#1الوطني NBK National Bank of Kuwait Investor Presentation July 2023#2PUBLIC Disclaimer 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#3PUBLIC Contents 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#4PUBLIC NBK 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 conventional banking group in Kuwait in terms of assets, customer deposits and customer loans and advances More than 30% market share of assets in Kuwait Named the most valuable banking brand in Kuwait and has featured among the biggest Middle East brands 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 owning more than 5% of the Bank's share capital (PIFSS owns 5.74% as of December 2022) NBK's market capitalization at 31 December 2022 was USD 26.6 bn. USD million Financial snapshot 2020 2021 2022 Total Assets 97,021 108,575 118,637 Loans, advances & Islamic financing 57,148 64,389 68,555 Customer Deposits 55,841 59,683 65,877 Total Equity 13,520 14,584 15,132 Net Operating Income 2,739 2,938 3,297 Net Profit attributable 804 1,183 1,662 36.7% 39.2% 38.2% Cost to Income (%) 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 13 countries with a predominant focus on the MENA region. Net Interest Margin (%) 2.21% 2.21% 2.30% NPL Ratio (%) 1.72% 1.04% 1.42% Credit Ratings Loan Loss Coverage Ratio (%) 220% 300% 267% Rating Agency Long Term Rating Standalone Rating Outlook Return on Average Equity (%) 7.0% 10.2% 14.3% MOODY'S A1 а3 Stable STANDARD Tier 1 Ratio (%) 16.0% 15.7% 15.0% A a- Stable & POOR'S Fitch Ratings A+ a- Stable Capital Adequacy Ratio (%) 18.4% 18.1% 17.4% Notes: Throughout the investor presentation, the USD/KD exchange rate used is .30630 for year-end figures and .30705 for interim figures. The rates are based on the Central Bank of Kuwait's closing exchange rates as of 31/12/2022 and 30/6/2023. National Bank of Kuwait 4#5PUBLIC Regional and International Geographic Presence New York - 1 Branch London - 1 branch Paris 1 branch Geneva - 1 branch Egypt -54 branches Kuwait - 70 branches Iraq 3 branches - Lebanon - 2 branches Bahrain - 2 branches UAE-2 branches KSA 3 branches Singapore 1 branch Shanghai-1 branch National Bank of Kuwait 5#6PUBLIC Key Strengths High credit ratings and among the top brand values regionally A Leading market position in Kuwait NBK has one of the highest credit ratings in the MENA region Named the most valuable banking brand in Kuwait and has featured among the biggest Middle East brands by Brand Finance NBK enjoys a dominant market share across various business segments in Kuwait The Bank has one of the largest and most diversified distribution networks, including its digital channels Sound and consistent financial performance Long history of profitability, even throughout the global financial crisis Excellent asset quality with an NPL ratio standing at 1.42% at end-2022 Strong liquidity serving as a buffer in times of need 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 الوطني NBK 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 13 countries, 7 of which are in the MENA region. The Bank focuses on organic growth in its key growth markets in the MENA regions with special emphasis on digital banking. And remains opportunistic for any potential transaction that has strategic synergies and creates value Strong wealth management capability NBK has established a strong global wealth management platform that builds on client accessibility in the region, offering best-in-class products and services and a seamless client experience throughout its global network A well-defined sustainability strategy NBK's leadership is deeply committed to the bank's sustainability journey and views sustainability as integral to business performance Very ambitious and transformational ESG strategy with full management ownership and board oversight National Bank of Kuwait 6#7PUBLIC Contents 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#8PUBLIC NBK'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 and brokerage operation and to leverage the Group's strong regional position to cross sell these products across the MENA region. National Bank of Kuwait 8#9PUBLIC Kuwait Operations NBK Islamic Banking (Boubyan Bank 60.1% owned subsidiary) Corporate Banking Remain the primary banker for local blue-chip companies Remain bank of choice among foreign corporations; serving 75% of them active in the Kuwaiti market Maintain current market share in excess of 30% in trade finance Increase market share in medium corporate segment Focus on project finance benefiting from NBK's large capital base Maintain asset quality Consumer Banking Maintain leadership with largest market share and highest customer penetration Maintain focus on customer service Aim to attract new bankable clients such as SMEs Pioneer innovative products and services utilizing the latest tools and technologies Proactive attrition management Meet evolving banking demands Co Private Banking Continue to provide a unique proposition to HNW Provide access to best of breed international funds leveraging NBK's wealth management expertise Leverage NBK's strong brand to acquire new clients and retain onshore relationships Broaden the product portfolio to accommodate growing needs 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. ■ NBK is committed to the future growth and transformation of Boubyan Bank and establishing a strong presence in the growing Islamic banking segment. 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. 5.7% Market share of Assets and Customer Deposits 8.5% 6.5% ■ Assets ■ CDs 10.0% 9.6% 8.9% 8.2% 7.6% 7.4% 9.5% 2018 2019 2020 2021 2022 National Bank of Kuwait 9#10PUBLIC International Operations New York - 1 Branch Geneva London - 1 branch Paris 1 branch 1 branch NBK's international operations have been traditionally contributing 25% of the Group's bottom line. NBK's international presence is a differentiating factor for the Group, enabling better service and strengthening client relationships. The Bank is focused on growing its business in existing and new markets; meanwhile, across the international locations, the Bank's focus is on: increasing its market share in Egypt and transforming the Retail Business in Egypt with enhanced digital capabilities. building a regional powerhouse in wealth management servicing its GCC-based corporate and private customers who are active internationally and growing its business with international corporates active in the MENA region exploring expansion of the Bank's digital proposition in regional markets Within its international network, NBK is focused on managing risks and costs to improve efficiency and achieve long-term cost savings and productivity gains. Shanghai - 1 branch Revenue Trends (USD mn) ■Net Operating Income ■Net Profit Singapore 1 branch. Egypt - 54 branches Kuwait - 70 branches Iraq 3 branches Lebanon - 2 branches Bahrain - 2 branches UAE - 2 branches KSA 3 branches 870 729 671 Balance Sheet Trends (USD bn) ■Segment Assets 33.1 448 301 163 51.4 43.1 2020 2021 2022 Dec-20 Dec-21 Dec-22 National Bank of Kuwait 10#11PUBLIC Digital Transformation Strategy With a solid digital transformation strategy, we are committed to our strong ambitions to be relevant to our customers' needs in the era of new normal, to enhance efficiency and to increase stakeholders' value through our two- pronged approach 1. Digital transformation of the core (comprehensive program to transform our business in Kuwait) We developed our digital agenda with strong ambitions Being and percieved as the digital leader and trendsetter in Kuwait Building "next generation digital banking" to deliver the best experience to our customers Establishing a digital working environment - Building digital skillsets - Digital tools to work efficiently Digital Transformation programs across all segments (Consumer, Private, Corporate) Leveraging the change through six main pillars Business diversification 2. leveraging digital disruption (our key markets outside Kuwait) Enhancing Existing Channels Experience Developing New Channels Fully Digital Value Proposition New Way of Working Building New Digital Capabilities Trendsetting Innovation National Bank of Kuwait 11#12PUBLIC NBK ESG Strategy Framework Ambition To support the transition to a sustainable economy and become a role model in our own transformation. Strategic Initiatives Support the transition to a low carbon economy by delivering on our net zero ambitions. Capitalize on sustainable business opportunities and develop a best-in-class Sustainable Finance proposition. Engage with our clients to accelerate their transition plans and support them in achieving their net zero ambitions. Embed ESG across our supply chain. Ambition To commit to the highest standards of governance by embedding ESG across the Group. Strategic Initiatives • • Build and implement the highest standards of ESG governance and accountability. Enhance stakeholder engagement, emphasizing our ESG narrative and commitments. Develop economic, environmental, and social risk resilience. CLEAN WATER AFFORDABLE AND AND SANITATION HOUSERY INNOVATION 11 SUSTAINABLE CITES 12 ESPONSIBLE AND INFRASTRUCTURE AND COMMUNITIES CONSUMPTION ANDPREDUCTION 13 CLIMATE ACTION 14 LIFE BELOW WATER 15 ON LAND 17 PARTNERSHIPS FOR THE GOALS ENABLERS rency & Communication | Capacity Building Monitoring & Reporting Governance for 16 PAGE JUSTICE AND STRING 17 PARTNERSHIPS FOR THE GOALS INSTITUTIONS GOOD HEALTH AND WELLBEING QUALITY EDUCATION 5 GENDER EQUALITY INDUSTRY INNOVATION AND INFRASTRUCTURE REDUCED INEQUALITES DECENT WORK AND ECONOMIC GROWTH 16 PEACE JUSTICE ANDSTRONG NSTITUTIONS Ambition To drive sustainable business growth achieved through organizational resilience. Strategic Initiatives . Promote diversity, equity, and inclusion in the workplace. Promote group-wide ESG transformation through enhanced employee engagement and development programs. Cultivate and retain local talent by providing rewarding career development opportunities. • Establish a digital and agile work environment. Digitalization & Innovation | Governance | Risk Management | on Capabilities моделодео GOOD HEALTH AND WELL-BENG W QUALITY EDUCATION 9 INDUSTRY, INNOVATION AND INFRASTRUCTURE REDUCED 10 INEQUALITIES 11 SUTTANABLE GITES AND COMMUNIC 12 RESPONSIBLE CONSUMPTION AND PRODUCTION BA GENDER LQUALITY Ambition To deliver a positive impact on the communities we serve. Strategic Initiatives • • Empower communities to achieve financial independence, confidence, and security. Continued and enhanced focus to providing optimal customer experience and service excellence. DECENT WORK AND ECONOMIC GROWTH • Support national development plans to • PARTNERSHIPS 14 BELOW WATER 17 FOR THE GOALS promote and nurture local talent. Expand our community investment efforts for optimal impact. Support equitable community and economic development. National Bank of Kuwait 12#13PUBLIC Building A Leading Journey In ESG ESG Ratings ESG Awards National and Global Frameworks SUSTAINALYTICS NBK is at 27.2- Medium Risk MSCI ESG RATINGS REFINITIV FTSE4Good BB NBK rating at 'BB' per the MSCI audit Listed on Refinitiv AFE Low Carbon Select Index in the MENA Constituent of the FTSE4Good Index Series Global Finance Best SME Bank Award - Kuwait 2022 Best Financial Innovation Labs 2022 - Group Digital Office Best Bank for Sustainable Finance - Kuwait 2022 Best Consumer Digital Bank - Kuwait 2022 Best Consumer Digital Bank - ME 2022 Most Innovative Digital Bank - Kuwait 2022 Most Innovative Digital Bank - ME 2022 Unified Direction for a Sustainable Future 1 2 CDP DRIVING SUSTAINABLE ECONOMIES IN ENERGY & ENVIR VIRONMEN LEED GOLD DESIGN ESG بورصة الكويت BOURSA KUWAIT SUSTAINABLE DEVELOPMENT GOALS • كويت جديدة NEWKUWAIT 910 11 12 GRI O (F) 13 1415 16 17 • K SUSTAINA GOALS "C" score for 2022 for both the Climate Change and Forests Categories NBK Headquarters awarded the Gold LEED Certification Euromoney Best Bank for ESG in Kuwait Best Bank for Diversity & Inclusion in Kuwait Best Bank for Corporate Responsibility - ME 2023 MEED Best Youth Programme Initiative - 2022 GREENHOUSE GAS PROTOCOL SUSTAINABIL ACCOUNTING SASB STANDARDS BOARD National Bank of Kuwait 13#14PUBLIC 2022-2023 Key ESG Achievements We measure our progress against well-defined metrics and targets to achieve the greatest impact. > Strategy Pillars Responsible Banking Governance for Resilience Investing in our Communities Capitalizing on our Capabilities > Key Highlights Launched NBK Sustainable Financing Framework and received SPO by S&P Global. Developed a roll-out plan for sustainable products for 2023. Achieved the LEED Gold Certification for NBK Kuwait new Headquarters. Committed to become carbon neutral by 2060 in line with the State of Kuwait's pledge to achieve carbon neutrality by 2060. Established interim goals to reduce its gross operational emissions by 25% by 2025 through increasing dependency on renewable and clean energy solutions and transforming local branches to become eco-friendly. Installed 12 EV charging stations at different levels of the multi-story car park attached to NBK's green Headquarters. Approved the new Group ESG Strategy. Elected eleven board members for a three year term; including two additional Independent members - totaling four independent members, one with extensive ESG experience. " Elected first female Board Member. Finalized and approved ESG Governance Structure and Framework that assigns ESG responsibility across members of the Executive Management. Established management-level Sustainability Committee headed by the Vice Chairman & GCEO and with direct oversight from the Board of Directors. Integrated ESG metrics into the Board of Directors' and Executive Management responsibilities, charters, oversight, and affairs. Joined the United Nations Global Compact (UNGC). Received our first CDP Score of 'C' for both the Climate Change and Forest categories for the Financial Services sector. Aligned our operational environmental footprint with GHG Protocol global framework. Constituent in Refinitiv AFE Low Carbon Select Index MENA. Launched new designs for all our cards with customer-tailored features, including design themes especially for the visually impaired. Launched new mobile banking experience for NBK customers themed "Tailored for You", to provide them with the latest and most advanced digital services. Launched the "Bankee" financial literacy program in Kuwait's public and private schools. NBK Academy named "Best Youth Programme Initiative" by MEED (MENA Banking Excellence Awards) international magazine. Received the "Job Replacement and Nationalization Award" on the GCC level. Nationalization rate currently stands at 75.1%. Awarded "Best Bank for Corporate Responsibility in the Middle East 2023" by Euromoney. Community Investments totaled USD 75 million in 2022, a 45% increase from 2021. Launched "She's Next" initiative in partnership with Visa, a global advocacy program that aims to support women-owned small businesses. Awarded "Best Bank for Diversity and Inclusion in Kuwait" from Euromoney. Women in workforce 44.0%, women in management 29.3%. Launched NBK RISE, a global leadership initiative designed to elevate women to more significant leadership roles. Provided key Sustainability Champions across the Bank with a Global Reporting Initiative (GRI) Standards training program. Engaged with external consultants to design a specialized training module focused on Sustainability that is planned to launch during 2023 for all employees. In 2022, each employee received an average of 5.7 hours of training. Named "Best Financial Innovation Lab in Kuwait 2022" by Global Finance for pioneering innovation in the country and the region. Fostering employee well-being, NBK partnered with Wara Hospital to provide specialized on-site medical advice to staff. National Bank of Kuwait 14#15PUBLIC NBK Sustainable Financing Framework Expanding our sustainable financing activities in line with industry leading practices and standards. NBK established a Sustainable Financing Framework to support and advance NBK's goal to integrate critical ESG issues into the business, culture and operations, thereby advancing the transition to a sustainable and low carbon economy and contributing to achieve New Kuwait 2035 vision. Use of Proceeds Under this framework, an amount equivalent to the net proceeds from NBK's sustainable financing instruments will be used to finance or re-finance, in part or in full, Eligible Assets with social or environmental benefits: Green Assets, including but not limited to: Renewable Energy, Energy Efficiency, Sustainable Water, Green Buildings. Social Assets, including but not limited to: Healthcare & Education, Access to Essential Services, Affordable Housing. Project Evaluation & Selection NBK has established a Sustainable Financing Working Group to govern the selection and monitoring of the Eligible Assets in accordance with the eligibility criteria defined by the Sustainable Financing Framework. The Sustainable Financing Working Group will be chaired by a member of Senior Management and consist of senior members from Finance, Treasury, Risk Management, Sustainability, and Investor Relations. Management of Proceeds NBK's Finance and Treasury teams will manage the allocation of an amount equivalent to the net proceeds of its Sustainable Financing Instruments to Eligible Assets using a portfolio approach. NBK will follow the process described in the Sustainable Financing Framework along with its professional judgement, discretion, and sustainability expertise when identifying the Eligible Assets. Reporting NBK commits to publish an allocation and impact report annually, and until full allocation of the proceeds, and in the event of any material changes until the relevant maturity date. NBK will request on an annual basis, starting one year after issuance and until full allocation, an assurance report on the allocation of the Sustainable Financing Instrument proceeds to eligible assets, provided by its external auditor. NBK Sustainable Financing Framework has been externally verified with a Second Party Opinion (SPO) by S&P Global to confirm alignment with the ICMA 2021 Green Bond Principles, ICMA 2021 Social Bond Principles, ICMA 2021 Sustainability Bond Guidelines, LMA 2021 Green Loan Principles and LMA 2021 Social Loan Principles. Use of Proceeds Strong Project Evaluation & Selection Aligned Management of Proceeds Aligned Reporting Aligned National Bank of Kuwait 15#16PUBLIC Contents 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 16#17PUBLIC Overview of Kuwait Overview Fiscal breakeven oil price* 98 88 1992 79 75 80 85 100 95 93 90 g གྷ 8 8 པྱ ལྐ 8 8 8 8 རྟེ 75 70 68 74 72 66 65 60 62 62 55 50 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24f ■ The State of Kuwait is a sovereign state on the coast of the Arabian Gulf with a population of 4.74 million (PACI data). ■ 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 its 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 95 90 85 80 Key Indicators Sovereign Ratings Current Account Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, Public Authority for Civil Information (PACI), NBK estimates Key economic indicators 2022e 2023f A1/A+ / AA (M/S/F) $60.5bn $52.7bn Government Revenues* (% GDP) Public Debt* (%GDP) 50.0% 44% 3.0% 2.9% *Excludes investment income and on a fiscal year basis National Bank of Kuwait 17#18PUBLIC Kuwait's Economy GDP Growth Public Finance and Inflation Consumer Sector Recent Developments Oil sector output gains in 2022 (+12.1% y/y), coupled with consumer-led gains in the non-oil sector (+2.6%), are expected to have propelled headline GDP growth to a more-than-ten-year high of 7.6%. Looking ahead to 2023, headline growth could slow to -0.3%, largely on the back of OPEC-mandated oil production cuts, which will push Kuwait's oil sector GDP growth down to -3.7%. Non-oil activity is projected to increase by 3.8% (including refining) following the full commissioning of the Al-Zour refinery and by 3.0% excluding refining. The government is expected to post a fiscal surplus of 9.6% of GDP in FY22/23, its first since 2014, thanks to higher oil prices ($97/bbl on average in FY22/23), but expenditures are rising to cover higher welfare spending. The FY23/24 draft budget projects a deficit of KD6.8 billion on higher outlays including KD1.2 billion worth of non-recurring accruals (fuel/electricity subsidies etc.). However we project a smaller deficit of 3% of GDP in FY23/24. Inflation averaged 4.0% in 2022, up from 3.4% in 2021 on stronger demand and supply chain disruptions. Inflation was a still-elevated 3.7% y/y in May 2023, but should ease to an average of 3.4% for 2023 overall on softer economic growth,, tighter monetary policy and fading supply pressures. Consumer spending growth continued to moderate in 1Q23 (+13.8% y/y). In 2022 some KD42.5bn (+24% y/y) was spent on card transactions, with robust demand supported by strong consumer confidence, employment gains and rising prices. Domestic credit growth slowed to 2.7% y/y in May 2023. Household and business credit increased by 5.3% y/y and 2.1% y/y, respectively. 5 0 -5 12 10 20 86 Real GDP (% y/y) Total Non-oil 10 10 5 0 -5 -10 -10 2014 2015 2016 2017 2018 2019 2020e 2021e 2022e 2023f Private credit (change, % y/y) Total 12m avg 8 4 2 0 May-20 Nov-20 20 % 6 +2 4 12 10 May-21 Nov-21 May-22 0 Nov-22 May-23 Credit Growth In 2022, the CBK hiked the discount rate by a cumulative 200 bps to 3.5%, and followed this up in January 2023 with another 50 bps increase to 4.0%. Further moves by the CBK are possible, given anticipated US Fed rate hikes. Real estate sales 12m average (KD mn) 250 Commercial Residential Investment 300 Deposit growth eased to 3% y/y in May, with private sector deposits (around 78% of total deposits) increasing by 6% y/y over the same period, while government (including public institutions) deposits fell by 7% y/y to KD10.5 billion. 250 200 200 150 150 100 Real Estate Activity Real estate sales fell by 40% y/y in June 2023 to KD209 million as residential sales fell by 33% y/y to KD121 million amid rising valuations, while investment and commercial sales saw similar declines KD88 million. The outlook in 2023 points toward softer activity on rising residential valuations, rising borrowing costs, softer economic growth and uncertainty over reforms. Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, Refinitiv, NBK estimates 100 50 50 0 0 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23 National Bank of Kuwait 18#19PUBLIC Kuwait's Banking Sector Snapshot 180 160 140 288 120 100 80 60 40 420 The Kuwaiti banking sector comprises 22 banks, including 11 domestic banks (five conventional, five Shariah-compliant and one specialized), and branches of 11 international banks (10 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 19% in 1Q23, 6% higher than the required minimum of 13%. Non-performing loans to total loans stood at 1.5% during the same period with the coverage ratio (all provisions to gross non-performing loans) of 302%. 20 0 2015 Key indicators (USD bn, end year) 1 2016 ■Loans ■ Deposits Development of the Discount rate (%, end year) 180 5.0 5.0 160 4.0 וווווו 4.0 140 120 3.0 3.0 100 80 2.0 2.0 60 220 40 1.0 1.0 0 0.0 0.0 2017 2018 2019 2020 2021 2022 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023* 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; * As of mid-July 2023 National Bank of Kuwait 19#20PUBLIC Dominant Kuwaiti Franchise NBK is the leading banking group in Kuwait with a market leading position across its business segments Total Assets (USD mn) Customer Deposits (USD mn) Kuwait Finance House National Bank of Kuwait Boubyan Bank Burgan Bank 120,697 118,637 Kuwait Finance House National Bank of Kuwait 73,402 65,877 25,729 23,395 Boubyan Bank Al-Ahli Bank of Kuwait 19,464 14,434 Gulf Bank 22,369 Al-Ahli Bank of Kuwait 20,967 Gulf Bank Burgan Bank 13,865 12,839 Ahli United Bank 15,383 Ahli United Bank 10,582 Commercial Bank of Kuwait 14,073 Warba Bank 8,732 Warba Bank 13,715 Kuwait International Bank 11,690 Commercial Bank of Kuwait Kuwait International Bank 7,640 7,636 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Customer Loans & Advances (USD mn) Net Profit attributable to shareholders (USD mn) National Bank of Kuwait 68,555 National Bank of Kuwait Kuwait Finance House Boubyan Bank Gulf Bank Burgan Bank Al-Ahli Bank of Kuwait Ahli United Bank Warba Bank 61,507 19,306 Kuwait Finance House Commercial Bank of Kuwait 1,662 1,168 240 16,744 Gulf Bank 202 13,803 Boubyan Bank 189 13,186 Burgan Bank 170 11,117 Ahli United Bank 119 10,218 Al-Ahli Bank of Kuwait 105 Kuwait International Bank 9,182 Warba Bank 63 Commercial Bank of Kuwait 7,899 Kuwait International Bank 44 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Sources: Banks' annual reports. All data as of 31 December 2022 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, Gulf Bank, Commercial Bank of Kuwait and Al-Ahli Bank of Kuwait are conventional banks. National Bank of Kuwait 20#21PUBLIC Contents 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 21#22PUBLIC Operating Performance & Profitability 2,938 1,183 Profitability (USD mn) ■Net Operating Income 3,297 ■ Net Profit 1,662 1,551 775 1,843 Operating Income Composition (USD mn) ■NII & NI from Islamic financing 3,297 2,938 25% 26% ■ Non-interest income 1,843 1,551 24% 27% 75% 897 74% 76% 73% 2021 2022 1H 2022 1H 2023 2021 2022 1H 2022 1H 2023 1.15% Return on average assets (%) 1.53% 1.48% 1.42% 10.2% Return on average equity (%) 15.2% 14.3% 13.6% 2021 2022 1H 2022 1H 2023 2021 2022 1H 2022 1H 2023 National Bank of Kuwait 22#23PUBLIC Operating Performance & Profitability (cont'd) 1H 2023 Op. income by type (%) FX, 3% Fees, 18% Others, 3% Net Interest Income, 76% Net Interest Margin (%) 1H 2023 Op. income by business line (%) Consumer & Private Banking, 27% Others, 11% 2.52% 2.21% 2.30% 2.18% Cost to income (%) Corporate, 14% Inv Bkg & 39.2% AM, 3% 38.7% 38.2% 36.5% Intern'l, 25% Islamic Banking, 20% 2.18% +1.28% 2021 2022 1H 2022 1H 2023 Net Interest Margin Drivers +1.11% -2.05% 2.52% 2021 2022 1H 2022 1H 2023 1H 2022 Loans Others Deposits 1H 2023 National Bank of Kuwait 23#24PUBLIC Balance Sheet Parameters 64.4 12.7% Dec-21 Net loan portfolio (USD bn) ■Net Loans 68.6 ◆Net loan growth YoY (%) 70.2 65.6 8.8% 7.1% 6.5% Dec-22 108.6 Loans to assets (USD bn) ■Total Assets ◆ Loans/Assets 118.6 117.5 111.7 59.3% 57.8% 58.7% 59.8% Jun-22 Jun-23 Dec-21 Dec-22 Low loan concentrations (as at 30 June 2023) Loan exposure by sector (%) (as at 30 June 2023) Crude Oil & Gases, 6% Manufacturing, Other, 14% 7% Financial 8% Trade & Commerce, _ 6% Personal, 34% Real Estate, 20% Construction, 3% -Purchase of Securities, 3% 85% Jun-22 Jun-23 Assets by Type (as at 30 June 2023) Goodwill and Cash and ST Other, 4% ■Top 20 Customers Others other intangible assets, 1% funds, 11% CBK Bonds and Kuwait 15% Inv. securities, 17% Tbills, 3% Deposits with banks, 5% Loans, advances and Islamic financing to customers, 60% National Bank of Kuwait 24#25PUBLIC Funding and Liquidity Positions Funding Mix (Total Liabilities) ■Customer deposits Deposits from other Fls Due to banks Other borrowed funds CDs 14% 11% 13% 13% 12% 12% 13% 12% Customer and FI Deposits (USD bn) ■Customer Deposits ■FI Deposits 12.2 10.2 12.3 12.0 65.9 66.0 61.6 59.7 63% 64% 63% 65% Dec-21 Dec-22 Jun-22 Jun-23 Dec-21 Loans to Customer and other FI Deposits Ratio (%) 92.1% 87.8% 88.7% 90.0% Dec-21 Dec-22 Jun-22 Notes:¹Excludes investments in Central Bank of Kuwait Bonds and Kuwait Government Treasury Bonds Jun-23 Dec-22 Jun-22 Jun-23 Overview of Investment Securities¹ - USD 18.4 bn Other, 4% Equities, 1% As at 31 December 2022 FVPL 5% Amortized Cost 16% Non-Gov't Debt, 37% Gov't Debt (non Kuwait), 58% FVOCI 79% National Bank of Kuwait 25#26PUBLIC Capitalization and Asset Quality Total Equity¹ Breakdown (USD mn) Prudent capitalization² (%) ■ Share capital ■Statutory reserves ■Retained Earnings Other Reserves & Treasury Shares ■ Tier 1 ■ Tier 2 18.1% 17.4% 11,556 11,827 11,991 17.0% 16.4% 11,249 2.4% 2.4% 2.4% 2,532 2.2% 3,066 3,511 2,622 5,647 5,063 4,996 4,523 15.7% 15.0% 14.6% 14.2% 1,174 1,233 1,171 1,230 2,348 2,466 2,460 2,583 Dec-21 Dec-22 Jun-22 Jun-23 Prudent Provisioning (USD mn) Dec-21 Provisions and Impairments Charges (USD mn) ■Provisions for Credit Losses Other Impairment Losses ■Specific Provisions ■ General Provisions 2,703 433 38 2,244 2,068 2,155 1,686 1,664 558 Dec-20 404 Dec-21 548 Dec-22 395 148 2021 156 Dec-22 Jun-22 Jun-23 Asset Quality Ratios (%) Loan Loss Coverage Ratio 311% 300% 267% NPL Ratio 218% 69 1.75% 131 156 25 1.42% 1.24% 1.04% 44 2022 1H 2022 1H 2023 Dec-21 Dec-22 Jun-22 Jun-23 Equity here refers to total equity attributable to the shareholders of National Bank of Kuwait S.A.K.P. Notes:1 2 Restated for June 2022 National Bank of Kuwait 26#27PUBLIC Expected Credit Losses (ECL) 1H 2023 Financial Statements ECL Disclosure (USDm) Total Gross Loans (USDbn) ■ Stage 1 Stage 2 ■ Stage 3 30 June 2023 Stage 1 Stage 2 Stage 3 Total 68.2 1% Loans, advances and Islamic 7% 71.1 1% 9% 73.0 2% 6% financing to customers 66,880 4,851 1,274 73,005 Contingent liabilities 12,896 2,064 38 14,998 90% 92% 92% Commitments (revocable and irrevocable) to extend credit 25,641 2,804 1 28,445 ECL allowance for credit facilities 620 522 845 1,988 Jun 22 ECL Allowance for Credit Facilities Dec 22 Jun 23 CBK Credit Provisions vs IFRS 9 ECL (USDm) 2,730 Stage 3 40% Stage 1 30% Stage 3 42% Stage 1 29% Stage 3 43% Stage 1 31% 1,039 Stage 2 Stage 2 29% Stage 2 26% 1,691 30% ■ ECL⭑ Excess over ECL 2,828 2,909 947 921 1,881 1,988 Jun-22 (USD 1,691m) Dec-22 (USD 1,881m) Jun-23 (USD 1,988m) Jun 22 Dec 23 Jun 23 * ECLS as per CBK guidelines National Bank of Kuwait 27#28PUBLIC Contents 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 28#29PUBLIC Kuwait Selected Mega Projects Project South Al Mutlaa City Sector Budget (KD bn) Scope Construction 6.0 30,000 residential units, schools and other facilities Jahra & Sulaibiya Low Cost Housing City Construction 0.4 Low cost housing project north of Kuwait City; 824 Hectares Kuwait Environmental Remediation Programme (KERP) Clean Fuels Project (CFP) Oil & gas 0.5 Environmental remediation project to address the environmental damage resulting from the Gulf War Oil & gas 3.70 Status Underway: Construction works are progressing on PAHW - Extension & Maintenance of 132kV Ground Cables in N1, N2 at Al Mutlaa city. Underway: Project was in the execution stage as per latest update in August 2019. Construction works on an infrastructure package are completed. Underway: The bid submission date for the North & South Kuwait Revegetation Project is extended from April 16, 2023 to June 18, 2023. 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. Jurassic Non Associated Oil & Gas Reserves Expansion: Phase 2 Oil & gas 0.8 Petrochemical Facility at Al-Zour Oil & gas 2.0 North Shuaiba Power Plant Al-Zour North (IWPP) - P2 to P5 Power & Water 0.4 +0 Power & water 5.0 Al-Khairan Power & Desalination Plant (IWPP) Power & water 1.0 10 Umm Al Hayman Waste Water (PPP) Power & water 0.4 Kabd Municipal Solid Waste Project Power & water 0.2 Production of 120,000 b/d of wet crude and more than 300 million cubic feet a day (cf/d) of sour gas Petrochemical plant to be integrated with Al-Zour refinery Dual-fuel plant with a net power generation capacity of 778 MW and includes 3 desalination units with a capacity of 45 MIGD 1800 MW of power generation capacity and 464,100m³/day of desalination capacity Power and desalination plants; project involves three phases. Initial treatment capacity of 500,000 m³/d. Plant may replace Riqqa WWTP in future Waste to energy facility; 50% of all the municipal solid waste produced in Kuwait will be processed at the facility Kuwait Metropolitan Rapid Transit Transport 5.4 165 km transit line running across Kuwait. Airport Expansion (New Passenger Building) Transport 2.6 To increase the annual handling capacity of the airport to 20 million passengers and new runways and infrastructure expansion Underway: JPV IV Off-Plot Works & Production Facilities: The construction works are still ongoing on the project and is expected to be completed by 2024.. 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. Bidding/Planning: Consultancy contract bid submission deadline in November 2021. Complete/Planning: Al Zour North IWPP Phase 2 & 3: The request for qualifications (RFQ) has been issued with submission due on July 11, 2023. Bidding/Planning: Al Khiran IWPP Phase I: The SOQ (statement of qualification) submission remains unchanged and is expected to be submitted by July 11, 2023. Underway (pending): The Construction works are ongoing and the project is expected to be completed by November 2025. On Hold: The project has been put on hold and the client is likely to cancel the project. Team led by France's CNIM is understood to have officially withdrawn from this project, which was planned to be developed under a PPP model. Planning: Feasibility study for the project has been completed stating the PPP models is more economically viable than the traditional tendered approach. Underway/Bidding: The Directorate General of Civil Aviation has invited the companies to bid by October 10, 2023, for the contract to operate the New Passenger Terminal 2 project. National Bank of Kuwait 29#30PUBLIC Consolidated financials 1H 2023 (USD mn) Income Statement (USD mn) Interest Income Interest Expense Net Interest Income 1H 2022 1H 2023 YoY Growth (%) Balance sheet (USD mn) Jun-22 Jun-23 YoY Growth (%) 1,214 2,462 NM Cash and short term funds 16,566 12,437 Central Bank of Kuwait bonds 368 1,334 NM Kuwait Government Treasury bonds 2,762 869 2,902 (25%) 5% 639 (26%) 846 1,128 33% Deposits with banks 3,807 5,434 43% Murabaha and other Islamic financing income 419 621 48% Loans, advances and Islamic financing to customers 65,587 70,229 7% Distribution to depositors and Murabaha costs 130 342 NM Investment securities 16,723 20,015 20% Net Income from Islamic financing 289 280 (3%) Land, premises and equipment 1,511 1,592 5% NII and NI from Islamic financing 1,134 1,407 24% Goodwill and other intangible assets 1,860 1,724 (7%) Other assets 1,968 2,550 30% Net fees and commissions 301 324 8% Total Assets 111,652 117,523 5% Net investment income 35 51 46% Due to banks 12,961 12,779 (1%) Net gains from dealing in foreign currencies 79 57 (28%) Deposits from other financial institutions 12,289 12,009 (2%) Other operating income 3 4 43% Customer deposits 61,622 66,015 7% Non-interest income 417 436 4% Certificates of deposit issued 4,398 4,757 8% Net Operating Income 1,551 1,843 19% Other borrowed funds 3,911 4,070 4% Other liabilities 1,953 2,610 34% Staff expenses 351 374 7% Total Liabilities 97,134 102,239 5% Other administrative expenses 185 225 21% Share capital 2,460 2,583 5% Depreciation of premises and equipment 62 71 14% Proposed bonus shares NM Amortisation of intangible assets 3 3 0% Statutory reserve 1,171 1,230 5% Operating Expenses 601 673 12% Share premium account 2,615 2,615 0% Pre-provision profits (and impairments) 950 1,170 23% Treasury share reserve 114 114 0% Other reserves 4,889 5,451 11% Provision charge for credit losses and impairment losses 69 156 NM Equity attributable to shareholders 11,249 11,992 7% Operating profit before taxation 882 1,014 15% Perpetual Tier 1 Capital Securities 1,430 1,430 0% Taxation 71 72 1% Non-controlling interests 1,839 1,862 1% Non-controlling interest 36 44 25% Total equity 14,518 15,284 5% Profit attributable to shareholders of the Bank 775 897 16% Total liabilities and equity 111,652 117,523 5% National Bank of Kuwait 30#31PUBLIC Consolidated Statement Of Income (USD mn) USD mn Interest Income Interest Expense Net Interest Income 2020 2021 2022 2,471 2,158 3,094 871 506 1,188 1,600 1,653 1,906 Murabaha and other Islamic financing income 735 744 939 Finance cost and Distribution to depositors 267 211 377 Net Income from Islamic financing 468 532 562 Net interest income and net income from Islamic financing 2,068 2,185 2,468 Net fees and commissions 483 551 593 Net investment income 7 91 51 Net gains from dealing in foreign currencies 107 97 181 Other operating income 75 13 3 Non-interest income Net Operating Income 671 753 829 2,739 2,938 3,297 Staff expenses 570 657 719 Other administrative expenses 322 377 410 Depreciation of premises and equipment 109 111 127 Amortisation of intangible assets 5 5 5 Operating Expenses 1,006 1,151 1,261 Op. profit before provision for credit losses and impairment losses 1,733 1,787 2,036 Provision charge for credit losses 711 395 17 Impairment losses 94 38 131 Operating profit before taxation 929 1,354 1,888 Taxation Directors' remuneration Non-controlling interest Profit attributable to shareholders of the Bank 84 111 155 0 3 40 60 68 804 1,183 1,662 National Bank of Kuwait 31#32PUBLIC Consolidated Statement Of Financial Position (USD mn) USD mn 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 2020 2021 2022 12,744 16,592 17,380 2,711 2,710 2,877 1,511 1,361 691 3,354 2,890 4,865 57,148 64,389 68,555 15,438 16,033 18,396 17 12 10 1,394 1,489 1,550 Goodwill and other intangible assets 1,900 1,898 1,746 Other assets 804 1,201 2,566 Total Assets 97,021 108,575 118,637 Due to banks 9,965 13,381 13,118 Deposits from other financial institutions 9,563 10,237 12,213 Customer deposits 55,841 59,683 65,877 Certificates of deposit issued 3,000 4,373 5,882 Other borrowed funds 2,640 4,135 4,060 Other liabilities Total Liabilities Share capital Proposed bonus shares Statutory reserve 2,491 2,182 2,355 83,501 93,991 103,504 2,236 2,348 2,466 112 117 123 1,118 1,174 1,233 Share premium account 2,622 2,622 2,622 Treasury share reserve 114 114 114 Other reserves 4,604 5,180 5,271 Equity attributable to shareholders of the bank 10,806 11,556 11,828 Perpetual Tier 1 Capital Securities 1,431 1,433 1,433 Non-controlling interests 1,282 1,595 1,870 Total equity 13,520 14,584 15,132 Total liabilities and equity 97,021 108,575 118,637 National Bank of Kuwait 32#33PUBLIC Contact 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 33#34الوطني NBK National Bank of Kuwait Investor Presentation July 2023