active investment trading book as per its conservative
	risk appetite.
	KIB's core business showed growth in total assets as at 31st March 2024
	compared to 31st March 2023, as can be seen from slide #9.
	Financing income grew by 15% to 44.5 million KD in 1Q 2024 compared to 38.7
	million KD for 1Q 2023 supported largely by increase in benchmark rates as CBK
	discount rate reached 4.25%.
	Fees and commission income grew by 18% at 3.8 million KD in 1Q 2024
	compared to 3.2 million KD in 1Q 2023.

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1Q 2024 KIB - Earnings Call

Operating expenses were higher by 7% at KD 11.5 million in 1Q 2024 compared to KD 10.7 million in 1Q 2023, mainly due to increase in expenses supporting our digital initiative journey and general and administrative expenses higher by 5% and staff costs higher by 8%.

Pre-provision income was at KD 9.6 million in 1Q 2024 compared to KD 6.4 million in 1Q 2023 for the reasons just mentioned.

KIB's net provision charge was modestly higher by KD 0.5 million in 1Q 2024.

Coming to slides #11, 12 and 13:

These slides show an overview of the Bank's core business.

KIB reported higher total assets by 1% or 24.2 million KD as of 31 March 2024 of

3.5 billion KD mainly contributed by higher investments securities 80.7 million KD, due from banks 69.8 million KD and investment properties 23.1 million KD to reach 386 million KD, 163 million KD and 63.2 million KD respectively as of 31 March 2024, which was offset by lower financing receivables by 5% or 129.2 million KD to reach almost 2.4 billion KD as at 31 March 2024 compared to 2.6 billion KD in 31 March 2023.

KIB's customer deposits were lower by 7% or 147.9 million KD as at 31 March 2024 compared to 31 March 2023 in line with lower financing portfolio.

Continuing to Slide #13

KIB maintained adequate levels of Basel III total Capital Adequacy Ratio at 20.3% with CET-1 of 12.5%, supported by the capital increase through rights issue during 2023. All ratios were well above required regulatory limits as at 31 March 2024.

NSFR was 117.6% and LCR stood at 164.2% as at 31 March 2024, well above CBK requirements of 100%.

Slide #15 shows KIB's commitment to the shareholders with dividends for YE 2023 at 5 fils per share cash dividend and 3% bonus shares (i.e. 3 shares for every 100 shares), which was approved by shareholders during the Annual General meeting held on 27th March 2024.

Slide #17 summarizes expectations for YE 2024.

Thank you. Handing it back to Abdullah for the Q&A session.

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1Q 2024 KIB - Earnings Call

Abdullah Al Asouse	Thank you Ajai. We will now start taking questions, after a few minutes pause so
	as to receive most of your questions.
Operator	Ladies and gentlemen, we will now start our question and answer session. If you
	wish to ask a question, please type your question into the "ask a question text"
	area then click the submit button. Thank you for holding.
Abdullah Al Asouse	We have a question on NIMs. Please elaborate on loan growth projections.
Ajai Thomas	The current CBK benchmark rate of 4.25% and US FED rate at 5.5% are favorable
	from a NIM perspective, however funding costs pressure still remain due to highly
	competitive environment. There is also an elevated inflation scenario which in
	turn is expected to keep rates at elevated levels and may delay any rate
	decreases in the near to medium term.
	We have noted improvements in NIMs and expects a similar trend for the
	remaining part of the year.
	2024 facilities is planned to be exceeding growth projections in line with pipeline.
Abdullah Al Asousi	Last question. Your views on capital ratios?
Ajai Thomas	The rights issue of KD 60 million in June 2023 significantly improved all capital
	ratios of the Bank. Robust growth in net profit in 2023 also supported
	capitalisation. Basel III total capital adequacy ratio as at 31 March 2024 was
	20.3% compared to the regulatory requirement of 13%. CET-1 ratio was 12.5%
	which was also well above the CBK requirement.
	The successful AT1 issued in April 2024 maintains the Bank's planned capital
	stack which will support planned growth for the short/ medium term.
Abdullah Al Asousi	Thank you all. We are nearing the close of our scheduled time for the call.
	Please feel free to get in touch with us at the investor relations contact
	provided at the end of the presentation, and we will respond to your inquiries.
	Any final words, Mr. Raed?
Raed Bukhamseen	On behalf of KIB, I would like to thank all the participants and look forward to
	discuss our next quarter results. I thank all of you for joining KIB's earnings call.
Operator	This concludes today's conference call.
	Thank you for your participation. You may now disconnect.

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INVESTOR PRESENTATION

1Q 2024 EARNINGS CALL

WEDNESDAY

13:00 KST 08 MAY 2024

KUWAIT INTERNATIONAL BANK

DISCLAIMER

This presentation has been prepared by KIB (Kuwait International Bank KSCP) (the "Bank"), is strictly confidential and is being furnished to each recipient solely for its own information. It may not be reproduced or redistributed to any other person, and it may not be published anywhere, in whole or in part, for any purpose. It is expressly forbidden to disclose the information in this presentation to any other person.

No representation or warranty, express or implied, is or will be made in relation to, and no responsibility, liability or duty of care is or will be accepted by the Bank and affiliated persons, or any directors, partners, officers, representatives, employees, advisers or agents of the Bank ("Relevant Persons") as to, or in relation to, the accuracy, reliability, or completeness of this presentation or any information herein. Accordingly, none of the Bank or any Relevant Persons shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on the accuracy of any information or any statement in this presentation or any errors or omissions in this presentation. No responsibility, liability or duty of care is or will be accepted by the Bank or any Relevant Persons for providing the recipient with access to any additional information, updating this presentation or correcting any inaccuracies herein which may become apparent.

IMPORTANT NOTICE

This presentation has been prepared by KIB and is subject to the applicable laws and regulations in the State of Kuwait. It is for information purposes only and it shall not be reproduced or redistributed to any other person without obtaining KIB's prior written consent. It does not and shall not constitute either an offer to purchase or buy or a solicitation to purchase or buy or an offer to sell or exchange or a solicitation to sell or exchange any securities of KIB. Neither this presentation nor anything contained herein shall form the basis of any contract, commitment or advice whatsoever. This Presentation must be read in conjunction with all other publicly available information. To the maximum extent permitted by law, KIB and its directors, employees, agents, consultants, affiliates and subsidiaries expressly exclude all liability and responsibility for any loss or damage arising from the use of, or reliance on, the information contained in this presentation or the website whether or not caused by any negligent act or omission. Neither KIB nor any of its directors, employees, agents, consultants, affiliates, or subsidiaries warrant or represent the correctness, accurateness or completeness of the information provided herein. This document is not to be relied upon in any manner as legal, tax or investment advice. Each recipient hereof shall be responsible for conducting its own investigation and analysis of the information contained herein and shall familiarize and acquaint itself with, and adhere to, the applicable local legislations. Except where otherwise expressly indicated herein, this presentation contains time-sensitive information which is based on currently available information to KIB as of the date stated or, if no date is stated, as of the date of this preparation and accordingly does not guarantee specific future results, performances or achievements. The information and the opinions contained herein are subject to change without notice. None of KIB/its subsidiaries or affiliates assume any obligation to update or otherwise revise any such information to reflect information that subsequently becomes available or circumstances existing or changes occurring after the date hereof.

FORWARD-LOOKING STATEMENTS

All statements included or incorporated by reference in this presentation, other than statements or characterizations of historical fact, are forward-looking statements. Such forward-looking statements are based on KIB's current expectations, predictions and estimates and are not guarantees of future performance, achievements or results. Forward-looking statements are subject to and involve risks and uncertainties and actual results, performance or achievements of KIB may differ materially or adversely from those expressed or implied in the forward-looking statements as a result of various factors. In addition, even if KIB's results of operations, financial condition and the development of the industry in which it operates are consistent with forward-looking statements contained herein, those results or developments may not be indicative of results or developments in subsequent periods. KIB does not undertake to update any forward-looking statements made herein. Past results are not indicative of future performance.

This presentation contains certain data based on internal management estimates, which may have not been independently verified by a third party. Information has been obtained from various sources and are provided to assist the recipient in the evaluation of matters described herein. They may be based on subjective assessments, adjustments and assumptions and may use one among alternative methodologies that produce different results and to the extent they are based on historical information, they should not be relied upon as an accurate prediction of future performance.

Copyright © 2024 by KIB. All rights reserved

08-May-2024

INVESTOR PRESENTATION 1Q2024

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