#1الوطني NBK National Bank of Kuwait Investor Presentation October 2021#2Disclaimer 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) National Bank of Kuwait S.A.K.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. Past performance is not indicative of future results. National Bank of Kuwait is under no obligation to update or keep current the information contained herein. No person shall have any right of action against the Bank or any other person in relation to the accuracy or completeness of the information contained in this presentation. No person is authorised to give any information or to make any representation not contained in and not consistent with this presentation, and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of the Bank. This presentation does not constitute an offer or an agreement, or a solicitation of an offer or an agreement, to enter into any transaction (including for the provision of any services). No assurance is given that any such transaction can or will be arranged or agreed. Certain statements in this presentation may constitute forward-looking statements. These statements reflect the Bank's expectations and are subject to risks and uncertainties that may cause actual results to differ materially and may adversely affect the outcome and financial effects of the plans described herein. You are cautioned not to rely on such forward-looking statements. The Bank does not assume any obligation to update its view of such risks and uncertainties or to publicly announce the result of any revisions to the forward-looking statements made herein. National Bank of Kuwait 2#3Contents Section 1 Overview of NBK Section 2 Strategy and Business Overview Section 3 Operating Environment Section 4 Financial Performance Highlights Section 5 Appendix National Bank of Kuwait 3#4NBK is Kuwait's Leading Banking Group Background Ownership Snapshot Established in 1952 as the first local and home-grown GCC bank, and first shareholding company in Kuwait The leading banking group in Kuwait in terms of assets, customer deposits and customer loans and advances More than 30% market share of assets in Kuwait Ranked amongst the 50 safest banks in the world by Global Finance, named the most valuable banking brand in Kuwait, and top 10 bank in the region by Brand Finance Established by a group of leading Kuwaiti merchants, NBK has retained the same core shareholder base since its inception NBK's shares are listed on the Kuwait Stock Exchange since 1984 with only one shareholder holding owning more than 5% of the Bank's share capital (PIFSS owns 5.60% as of September 2021) NBK's market capitalisation at 30 September 2021 was USD 22.7 bn. USD million Financial snapshot 2018 2019 2020 Total Assets 90,447 96,524 97,996 Loans, advances & Islamic financing 51,124 54,584 57,722 Customer Deposits 47,449 52,533 56,403 Total Equity 12,205 14,045 13,656 Net Operating Income 2,913 2,953 2,778 Net Profit attributable 1,222 1,323 812 Cost to Income (%) 31.3% 34.0% 37.0% Operations The Bank's core businesses are (i) consumer and private banking, (ii) corporate banking, (iii) Islamic banking and (iv) investment banking and asset management The Bank operates across 14 countries with a predominant focus on the MENA region. Net Interest Margin (%) 2.69% 2.56% 2.21% NPL Ratio (%) 1.38% 1.10% 1.72% Credit Ratings Loan Loss Coverage Ratio (%) 228% 272% 220% Rating Agency Long Term Rating Standalone Rating Outlook Return on Average Equity (%) 12.0% 12.3% 7.0% MOODY'S A1 a3 Stable STANDARD Tier 1 Ratio (%) 15.3% 15.9% 16.0% A a- Negative & POOR'S Fitch Ratings AA- a- Negative Capital Adequacy Ratio (%) 17.2% 17.8% 18.4% Notes: Through out the investor presentation, the USD/KD exchange rate used is .30325 for year-end figures and .30165 for interim figures. The rates are based on the Central Bank of Kuwait's closing exchange rates as of 31/12/2020 and 30/09/2021. National Bank of Kuwait 4#5Regional and International Geographic Presence Middle East Legal Structure - Branches Parent - 68 Europe Location Year established/acquired London 1983 Geneva 1984 Paris - 1987 Legal Structure - Branches Subsidiary - 1 Subsidiary - 1 Subsidiary - 1 Location Year established/acquired Kuwait 1952 Egypt - 2007 Iraq-2005 Lebanon 1996 Jordan 2004 Bahrain 1987 UAE 2008 Saudi Arabia - 2006 US Legal Structure - Branches Branch 1 Location Year established/acquired New York 1984 Asia Location Year established/acquired Shanghai 2005 Legal Structure - Branches Singapore 1984 - Branch - 1 Branch - 1 Subsidiary - 52 Subsidiary - 5 Subsidiary - 2 Branch - 1 Branch - 2 Branch - 2 Branch - 3 National Bank of Kuwait 5#6Key Strengths High credit ratings and among the top brand values regionally NBK has one of the highest credit ratings in the MENA region Ranked amongst the 50 safest banks in the world by Global Finance, named most valuable banking brand in Kuwait and among the top 10 in the Middle East by Brand Finance Largest banking group in Kuwait with dominant market position As at 31 December 2020, the Bank was the largest bank in Kuwait in terms of total assets, loans and customer deposits. In addition, the Bank enjoys a dominant market share across its business segments NBK also has one of the largest and most diversified distribution networks Sound and consistent financial performance Long history of profitability, even throughout the global financial crisis Excellent asset quality with an NPL ratio standing at 1.72% at end-2020 Strong liquidity serving as a buffer in times of need الوطني NBK Stable shareholder base and strong management team Established in 1952 by a group of leading Kuwaiti merchants and has retained the same core shareholder base since NBK's stable shareholder base is complemented by a strong and stable Board of Directors and a long-serving executive team with in-depth experience Strong investment banking capability NBK conducts its investment banking and asset management business through its subsidiary, Watani Investment Company K.S.C.C. (Known as NBK Capital) Only banking group in Kuwait to provide both conventional and Islamic banking Following its consolidation of Boubyan Bank in 2012, NBK became the only banking group in Kuwait to offer both conventional and Islamic banking services This has allowed the Bank to leverage off the opportunities across both markets, particularly given the growing importance of Islamic Finance in Kuwait A strong regional and international network Operations in 14 countries, 8 of which are in the MENA region. The Bank continues to explore opportunities to expand geographically with a primary focus on further strengthening operations in MENA region National Bank of Kuwait 6#7Contents Section 1 Overview of NBK Section 2 Strategy and Business Overview Section 3 Operating Environment Section 4 Financial Performance Highlights Section 5 Appendix National Bank of Kuwait 7#8NBK's Strategy The Group's strategy, which is based on two main pillars, focuses on defending and growing its leadership position in Kuwait whilst also diversifying its business Digital transformation of the core Defend and Grow Leadership Position in Kuwait Maintain excellence and market leadership position, to expand market shares and to maintain discipline in managing both risks and costs ✓ Corporate Banking ✓ Consumer Banking ✓ Private Banking " The Bank aims to (i) remain the primary banker for the leading local companies whilst continuing to be active in the mid-market sector; (ii) remain the bank of choice for foreign companies and continuing to serve at least 75% of those companies and (iii) maintain its current market share in trade finance (over 30%). To achieve the above, NBK will leverage off its different services, expand its coverage and broaden the range of products and services offered. NBK intends to expand its consumer customer base by focusing on profitable consumer segments (such as the affluent and mass affluent segments) and by attracting new clients such as the SMEs. Through the above, the Bank aims to maintain its leadership position, maintain its focus on delivery of superior customer service experience and achieve the lowest cost of funds among Kuwaiti conventional banks. Within the private banking sector, NBK aims to continue to provide a unique proposition to high net worth clients in collaboration with its investment arm. NBK also aims to provide superior customer service through its highly experienced bankers. The Bank also aims to leverage off its existing brand and experience (particularly in Switzerland) to provide access to leading funds and broaden its product portfolio. Business diversification leveraging digital disruption Geographical, and product and service diversification Includes expanding regional presence, establishing an Islamic banking franchise and building a leading regional investment bank. ✓ Expand Regional Presence ✓ Establish an Islamic Franchise Build Regional powerhouse in Wealth Management The Bank's geographic diversification strategy is to leverage its fundamental strengths and capabilities, including its international reach and strong regional relationships, to build a regional platform and support growth in key markets. NBK focuses on markets with long-term potential through a combination of high growth economies, sound demographic trends and opportunities aligned with the Bank's competitive advantages. The Bank's strategy, in relation to its Islamic subsidiary, is to differentiate it from other domestic Islamic banks through a clear focus on high net worth and affluent clients and large and mid-market corporate customers. NBK looks to establish its business as a leading regional investment banking, asset management, brokerage and research operation and to leverage the Group's strong regional position to cross sell these products across the MENA region. National Bank of Kuwait 8#9Kuwait Operations " NBK is a universal bank and the industry leader in all key business segments in Kuwait with an average market share of 30% Corporate Banking Remain the primary banker for most of the local blue-chip companies, and an active player in the mid-market Remain bank of choice among foreign corporations and continue serving 75% of them active in the Kuwaiti market Maintain current market share in excess of 30% in trade finance in Kuwait Offer differentiated services to large corporate clients leveraging other NBK units Increase market share in medium corporate segment through focused teams and relationship management Focus on Government mega projects benefiting from NBK's large capital base Maintain asset quality with emphasis on credit control and risk management " Overview and strategy Consumer Banking Maintain undisputed leadership in retail banking with leading market share and the highest customer penetration among conventional banks Maintain focus on customer service Expand client base with focus on profitable consumer segments such as affluent and mass affluent, and aim to attract new bankable clients such as SMEs Achieve lowest cost of funds among Kuwaiti commercial banks Pioneer innovative multi-channel solutions including state of the art internet, mobile banking and call center services Focus on the evolution to segment of one by providing tailor-made propositions aiming at better cross-sell, increased product penetration, proactive attrition management utilizing the latest tools and technologies Private Banking Continue to provide a unique proposition to HNW clientele in collaboration with NBK Capital and the bank's international network Provide access to best of breed international funds leveraging NBK Banque Privee's wealth management expertise Provide the best service with a dedicated team of over 30 well qualified and experienced private bankers Leverage NBK's strong brand to acquire new clients and retain onshore relationships Broaden the product portfolio to accommodate growing needs NBK is a full-service bank that offers a broad suite of financial services and products to clients, meeting their ever growing and evolving demands National Bank of Kuwait 9#10International Operations NBK's international operations has been traditionally contributing up to circa 30% of the Group's bottom line with the Bank aspiring to increase this contribution. The Bank generally aims to maintain a majority stake in its subsidiaries or at least maintain a decision making role. NBK's international presence is a differentiating factor for the Bank and an extension of the MENA franchise enabling better service and strengthening client relationships. Specifically within the MENA region, the Bank is focused on growing its business in existing and new markets through attracting increased corporate and private customers. Meanwhile, across the international locations, the Bank's focus is on servicing its private and corporate customers who are active internationally and growing its business with international companies that are active in the MENA region. Within its international network, NBK is focused on managing risks and costs to improve efficiency and achieve long-term cost savings and productivity gains. International London Established or acquired Branches Legal structure 1983 1 Subsidiary New York 1984 1 Branch + Geneva 1984 1 Subsidiary Singapore 1984 1 Branch Paris 1987 1 Subsidiary Shanghai 2005 1 Branch Overview of Performance MENA region Revenue Trends (USD mn) Balance Sheet Trends (USD mn) Bahrain 1987 2 Branch ■Net Operating Income ■Net Profit 690 372 728 370 680 ■Segment Assets 36,601 Lebanon 1996 2 Subsidiary Jordan 2004 1 - Branch Iraq 2005 LO 5 Subsidiary 33,467 Saudi Arabia 2006 3 Branch kkk.lı 165 32,227 Egypt UAE 2018 2019 2020 2018 2019 2020 2007 52 Subsidiary 2008 2 Branch National Bank of Kuwait 10#11Boubyan Bank (59.9% owned subsidiary) Market share of Total Assets(%) 7.6% 6.5% 5.5% 5.7% 5.1% 2016 2017 2018 2019 2020 Market share of Total Deposits (%) 9.6% 7.9% 8.5% 8.9% 7.4% 2016 2017 2018 Notes: Market share data based on the consolidated data of all banks operating in Kuwait. 2019 2020 Highlights ☐ Islamic banking has been gaining ground in the Kuwaiti market, representing more than 40% of assets and deposits at year-end 2020. After a series of gradual share acquisitions since 2009, NBK's stake in Boubyan bank reached 58.4% in 2012. Through Boubyan, NBK aims at diversifying its income stream, complementing its product offering as well as targeting a new segment of clients. ■ The size and market share development of Boubyan relative to other Islamic banks leaves significant room for repositioning the bank and acquiring market share. ■ As the largest single shareholder, NBK is committed to the future growth and transformation of Boubyan Bank and establishing a strong presence in the growing Islamic banking segment. Leading international consulting firms have assisted Boubyan in developing a new strategy aiming to differentiate the bank from other players with a clear focus on HNWI, affluent and mid/large companies. ■ The Bank's transformation and strategy implementation is led by a highly proficient management team with extensive regional banking experience, with key positions filled by NBK veterans aligned with the NBK culture. National Bank of Kuwait 11#12Maintaining Course with Our Sustainability Directions NBK Sustainability Pillars Contributing to Economic Development Serving Customers Leading in Governance Respecting and Developing People Giving Back to Our Community Caring for Our Environment National Bank of Kuwait 12#13Close Alignment With International Frameworks and ESG Raters Figure 1 Overview of the set of GRI Standards Foundation Starting point for using the GRI Standards GRI 101 Universal Standards General Disclosures GRI 102 To report contextual information about an organization Management Approach GRI 103 To report the management approach for each material topic || Global Reporting Initiative (GRI) • A sustainability reporting standard widely used by various organizations around the world It is composed of a set of universal standards (general disclosures), as well as topic-specific standard disclosures # of GRI reports: over 38,000 reports in database Economic Environmenta Social Topic- specific GRI GRI Standards 200 300 GRI 400 Select from these to report specific disclosures for each material topic GRI International ESG Raters • ESG ratings are evaluations of a company based on a . comparative assessment of their performance related to environmental, social and governance (ESG) issues Examples of ESG raters include: MSCI ESG Ratings, Dow Jones, FTSE Russell and Thomson Reuters MSCI Dow Jones Sustainability Indices In Collaboration with RobecoSAM FTSE Russell THOMSON REUTERS Main Reporting Framework International Framework for Sustainability International ESG Raters United Nations Sustainable Development Goals (SDGs) 17 goals which cover the following dimensions: Economy • Environment • Community • Labour rights THE GLOBAL GOALS For Sustainable Development 1 • Equality National Frameworks for Sustainability Kuwait National Development Plan (KNDP) • Global positioning High quality healthcare • Creative human capital Sustainable living environment Developed infrastructure • Sustainable diversified economy • Effective government administration Boursa Kuwait Sustainability Indicators • Includes 26 sustainability indicators, which are aligned to KNDP and cover the sustainability dimensions of Economy, Environment, Social and Governance. 1 10 12 13 14 15 со 秦二 X ABUM 17 #GLOBALGOALS كويت جديدة NEWKUWAIT بورصة الكويت BOURSA KUWAIT National Bank of Kuwait 13#14NBK's 2020 ESG Highlights Environmental Caring for our environment is a priority as we actively measure and assess the environmental impacts of our business and operations. Completion of our new LEED Gold Headquarters Inclusion in Refinitiv AFE Low Carbon Select Index MENA 840 Kgs Plastic collected and recycled from branches 98 tons of paper recycled Total GHG emissions of 5,152 MT CO2e Social Wellbeing of external and internal stakeholders is of critical importance as we remain committed to show our values to our people. 45.8% Female employee Ratio 72.7% Kuwaitization 51.9 k Employee training hours 77% Local Procurement Supporting nationalization programs in Kuwait including NBK Academy Provided training center facilities for 110 participants in LOYAC Organized training courses for 141 candidates (Ministry of Justice) Sponsoring TAMAKAN graduate training scheme (32 fresh graduates) Governance With leadership in business and governance among our sustainability priorities, NBK continues to strive to integrate sustainable practices into its corporate governance practices. Reformation of Board Risk Committee to Board Risk and Compliance Committee Appointment of two independent Board of Directors (March 2021) Updated and published various policies and statements including: Human rights statement Advertising Code policy Brand protection policy National Bank of Kuwait 14#15Contents Section 1 Overview of NBK Section 2 Strategy and Business Overview Section 3 Operating Environment Section 4 Financial Performance Highlights Section 5 Appendix National Bank of Kuwait 15#16Overview of Kuwait Overview Fiscal breakeven oil price ■ The State of Kuwait is a sovereign state on the coast of the Arabian Gulf with a population of 4.6 million ■ Kuwait is a constitutional monarchy, headed by His Highness the Emir, Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah ■ Kuwait enjoys an open economy, dominated by the government sector. Its economy is primarily dependent on the oil industry, but has witnessed growing contribution from non-oil sectors ■ Kuwait has one of the lowest industry breakeven oil prices in the world and a fiscal breakeven lower than some other GCC countries, making it more resilient to low oil prices. It has one of the world's largest sovereign wealth funds and very low debt, which underpins the investment grade sovereign credit rating ■ Kuwait has a long-term policy vision under the banner of "Kuwait Vision 2035". It encompasses six strategic aims: increasing GDP growth; encouraging the private sector; supporting human and social development; promoting demographic policies; enhancing and improving the effectiveness of government administration and consolidating the country's Islamic and Arab identity 100 Exc. investment income Incl. investment income 90 80 70 68 60 62 62 57 54 46 50 50 45 40 98 100 74 74 72 66 00 90 82 62 60 80 59 55 55 48 70 10 60 60 60 50 59 45 40 10 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 Key Indicators Sovereign Ratings Current Account Government Revenues* (% GDP) Public Debt* (% GDP) Key economic indicators * Financial year. Debt projections assume debt law is approved in FY21/22 2020 2021F A1/A+ / AA (M/S/F) $22.4 bn $34.6 bn 32% 43% 11% 14% Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, NBK estimates National Bank of Kuwait 16#17Kuwait's Economy GDP Growth Recent Developments GDP declined by 8.9% in 2020 due to sharply lower oil production as Kuwait adhered to OPEC+ cuts and reduced non-oil activity resulting from the coronavirus pandemic. Headline growth could rebound to 1.0% in 2021 as these cuts are partially reversed. Non-oil GDP contracted by 8.8% in 2020 after mobility restrictions were imposed to contain the pandemic. Growth could rebound by 3.2% in 2021 as private consumption recovers and refining activity ramps up. Public Finance and Inflation After cutting spending in FY20/21 to address the fiscal deficit, the FY21/22 budget outlined a 7% rise in outlays, including a targeted 20% rise in capex. If implemented, this would help spur the recovery in economic growth. Inflation accelerated to 2.1% in 2020, mainly on higher food prices, and is expected to average 2.6% in 2021; there is some downside risk from potential softness in residential real estate rents. Consumer Sector Credit Growth " Real Estate Activity Consumer spending took a major hit during the lockdown months, but has bounced back appreciably. Total spending (POS/ATM) was up 22.8% y/y in September 2021. Loan payment deferrals, the number of nationals in stable public sector jobs and reduced overseas travel have supported spending. Private credit growth was up 3.8% y/y at end-August, driven by strong household borrowing. Business credit has been slower to take off, but should benefit from the economy returning to a more normal footing. The policy interest rate is at 1.5%. Private and government deposit growth (-2.3% y/y and -2.6% y/y, respectively) was still negative in August; the reinstatement of loan repayment deferrals has been positive, as are higher oil prices, which have boosted government liquidity. Property sales have returned to pre-Covid levels, having been hard-hit in 2020. Recent strength is mostly from the residential sector which could hold up well given the solid demand base and potentially get a further boost if the mortgage law is approved. Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, Refinitiv, NBK estimates Real GDP (% y/y) Total Non-oil 10 10 5.7 3.8 3.2 5 3.1. 2.4 2.5 5 1.5 1.1 0.5 -0.1 0.6° 0 0 2.4 1.0 2.9 -0.6 -5 -5 -8.8 -4.7 -10 -8.9 -10 2013 2014 2015 2016 2017 2018 2019 2020 2021f Private credit (change, % y/y) 10 Month end 8 6 4 12 month average 10 10 8 6 4 2 2 0 Aug-18 Aug-19 Aug-20 0 Aug-21 Real estate sales 12m average (KD mn) 250 Commercial 200 150 100 50 50 Residential 250 Investment 200 150 100 50 0 Sep-17 Sep-18 Sep-19 Sep-20 0 Sep-21 National Bank of Kuwait 17#18Kuwait's Banking Sector Snapshot The Kuwaiti banking sector comprises 23 banks, including 11 domestic banks (five conventional, five Shariah-compliant and one specialized), and branches of 12 international banks (11 conventional and one Islamic). The sector is well regulated by the Central Bank of Kuwait ("CBK") with a number of regulations and supervisory norms to ensure the safety of the banking sector including through strict supervision and imposition of prudential ratios, such as lending limits and concentrations, investment limits, liquidity and capital adequacy. The banking sector has demonstrated strong resilience and elevated levels of financial soundness over the past 10 years. In fact, the sector is very well capitalized, with an average Capital Adequacy Ratio of 18.7% in 1Q21, 8.2% higher than the required minimum of 10.5%. Non-performing loans to total loans stood at 2.3% in 1Q21. Key indicators (USD bn, end year) 1 3.5 ■ Loans 110.7 114.2 110.8 109.8 ■ Deposits 113.6 113.0 116.6 116.7 129.9 122.1 122.0 126.6 121.9 119.4 3.0 108.0 102.1 2.5 2.0 1.5 Development of the Discount rate (%, end year²) 3.5 3.0 2.5 2.0 1.5 1.0 1.0 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sources: Central Bank of Kuwait / Refinitiv 1Loans refers to total credit facilities to residents and deposits refer to private resident deposits, all as reported by the Central Bank of Kuwait. 2 Latest figure is for Oct 2021 National Bank of Kuwait 18#19Dominant Kuwaiti Franchise NBK is the leading banking group in Kuwait with a market leading position across its business segments Total Assets (USD million) Customer Deposits (USD million) National Bank of Kuwait Kuwait Finance House Burgan Bank 97,996 National Bank of Kuwait 70,906 23,433 Gulf Bank Boubyan Bank 21,227 20,157 Kuwait Finance House Boubyan Bank Burgan Bank Gulf Bank 56,403 50,511 16,843 13,492 13,302 Al-Ahli Bank of Kuwait 16,002 Al-Ahli Bank of Kuwait 11,494 Commercial Bank of Kuwait 14,472 Ahli United Bank 14,411 Warba Bank 11,460 Ahli United Bank Commercial Bank of Kuwait Warba Bank 9,920 7,812 7,761 Kuwait International Bank 9,239 Kuwait International Bank 5,424 0 20,000 40,000 60,000 80,000 100,000 120,000 0 10,000 20,000 30,000 40,000 50,000 60,000 Customer Loans & Advances (USD million) Net Profit attributable (USD million) 57,722 National Bank of Kuwait Kuwait Finance House 812 489 Boubyan Bank Burgan Bank 114 111 Ahli United Bank Gulf Bank 98 95 Warba Bank 19 Kuwait International Bank Commercial Bank of Kuwait Al-Ahli Bank of Kuwait -250 0 (230) -50 150 350 550 750 950 National Bank of Kuwait Kuwait Finance House 35,441 Boubyan Bank 15,905 Burgan Bank 14,328 Gulf Bank 14,208 Al-Ahli Bank of Kuwait 10,279 Ahli United Bank 10,268 Warba Bank 8,235 Commercial Bank of Kuwait 7,515 Kuwait International Bank 6,526 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Sources: Bank's annual reports. All data as of 31 December 2020 for Balance Sheet items and Income Statement Items. Note: Kuwait Finance House, Boubyan Bank, AUB, KIB and Warba Bank are Islamic banks while Burgan Bank, CBK, Gulf Bank, Al-Ahli Bank of Kuwait are conventional banks. National Bank of Kuwait 19#20Contents Section 1 Overview of NBK Section 2 Strategy and Business Overview Section 3 Operating Environment Section 4 Financial Performance Highlights Section 5 Appendix National Bank of Kuwait 20#21Operating Performance & Profitability 2,953 1,323 Profitability (USD mn) ■Net Operating Income ■ Net Profit 2,778 Operating Income Composition (USD mn) ■NII & NI from Islamic financing ■ Non-interest income 2,953 2,778 2,258 23% 2,097 2,258 25% 2,097 26% 25% 812 845 77% 75% 559 75% 74% 2019 2020 9M 2020 9M 2021 2019 2020 9M 2020 9M 2021 1.42% Return on average assets (%) 0.82% 0.75% 1.09% 12.3% Return on average equity (%) 7.0% 6.6% 9.6% 2019 2020 9M 2020 9M 2021 2019 2020 9M 2020 9M 2021 National Bank of Kuwait 21#22Operating Performance & Profitability (cont'd) 9M 2021 Op. income by type (%) 9M 2021 Op. income by business line (%) Cost to income (%) FX, 4% Fees, 18% Others, 4% Consumer & Private Banking, 33% Corporate, 15% Net Interest Income, 74% Others, 2% Net Interest Margin (%) Intern'l,. 25% 39.1% 37.0% 35.8% Inv Bkg & AM, 4% 34.0% Islamic Banking, 21% 2019 2020 9M 2020 9M 2021 Net Interest Margin Drivers 2.56% 2.21% 2.20% 2.25% -0.27% +0.66% 2.20% 2.25% -0.34% 2019 2020 9M 2020 9M 2021 9M 2020 Loans Others Deposits 9M 2021 National Bank of Kuwait 22#23Balance Sheet Parameters Net loan portfolio (USD bn) ■Net Loans 57.7 54.6 ◆ Net loan growth YoY (%) 62.9 58.5 7.8% 7.5% 6.8% 5.7% Dec-19 Dec-20 Sep-20 Loan exposure by sector (%) (as at 30 September 2021) Crude Oil & Gases, 7% Manufacturing, 8% Other, 12% Financial 7% Trade & Commerce, 6% Personal, 35% Real Estate, 20% Construction, Purchase of Securities, 4% Sep-21 Loans to assets (USD bn) ■Total Assets ◆ Loans/Assets 107.8 100.7 98.0 96.5 58.9% 56.5% 58.0% 58.3% Dec-19 Low loan concentrations (as at 30 September 2021) 3% 84% Dec-20 Sep-20 Sep-21 Assets by Type (as at 30 September 2021) ■Top 20 Customers Others Goodwill and other intangible assets, 2%, Other, 2% Cash and ST funds, 16% 16% Inv. securities, 15% CBK Bonds and Kuwait Tbills, 4% Deposits with banks, 3% Loans, advances and Islamic financing to customers, 58% National Bank of Kuwait 23#24Funding and Liquidity Positions Customer Deposits (USD bn) 58.0 57.6 56.4 52.5 Dec-19 Dec-20 Sep-20 Other, 5% Equities, 1%. Sep-21 Funding Mix (Total Liabilities) ■Due to banks and other Fis ■Certificates of deposit ■Customer Deposits ■ Other borrowed funds 62% 64% 66% 67% 27% 30% 23% 25% Dec-19 Overview of Investment Securities¹ - USD 15.6 bn As at 31 December 2020 Non-Gov't Debt, 38% Gov't Debt (non Kuwait), 56% FVOCI 77% Notes:¹Excludes investments in Central Bank of Kuwait Bonds and Kuwait Government Treasury Bonds Dec-20 Sep-20 Sep-21 FVPL 5% Amortized Cost 18% National Bank of Kuwait 24#25Capitalization and Asset Quality Total Equity Breakdown (USD mn) Prudent capitalization (%) ■Share capital ■Retained Earnings 11,323 ■ Statutory reserves ■ Tier 1 ■Tier 2 Other Reserves & Treasury Shares 18.4% 17.8% 18.1% 17.0% 11,403 10,915 10,512 1.9% 2.4% 2.5% 1.9% 2,733 3,382 3,134 2,337 4,715 4,392 4,823 5,150 15.9% 16.0% 15.1% 15.6% 1,076 1,129 1,081 1,135 2,151 2,259 2,271 2,384 Dec-19 Dec-20 Sep-20 Sep-21 Prudent Provisioning (USD mn) ■Specific Provisions ■General Provisions 2,266 Dec-19 Provisions and Impairments Charges (USD mn) ■ Provisions for Credit Losses Other Impairment Losses 813 95 688 94 Dec-20 Sep-20 Sep-21 Asset Quality Ratios (%) Loan Loss Coverage Ratio NPL Ratio 1,668 1,678 272% 1,702 428 24 407 28 220% 230% 191% 1,269 1,309 718 594 404 379 1.89% 1.72% 1.43% 564 398 1.10% 368 2018 2019 2020 2019 2020 9M 2020 9M 2021 Dec-19 Dec-20 Sep-20 Sep-21 Notes:¹Equity here refers to total equity attributable to the shareholders of National Bank of Kuwait S.A.K.P. National Bank of Kuwait 25#26Expected Credit Losses (ECL) 9M 2021 Financial Statements ECL Disclosure (USD mn) Total Gross Loans (USD bn) 30 September 2021 Stage1 Stage 2 Stage 3 Total ■Stage 1 ■Stage 2 ■Stage 3 65.0 60.7 2% Loans, advances and Islamic 59,069 financing to customers 4,913 1,006 64,988 7% 60.0 2% 10% 2% 7% Contingent liabilities 12,002 2,302 94 14,398 91% 88% 91% ECL allowance for credit 420 facilities 480 737 1,637 Sep-20 ECL Allowance for Credit Facilities Dec-20 Sep-21 CBK Credit Provisions vs IFRS 9 ECL (USD mn) 2,310 Stage 1 24% Stage 1 21% Stage 3 52% Stage 3 47% Stage 3 45% Stage 1 26% 233 Stage 2 24% Stage 2 32% CBK Provision ■ ECL⭑ 2,387 393 Excess over ECL 2,247 610 Stage 2 29% 2,077 1,995 1,637 Sep-20 (USD 2,077 mn) Dec-20 (USD 1,995 mn) Sep-21 (USD 1,637 mn) Sep-20 Dec-20 Sep-21 * ECLS as per CBK guidelines National Bank of Kuwait 26#27Contents Section 1 Overview of NBK Section 2 Strategy and Business Overview Section 3 Operating Environment Section 4 Financial Performance Highlights Section 5 Appendix National Bank of Kuwait 27#28Kuwait Selected Mega Projects Project South Al Mutlaa City Sector Value (KD bn) Scope Housing 2.33 30,000 residential units, schools and other facilities Jahra & Sulaibiya Low Cost Housing City Housing 0.6 Low cost housing project north of Kuwait City; 824 Hectares New Refinery Project (NRP) Clean Fuels Project (CFP) Oil & gas 3.90 New 615,000 bpd refinery by KNPC Oil & gas 3.70 Jurassic Non Associated Oil & Gas Reserves Expansion: Phase 2 Oil & gas 1.22 Petrochemical Facility at Al-Zour Status Underway: Construction works are ongoing as per schedule and are expected to be completed by February 2022 on Public Building in Mutlaa City (N8 & N9). The consultancy tender submission deadline has been extended to 12 October 2021 for wastewater treatment plant. Underway: Infrastructure works completed. Project was in the execution stage as per latest update in June-2021 and scheduled to complete in 2030. Complete: Construction works are complete. Specification upgrade and expansion of 2 existing refineries to produce 800,000 b/d. Complete: Overall progress 100%. The project is currently under operation and the time for its shutdown mechanical maintenance is still unknown. Production of 120,000 b/d of wet crude and more than 300 million cubic feet a day (cf/d) of sour gas Underway: Construction activities completed on West and East Raudhatain field, Sabriyah and Umm Niqa. JPF-4 & 5 bids submitted. Oil & gas 2.0 Petrochemical plant to be integrated with Al-Zour refinery. LNG Import and Regasification Terminal Oil & gas 0.80 4 full containment LNG tanks each with a working capacity of 225,500 m and a regasification plant with capacity of 1500 BBTU/day Planning/Underway: FEED works completed. Project Engineering and Management Services for 6 years contract has been awarded. KIPIC qualified 7 bidders for the main contract tender expected before end-2021. The Fire Station and Training Center tender is yet to be issued. Complete: The project is complete. Al-Zour North (IWPP) - P2 to P5 Power & water 0.5 1800 MW of power generation capacity and 464,100m³ /day of desalination capacity Al-Khairan Power & Desalination Plant (IWPP) Power & water 0.51 Net capacity of a min 1,500 MW of power and a min 125 MIGD of desalinated water Umm Al Hayman Waste Water (PPP) Power & water 0.47 Initial treatment capacity of 500,000 m³/d. Plant may replace Riqqa WWTP in future Complete/Planning: P-1 is complete. Overall progress 55%. KAPP obtained approval to award the Transaction Advisory Services contract for P-2 & P-3; while request for main contract qualification is expected between 3rd and 4th quarter 2021. The P-4 & P-5 are under study. Bidding/Planning: KAPP obtained approval to award the Transaction Advisory Services contract. KAPP is expected to issue request for qualification between 3rd and 4th quarter 2021 for main contract. Underway (pending): KAPP signed final agreements and financial closure has been achieved for the project. Construction works commenced, ongoing per schedule and set to be completed by Jan-2024. Kabd Municipal Solid Waste Project Power & water 0.3 Waste to energy facility; 50% of all the municipal solid waste produced in Kuwait will be processed at the facility On Hold: The project has been put on hold. Kuwait Metropolitan Rapid Transit Transport 5.4 165 km transit line running across Kuwait. Airport Expansion (New Passenger Building) Transport 1.90 To increase the annual handling capacity of the airport to 20 million passengers and new runways and infrastructure expansion Planning: Feasibility study for the project has been completed stating the PPP models is more economically viable than the traditional tendered approach. Underway/Bidding: Overall progress at 41%. Construction works ongoing on Terminal. P-2 contract for landside works is yet to be awarded. Crossroads contract bid submission deadline ended Jun-2021. The main contract tender is yet to be issued on P-1 of Package 1. The Cargo City (Package 4B) is still in its initial stage of development. National Bank of Kuwait 28#29Consolidated financials 9M 2021 (USD million) Income Statement (USD million) Interest Income Interest Expense Net Interest Income 9M-2020 9M-2021 YoY Growth (%) Balance sheet (USD million) September- September- YoY Growth 2020 2021 (%) 1,956 1,630 (17%) Cash and short term funds 14,603 17,291 18% 736 375 (49%) Central Bank of Kuwait bonds 2,754 2,754 0% 1,220 1,255 3% Kuwait Government Treasury bonds 1,583 1,481 (6%) Murabaha and other Islamic financing income 561 566 (1%) Deposits with banks 3,681 2,749 (25%) Loans, advances and Islamic financing to customers 58,460 62,855 8% Distribution to depositors and Murabaha costs 215 156 (27%) Investment securities 15,362 15,859 3% Net Income from Islamic financing 347 410 18% Investment in associates 21 14 (34%) NII and NI from Islamic financing 1,567 1,664 6% Land, premises and equipment 1,411 1,481 5% Net fees and commissions 364 410 13% Goodwill and other intangible assets 1,935 1,928 0% Other assets 914 1,356 48% Net investment income 2 79 NM Total Assets 100,723 107,767 7% Net gains from dealing in foreign currencies 106 91 (14%) Due to banks and other financial institutions 21,788 25,180 16% Other operating income 58 13 (78%) Customer deposits 58,012 57,567 (1%) Non-interest income 530 593 12% Certificates of deposit issued 3,145 4,544 44% Net Operating Income 2,097 2,258 8% Other borrowed funds 1,957 3,689 88% Other liabilities 2,570 2,331 (9%) Staff expenses 412 497 21% Total Liabilities 87,472 93,310 7% Other administrative expenses 251 298 19% Share capital 2,271 2,384 5% Depreciation of premises and equipment 83 85 2% Proposed bonus shares NM Amortisation of intangible assets 4 4 0% Statutory reserve 1,081 1,135 5% Operating Expenses 750 883 18% Share premium account 2,662 2,662 0% Treasury shares (130) NM Pre-provision profits (and impairments) 1,347 1,375 2% Treasury share reserve 83 116 39% Provision charge for credit losses and impairment losses 688 407 (41%) Other reserves 4,545 5,105 12% Operating profit before taxation Equity attributable to shareholders 10,512 11,403 8% 659 967 47% Perpetual Tier 1 Capital Securities 1,453 1,455 0% Taxation 71 84 19% Non-controlling interests 1,285 1,598 24% Non-controlling interest 29 39 35% Total equity 13,251 14,456 9% Profit attributable to shareholders of the Bank 559 845 51% Total liabilities and equity 100,723 107,767 7% National Bank of Kuwait 29#30Consolidated Statement Of Income (USD million) USD million Interest Income Interest Expense Net Interest Income Murabaha and other Islamic financing income 2018 2019 2020 2,959 3,253 2,496 1,091 1,390 880 1,868 1,863 1,617 614 697 742 Finance cost and Distribution to depositors 204 287 270 Net Income from Islamic financing 409 410 472 Net interest income and net income from Islamic financing 2,277 2,273 2,089 Net fees and commissions 495 518 481 Net investment income 7 28 7 Net gains from dealing in foreign currencies 129 130 126 Other operating income 5 5 75 Non-interest income 636 680 689 Net Operating Income 2,913 2,953 2,778 Staff expenses 528 579 575 Other administrative expenses 325 326 337 Depreciation of premises and equipment 48 87 110 Amortisation of intangible assets 10 11 5 Operating Expenses 911 1,003 1,027 Op. profit before provision for credit losses and impairment losses 2,001 1,950 1,751 Provision charge for credit losses 558 404 718 Impairment losses 34 24 95 Operating profit before taxation 1,409 1,522 938 Taxation Non-controlling interest 110 117 85 77 81 41 Profit attributable to shareholders of the Bank 1,222 1,323 812 National Bank of Kuwait 30#31Consolidated Statement Of Financial Position (USD million) USD million Cash and short term funds Central Bank of Kuwait bonds Kuwait Government treasury bonds Deposits with banks Loans, advances and Islamic financing to customers Investment securities Investment in associates Land, premises and equipment 2018 2019 2020 9,783 12,489 12,782 2,671 2,715 2,738 2,876 2,184 1,527 7,796 6,295 3,388 51,124 54,584 57,722 12,129 13,898 15,594 104 116 17 1,196 1,430 1,408 Goodwill and other intangible assets 1,909 1,922 1,919 Other assets 859 891 812 Total Assets 90,447 96,524 97,996 Due to banks and other financial institutions 26,679 25,002 19,725 Customer deposits 47,449 52,533 56,403 Certificates of deposit issued 1,488 1,776 3,030 Other borrowed funds 1,137 1,161 2,667 Other liabilities 1,488 2,007 2,516 Total Liabilities Share capital Proposed bonus shares Statutory reserve 78,241 82,478 84,341 2,049 2,151 2,259 102 108 113 1,024 1,076 1,129 Share premium account 2,648 2,648 2,648 Treasury shares (216) (129) Treasury share reserve 46 83 115 Other reserves 4,777 5,387 4,650 Equity attributable to shareholders of the bank 10,431 11,323 10,915 Perpetual Tier 1 Capital Securities 695 1,446 1,446 Non-controlling interests 1,079 1,276 1,295 Total equity 12,205 14,045 13,656 Total liabilities and equity 90,447 96,524 97,996 National Bank of Kuwait 31#32Contact Contact Investor Relations E: [email protected] National Bank of Kuwait (NBK) PO Box 95, 13001 Safat Kuwait Al Shuhada Street, Block 7, Sharq State of Kuwait Useful information Download copies of NBK's: • Financial statements Earnings release • Annual report National Bank of Kuwait 32#33الوطني NBK National Bank of Kuwait Investor Presentation October 2021