#1الوطني NBK National Bank of Kuwait Investor Presentation February 2016#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. الوطني NBK#3Contents Section 1 Overview of NBK Section 2 Overview of Operating Environment Section 3 Strategy and Business Overview Section 4 Financial Performance (Historical) Section 5 Performance Overview FY 2015 Section 6 Appendix الوطني NBK 2#4NBK at a Glance Background Ownership Operations " Snapshot National Bank of Kuwait S.A.K.P. ("NBK" or the "Bank”) was established in 1952 as the first local bank and the first shareholding company in Kuwait and as the first indigenous bank in the GCC. The Bank is the leading banking group in Kuwait in terms of assets, customer deposits and customer loans and advances. NBK is the dominant bank in Kuwait with more than 30% market share of assets as of 31 December 2015. The Bank was ranked amongst the 50 safest banks in the world by Global Finance and was named the most valuable banking brand in Kuwait and among the top 10 in the region by Brand Finance. The Bank was established by a group of leading Kuwaiti merchants and it has retained the same core shareholder base since that time. NBK's shares are listed on the Kuwait Stock Exchange since 1984 with only one shareholder holding owning more then 5% of the Bank's share capital (PIFSS owns 5.04% as of April 2015). NBK's market capitalisation as at 31 December 2015 was USD 13.0 bn. 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 15 countries with a predominant focus on the MENA region. USD million Net Operating Income Financial Snapshot 2013 2014 2015 Total Assets 61,285 71,776 77,752 Loans, advances & Islamic financing 35,240 39,238 44,649 Customer Deposits 34,524 37,100 39,734 Total Equity 8,935 9,458 10,514 2,063 2,178 2,401 785 863 930 33.1% 32.5% 32.2% 2.70% 2.45% 2.42% 1.96% 1.50% 1.34% Loan Loss Coverage Ratio (%) 199.8% 276.1% 322.4% Return on Average Equity (%) 10.0% 10.5% 10.5% Tier 1 Ratio (%)² 16.8% 13.3% 14.7% Capital Adequacy Ratio (%) 2 17.3% 14.5% 16.8% Net Profit attributable Cost to Income (%) Net Interest Margin (%) NPL Ratio (%) Overview of Regional and International Geographic Presence Credit Ratings Long Term Rating Standalone Rating Outlook Aa3 a3 Stable A+ a- Stable US AA- a Stable Location New York Branches 1 Europe Location Branches London 2 Geneva Paris 1 Middle East Location Branches Kuwait 66 Egypt 38 Turkey 19 Iraq 10 Lebanon 6 Jordan 3 Bahrain 2 UAE 2 Saudi Arabia 1 Rating Agency MOODY'S STANDARD & POOR'S Fitch Ratings الوطني Notes: Through out the investor presentation, the USD/KD exchange rate used is 0.3035. The rates are based on the Central Bank of Kuwait's closing exchange rates as of 31/12/2015. Shanghai is currently a representative office. Asia Location Shanghai Branches 1 1 1 Singapore NBK 2 All Capital Adequacy Ratios for the periods prior to 2014 are computed on Basel II basis 3#5Key Strengths High Credit Ratings and among the Top Brand Values Regionally NBK has one of the highest credit ratings in the MENA region. The Bank was ranked amongst the 50 safest banks in the world by Global Finance and was named the most valuable banking brand in Kuwait and among the top 10 in the Middle East by Brand Finance. Sound and Consistent Financial Performance NBK has a long history of profitability and remained profitable throughout the global financial crisis. The Bank also boasts an excellent asset quality (NPL ratio at 1.34% at end-2015). NBK also maintains strong liquidity which serves as a buffer in times of needs. الوطني NBK Largest Banking Group in Kuwait with Dominant Market Position As at 31 December 2015, 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. Stable Shareholder Base and Strong Management Team The Bank was established in 1952 by a group of leading Kuwaiti merchants and has retained the same core shareholder base since then. 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 NBK has a strong regional and international presence, with operations in 15 countries, 9 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. الوطني NBK 4#6Rating Excerpts 667 The standalone baseline credit assessment (BCA) of a3, reflects the bank's (1) dominant position in its domestic market, underpinning its resilient core profitability and growth prospects; and (2) robust financial fundamentals including consistently good asset quality metrics, as well as strong capitalisation and liquidity." MOODY'S Moody's-08 September 2015 view NBK's business position as "strong," reflecting the bank's leading position in Kuwait, good and stable performance through the full economic cycle, and good management..... The stable outlook reflects Standard & Poor's Ratings Services' expectation that NBK's asset quality will remain stable, its market share strong, and its funding and liquidity in line with that of peers over the next two years." STANDARD & POOR'S Standard & Poor's - 07 July 2015 66 NBK's company profile has a high influence on its VR. This reflects the bank's dominant market share in Kuwait and historical flagship status. NBK enjoys strong links to the state and has a significantly more diverse business model than peers. "I Fitch Ratings الوطني NBK Fitch Ratings - 16 February 2015 LO 5#7Contents Section 1 Overview of NBK Section 2 Overview of Operating Environment Section 3 Strategy and Business Overview Section 4 Financial Performance (Historical) Section 5 Performance Overview FY 2015 Section 6 Appendix الوطني NBK 6#8Overview of Kuwait Snapshot The State of Kuwait ("Kuwait" or the "Sovereign") is a sovereign emirate on the coast of the Arabian Gulf, covering a total area of 17,818 square kilometers. 60 80 Substantial Current Account Surpluses Current Account Balance (USD bn, Ihs) Current Account Balance / GDP (%, rhs) 45.28% 60% 40.90% 32.50% 40% 20% 6.80% 27.1 35.3 61.8 73.5 67.4 50.5 2009 2010 2011 2012 2013 2014 8.0 2015e 0% 43.60% Overview 60 Kuwait is a constitutional monarchy, headed by His Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah (the "Emir"). 32.02% 27.73% 40 20 20 0 Strong Sovereign Balance Sheet Sovereign Net Foreign Assets (USD bn, lhs) 600 Sovereign Net Foreign Assets to GDP (rhs) 469.0% 281.0% 332.0% 600% 500 400 500% 251.0% 246.0% 400% 250.0% 220.0% 300 200 300% 200% 100 100% 257.0 258.0 376.0 436.0 491.0 529.0 551.0 0 0% 2009 2010 2011 2012 2013 2014 2015e Economy Strategic Vision Kuwait enjoys an open economy, dominated by the Government sector. Its economy, while primarily dependent on the oil industry, has witnessed increased contribution from non-oil sectors. Kuwait has one of the lowest external break-even oil prices globally, and the lowest in the GCC, making it more resilient to the recent decline in oil prices. In addition, it has registered substantial fiscal and current account surpluses, which serve as a buffer. Kuwait has launched a long-term policy vision under the banner of "Kuwait Vision 2035". The vision encompasses six strategic aims: increasing the GDP, encouraging the private sector, supporting human and social development, promoting demographic policies, enhancing and improving the effectiveness of government administration and consolidating the Islamic and Arab identity. Kuwait has set medium-term development strategies with a view to ultimately achieving its vision. Key Figures GCC Fiscal Breakeven Oil Price ■Fiscal Breakeven Oil Price ($/barrel) Low External Debt which is Stable as a Share of GDP External Debt (USD bn) External Debt to GDP Key Indicators 2014 2015E 50.0 60% 40.0 Sovereign Ratings Aa2/AA/AA (M/S/F) 42.4% 34.8% 40% 30.0 30.3% 24.3% Current Account $50.5 bn $8.0 bn 19.8% 17.3% 20.0 23.7% Δ 20% Gov Revenues (%GDP) 54% 39% 10.0 75 60 114 70 108 120 41.5 33.5 34.4 28.1 32.6 36.8 41.0 Public Debt (%GDP) 3.4% 4.5% 0.0 0% Kuwait Qatar Saudi Arabia UAE Oman Bahrain 2009 2010 2011 2012 2013 2014 2015e الوطني NBK Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, IIF and NBK estimates 7#9Overview of Kuwait (Continued) Investment Investments (KD Bn, Ihs) Investments (% Non-oil GDP, rhs) 50% 33.3% 45% 8 31.6% 30.9% 32.3% 29.5% 29.3% 40% 6 25.8% 35% 4 30% 2 25% 4.6 5.8 5.8 6.3 7.1 7.4 8.5 0 20% 2009 2010 2011 2012 2013 2014 2015e GDP Growth Public Finance Household Debt Recent Developments Economic growth seen improving despite drop in oil prices, as project awards pick up. Fiscal and external buffers give Kuwait ample capacity to sustain spending plans. Non-oil growth is expected to accelerate slightly as capital spending on projects improves. Non-oil growth is expected around 4-5% in 2016 and 2017. Fiscal deficits are likely in the near term with oil prices at current levels, on the back of rapid growth in government spending and lower oil revenues. Inflation expected to remain under control, supported by a stronger dinar and limited global inflation. Domestic pressures have risen, but remain contained. Household debt growth has moderated but remains healthy. Kuwaiti employment remained healthy in 2015, though Kuwaiti household income growth moderated. Growth in government spending on wages and salaries is expected to moderate, but remain positive. 10 8 6 4 10 Credit Growth Credit growth picked up in 2015, as government project implementation boosted borrowing. Growth rose to 8% y/y in December 2015. We expect it in the 7-8% range in 2016 and 2017. Government project awards accelerated in 2015. With the recent announcement of mega project awards and a strong pipeline of tenders building up, FY15/16 has seen a pick up in execution. 2 0 Dec-11 Private credit (Change, %y/y) Dec-12 Month end Dec-13 10 12 month average 8 6 Dec-14 Real Estate sales 12m average (KD mn) 200 Commercial 150 Residential 4 2 Dec-15 95 0 200 Investment 150 100 100 50 Real Estate Activity Real estate activity cooled in 2015 following a strong 2014; sales were off by 30% to KD 3 billion in 2015. Real estate prices have also come off, though outright declines have been limited. 50 0 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 06 الوطني NBK Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, IIF and NBK estimates 8#10Overview of the Kuwaiti Banking Sector ■ " Snapshot The Kuwaiti banking sector comprises 23 banks, including five commercial banks, one specialised bank, five Shari'a-compliant local banks, branches of 11 international conventional banks and a branch of a Saudi Arabian Islamic bank. Highly regulated sector by the Central Bank of Kuwait ("CBK") with a number of regulations and supervisory norms in place monitoring interest rates charged, lending limits and concentrations, investment limits, liquidity and capital adequacy. The government's financial strengths underpins its capacity to provide support to the banking sector with historical evidence of support. Most recently, in 2008, the state offered capital support to one bank as well as introduced a blanket guarantee on deposits following the global financial crisis. Key Indicators¹ (USD bn) ◉ Overview of Basel III Implementation in Kuwait In June 2014, the Central Bank of Kuwait announced the implementation of the Instructions of Basel III Capital Adequacy Framework in its final format to all local banks. Minimum Capital Requirements Kuwait's minimum capital requirements are more stringent, being 2.5%, higher than the Basel III guidance with full phase-in required by December 2016 (as compared to Basel III's Jan-2019 deadline) Phase-in Arrangements Dec-2014 Dec-2015 Dec-2016 Total Common Equity Tier 1 8.5% 9.0% 9.5% Additional Tier 1 1.5% 1.5% 1.5% ■Loans ■ Deposits Tier 1 108.3 109.7 104.6 102.5 95.2 96.5 85.4 89.1 89.3 110.7 80.4 82.6 Tier 2 83.7 84.0 10.0% 10.5% 11.0% 2.0% 2.0% 2.0% Total minimum CAR 12.0% 12.5% 13.0% D-SIB 2009 2010 2011 2012 2013 2014 2015 الوطني NBK Sources: Central Bank of Kuwait 1Loans refers to total credit facilities to resident and deposits refer to private resident deposits, all as reported by the Central Bank of Kuwait 0.5%-2.5% as part of CET1 (by 2016) 9#11The Dominant 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 Gulf Bank 17,822 Commercial Bank of Kuwait 13,295 55,357 25,876 78,340 National Bank of Kuwait Kuwait Finance House Burgan Bank Gulf Bank Commercial Bank of Kuwait 8,529 12,211 38,349 35,919 15,396 Al Ahli Bank of Kuwait 12,598 Al Ahli Bank of Kuwait 7,025 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Customer Loans & Advances (USD million) Net Profit (USD mn) National Bank of Kuwait Kuwait Finance House Burgan Bank Gulf Bank Al Ahli Bank of Kuwait Commercial Bank of Kuwait الوطني NBK 14,512 12,237 9,130 26,255 43,597 National Bank of Kuwait 7,366 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Kuwait Finance House Burgan Bank Commercial Bank of Kuwait 84 Al Ahli Bank of Kuwait 96 194 348 751 Gulf Bank 98 0 100 200 300 400 500 600 700 800 Sources: Bank's annual reports. All data as of 30 September 2015 (for Balance Sheet items) or for the 9-months ended 2015 (for Income Statement Items) Note: Kuwait Finance House is an Islamic bank while Burgan Bank, Gulf Bank, Commercial Bank of Kuwait, Al Ahli Bank of Kuwait are conventional banks 10#12Contents Section 1 Overview of NBK Section 2 Overview of Operating Environment Section 3 Strategy and Business Overview Section 4 Financial Performance (Historical) Section 5 Performance Overview FY 2015 Section 6 Appendix الوطني NBK 11#13NBK'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 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. 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 identified to have long-term potential through a combination of high growth economies, sound demographic trends and opportunities aligned with the Bank's competitive advantages. 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 Investment Bank 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. الوطني NBK 12#14Kuwait 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 الوطني NBK 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 13#15International Operations International Operations NBK's international operations currently contributed to circa 27% of its 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 Established or acquired Branches Legal structure London 1983 2 Subsidiary New York 1984 1 Branch Geneva 1984 1 Subsidiary Singapore 1984 1 Branch Paris 1987 1 Branch Shanghai 2005 1 Rep office Overview of Performance MENA region Revenue Trends (USD mn) Balance Sheet Trends (USD mn) Bahrain 1987 2 Branch Lebanon 1996 6 Subsidiary ■Net Operating Income Net Profit ■Segment Assets Jordan 2004 3 Branch 587 512 463 29,423 26,782 Iraq 2005 10 Subsidiary 20,351 Saudi Arabia 2006 1 Branch 250 263 230 Egypt 2007 38 Subsidiary Turkey 2007 19 Associate UAE 2008 2 Branch 2013 2014 2015 2013 2014 2015 الوطني NBK 14#16Boubyan Bank (58.4% owned subsidiary) Market share of Total Assets(%) 4.4% 3.9% 3.5% 3.6% 3.2% 2011 2012 2013 2014 30 Sep. 2015 Market share of Total Deposits (%) 5.9% 5.1% 4.4% 4.0% 4.1% Key Highlights ■ Islamic banking has been gaining strong grounds in the Kuwaiti market in recent years, representing close to 40% of assets and deposits at year-end 2015. 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 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. 2011 2012 2013 2014 30 Sep. 2015 الوطني NBK Notes: Market share data based on the consolidated data of all banks operating in Kuwait 15#17Contents Section 1 Overview of NBK Section 2 Overview of Operating Environment Section 3 Strategy and Business Overview Section 4 Financial Performance (Historical) Section 5 Performance Overview FY 2015 Section 6 Appendix الوطني NBK 16#18Operating Performance & Profitability 2,063 2013 785 Resilient Profitability (USD mn) ■Net Operating Income ■Net Profit 2,178 2014 2,401 Stable Returns (%) Return on Average Assets Return on Average Equity 10.5% 10.5% 10.0% 863 930 1.3% 1.3% 1.2% Operating Income Composition (USD mn) ■ Non-interest income ■Net interest income & net income from Islamic financing الوطني NBK 2015 Operating Efficiency (%) Cost to Income 2013 2014 2015 Interest Margins (%) Net Interest Margin 2,401 2,178 2,063 27% 29% 2.70% 28% 33.1% 2.45% 2.42% 32.5% 32.2% 73% 72% 71% 2013 2014 2015 2013 2014 2015 2013 2014 2015 17#19Balance Sheet Parameters 35,240 Assets & Loans and Advances (USD mn) ■Loans, advances & Islamic financing 2013 61,285 39,238 2014 71,776 ■Total Assets 77,752 44,649 2015 Breakdown of Assets by Type (As at 31 December 2015) Goodwill and other intangible Other 2% Cash and short assets 3% term funds 15% Investment securities 12% Loans, advances and Islamic financing to customers 57% Breakdown of Gross Loans and Advances Breakdown of Gross Loans and Advances By Type -As at 31 December 2015 By Geography - As at 31 December 2015 الوطني NBK Retail 31% Corporate 69% Europe North 2% America Asia 2% Others 3% 2% MENA 91% CBK Bonds and Kuwait Tbills 5% Deposits with banks 6% Low loan concentrations As at 31 December 2015 85% 15% ■Top 20 Customers Others 18#20Funding and Liquidity Positions 34,524 2013 Customer Deposits (USD mn) 37,100 2014 34.6% 39,734 21,219 2015 2013 (Total Liabilities) Funding Mix (USD mn) ■ Other liabilities ■Customer Deposits الوطني NBK 60% 66% 31% 2013 Notes: 35% 2014 ■Certificates of deposit ■ Due to banks and other financial institutions Strong Liquidity Position (USD mn) Liquid Assets Liquid Asset Ratio 38.8% 37.1% 27,821 2014 28,853 2015 Overview of Investment Securities¹ - USD 9.2 bn Others .7% Equities 4% As at 31 December 2015 59% Non- Gov't Debt Gov't 36% Debt 36% 2015 1Excludes investments in Central Bank of Kuwait Bonds and Kuwait Government Treasury Bonds (non Kuwait) 53% FVPL 3% Held to Maturity 4% Available for Sale 93% 19#21Capitalization and Asset Quality Total Equity¹ Breakdown (USD mn) ■ Share capital Retained Earnings 8,266 ■Statutory reserves Tier 1 Ratio Other Reserves & Treasury Shares 9,081 8,742 3,017 2,929 2,942 17.3% Capital Adequacy² (%) Capital Adequacy Ratio Regulatory CAR 16.8% 16.8% 3,078 3,353 3,648 14.5% 13.3% 14.7% 753 791 830 Basel II Basel III 12.5% 1,506 1,581 1,661 12.0% 12.0% 2013 2014 2015 2013 2014 2015 Non-Performing Loans Prudent Provisioning (USD mn) Loan Loss Coverage Ratio (%) NPLs - NPL Ratio Specific Provisions ■General Provisions Loan Loss Coverage Ratio (%) 1,696 1,435 2,019 1,548 199.8% 1,238 1.96% 1.50% 956 1.34% 276.1% 322.4% 718 614 626 479 457 471 2013 2014 2015 2013 2014 2015 2013 2014 2015 Notes: الوطني NBK ¹Equity here refers to total equity attributable to the shareholders of National Bank of Kuwait S.A.K.P. 2 All Capital Adequacy Ratios for the periods prior to 2014 are computed on Basel II basis 20 20#22Contents Section 1 Overview of NBK Section 2 Overview of Operating Environment Section 3 Strategy and Business Overview Section 4 Financial Performance (Historical) Section 5 Performance Overview FY 2015 Section 6 Appendix الوطني NBK 21#23FY 2015 Key Performance Extracts 2.45% 2014 Interest Margins (%) ■Net Interest Margin Strong Returns (%) ■Return on Average Assets Return on Average Equity 10.5% 10.5% الوطني NBK 1.28% 2014 1.22% 2015 Income Statement Key Highlights (USDmn) USD million 2014 2015 Net Interest Inc. & net inc. from Islamic financing 1,546 1,747 2.42% Fees and Commissions 401 428 Net Operating Income 2,178 2,401 Total Operating Expenses 709 773 Operating Surplus 1,469 1,628 Provision charge for credit losses 447 428 Impairment losses 37 113 Taxation 84 109 Non-Controlling Interests 39 47 2015 Profit Attributable to Shareholders 863 930 Strong returns and well-diversified earnings Operating Income by type Operating Income by Business Line Fees, 18% FX, 5% Others, 4% Consumer & Private Banking, 31% Net Interest Income, Others, 5% 73% Corporate, 22% Inv Bkg & AM, 3% Islamic Banking, Intern'l, 24% 13% 22 22#24FY 2015 Key Performance Extracts (Continued) 11.3% 39.2 2014 Net Loan Portfolio (USD bn) Net Loans Net loan growth YoY (%) Loan exposure by sector (%) Telecom, Utls & Transport. 7% Manufact. 7% Financial 6% Retail & Trade 12% الوطني NBK Real estate 19% Other 14% Eng & Constructi on 4% 13.8% 44.6 2015 Non-Performing Loans Coverage Ratio ⚫NPL Ratio 54.7% 71.8 2014 Loans to Assets (USD bn) Total Assets ◆Loans/Assets 57.4% 77.8 2015 Prudent Capitalization (%) ■ Tier 1 14.5% 1.2% 322% ■Tier 2 16.8% 2.1% 276% Personal 31% 13.3% 14.7% 1.50% 1.34% 2014 Notes: September 2014 capital ratios were calculated based on Basel II regime 2015 2014 2015 23#25Contents Section 1 Overview of NBK Section 2 Overview of Operating Environment Section 3 Strategy and Business Overview Section 4 Financial Performance (Historical) Section 5 Performance Overview FY 2015 Section 6 Appendix الوطني NBK 24 24#26Kuwait Selected Mega Projects Awarded: Company has appointed a CEO; the project is expected to be operational within 3 years. Capacity: 1,157 beds, parking facilities for 3,000 Underway: Project is 20% complete and should be finished by 2019. cars 140 million m residential city, incl 10,000 houses, 22,000 apts, other facilities. 29,000 residential units, schools and other facilities New 615,000 bpd refinery by KNPC Specification upgrade and expansion of 2 existing refineries 4 full containment LNG tanks each with a working capacity of 225,500 m and a regasification plant with capacity of 1500 BBTU/day 1,800 MW power generation capacity, (2.5 all phases) 464,100m desalination capacity Planning: Project is in study phase; no developments expected before 2017. Bidding: 1/3 of major infrastructure contracts tendered; prequalified companies have until 7th of Feb 2016 to submit bids. Awarded: The signing ceremony took place in October 13,2015. One small package left to tender soon: feed pipeline. Project duration is 45 months. Underway: Project is 48% complete with completion date set for November 2018. Bidding: Prequalified companies have until 31st of Jan. 2016 to submit their bids. Bidding: Prequalified companies have until 17th of Feb 2016 to submit their bids. Phase 1 is to reach commercial capacity by summer 2016. Project Sector Value (KD bn) Scope Status Kuwait Health Assurance Co. (PPP) Healthcare NA Health insurance, medical treatment for non- Kuwaitis. Also, 3 hospitals & 15 clinics Al-Jahra Hospital Healthcare 0.4 Khairan City Housing 4.2 South Al Mutlaa City Housing 0.2 New Refinery Project Oil & gas 3.9 (NRP) Clean Fuels Project (CFP) Oil & gas 3.7 LNG Import and Regasification Terminal Oil & gas 1.0 Al Zour North IWPP - Phase 2 (PPP) 0.8 Power & water Umm Al Hayman Waste Water (PPP) Power & water 0.4 Airport Expansion Transport 1.7 Mubarak Al-Kabeer Seaport 0.7 Transport Project-Phase 1 (2.3 all phases) Kuwait Metro Transport 2.1 (PPP) Kuwait National Railroad Transport 2.4 (PPP) Sheikh Jaber Al Ahmed Al Transport 0.7 Sabah Causeway South Regional Transport 0.5 Highway(section 1) Al Jahra Ministerial Complex Construction 0.35 Initial treatment capacity of 500,000 m³/d. Plant may replace Riqqa WWTP in future Project includes new terminal building and a new runway Building a seaport on Bubiyan island 200km long, running across Kuwait. 10% of the project is underground Railroad system linking Kuwait to rest of GCC Bidding: Prequalified companies have until 29th of Feb 2016 to submit their proposals. Awarded: Contract for the New Terminal Building has not been signed; tender for Runway package issued with a deadline on 7" of Feb 2016; lowest bidder for Passenger Supporting Building is under review. Underway: Construction work on package 1 expected to start in June 2016. Main tender for package 3A hasn't been issued yet. Planning: Prequalification process expected to start in 1Q16, according to a statement by the project manager. Planning: Prequalification process expected to start in 1Q16, according to a statement by the project manager. 37 km causeway linking Kuwait City with Subiya Underway: progress is at 44%; cement work to commence soon. area in northern Kuwait 135 km highway souh of Kuwait as part of the International Middle East Arab Highways Network 140,000 m² of ministerial offices; the scheme will Planning: Construction tenders are expected to be issued in 1Q16. be a prominent landmark in the northern Kuwait Planning: Main Contract Tender expected in April 2016 الوطني NBK 25#27Consolidated Statement Of Income USD million Interest Income Interest Expense Net Interest Income Murabaha and other Islamic financing income 2013 2014 2015 1,612 1,692 1,928 335 376 459 1,277 1,316 243 287 1,468 350 Distribution to depositors and Murabaha costs 33 57 72 Net Income from Islamic financing 210 230 278 Net interest income and net income from Islamic financing 1,488 1,546 1,747 Net fees and commissions 366 401 428 Net investment income 62 109 105 Net gains from dealing in foreign currencies 86 90 109 Share of results of associates 54 25 1 Other operating income Non-interest income Net Operating Income 8 6 12 576 632 654 2,063 2,178 2,401 Staff expenses 379 403 452 Other administrative expenses 237 239 254 Depreciation of premises and equipment 48 50 51 Amortisation of intangible assets 19 17 16 Operating Expenses 682 709 773 Op. profit before provision for credit losses and impairment losses 1,381 1,469 1,628 Provision charge for credit losses 473 447 428 Impairment losses 17 37 113 Operating profit before taxation 891 986 1,086 Taxation 62 84 109 Non-controlling interest 44 39 Profit attributable to shareholders of the Bank 785 863 47 930 الوطني NBK 26#28Consolidated Statement Of Financial Position USD million Cash and short term funds 2013 2014 2015 7,947 10,320 11,471 Central Bank of Kuwait bonds 1,761 1,762 2,649 Kuwait Government treasury bonds 1,055 1,135 1,252 Deposits with banks 2,964 6,756 4,701 Loans, advances and Islamic financing to customers 35,240 39,238 44,649 Investment securities 7,744 8,216 9,174 Investment in associates 856 393 305 Land, premises and equipment 633 670 746 Goodwill and other intangible assets 2,307 2,295 2,233 Other assets 778 535 572 Investment in an associate held for sale 0 456 0 Total Assets 61,285 71,776 77,752 Due to banks and other financial institutions 16,293 22,095 24,074 Customer deposits 34,524 37,100 39,734 Certificates of deposit issued 794 2,224 2,159 Subordinated Tier 2 bonds 0 0 411 Other liabilities 740 900 860 Total Liabilities Share capital Proposed bonus shares 52,350 62,318 67,237 1,506 1,581 1,661 75 79 83 Statutory reserve 753 791 830 Share premium account 2,306 2,306 2,306 Treasury shares (265) (260) (256) Treasury share reserve 53 49 46 Other reserves 3,837 4,196 4,411 Equity attributable to shareholders of the bank 8,266 8,742 9,081 Perpetual Tier 1 Capital Securities 0 0 694 Non-controlling interests 669 716 740 Total equity 8,935 9,458 10,514 Total liabilities and equity 61,285 71,776 77,752 الوطني NBK 27