#1الوطني NBK National Bank of Kuwait Investor Presentation September 2022#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 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 commercial 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 Financial snapshot USD million 2019 2020 2021 Total Assets 96,763 98,239 109,939 Loans, advances & Islamic financing 54,719 57,866 65,198 Customer Deposits 52,663 56,543 60,433 Ownership 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 5.77% as of December 2021) NBK's market capitalisation at 31 December 2021 was USD 23.7 bn. Total Equity 14,080 13,689 14,767 Net Operating Income 2,960 2,785 2,996 Net Profit attributable 1,327 814 1,198 Cost to Income (%) 34.0% 37.0% 39.6% 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 (%) 2.56% 2.21% 2.21% NPL Ratio (%) 1.10% 1.72% 1.04% Credit Ratings Loan Loss Coverage Ratio (%) 272% 220% 300% Rating Agency Long Term Rating Standalone Rating Outlook Return on Average Equity (%) 12.3% 7.0% 10.2% MOODY'S STANDARD & POOR'S A1 a3 Stable Tier 1 Ratio (%) 15.9% 16.0% 15.7% A a- Stable Fitch Ratings A+ a- Stable Capital Adequacy Ratio (%) 17.8% 18.4% 18.1% Notes: Through out the investor presentation, the USD/KD exchange rate used is .30250 for year-end figures and .30670 for interim figures. The rates are based on the Central Bank of Kuwait's closing exchange rates as of 31/12/2021 and 30/06/2022. 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 53 branches - Kuwait - 66 branches Iraq 4 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 NBK has one of the highest credit ratings in the MENA region Ranked amongst the 50 safest commercial 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 2021, 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 1.04% at end-2021 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 13 countries, 7 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#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, 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#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. 5.5% Market share of Assets and Customer Deposits 7.9% 5.7% ■ Assets 8.5% 6.5% ■ CDs 10.0% 9.6% 8.9% 8.2% 7.6% 2017 2018 2019 2020 2021 National Bank of Kuwait 9#10PUBLIC International Operations New York - 1 Branch London - 1 branch Paris 1 branch Geneva - 1 branch ■ NBK's international operations has been traditionally contributing to 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 • building a regional powerhouse in wealth management servicing its corporate and private customers who are active internationally and growing its business with international corporates 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. Shanghai - 1 branch Revenue Trends (USD mn) ■Net Operating Income Net Profit 729 741 681 Singapore 1 branch. 371 Egypt - 53 branches Kuwait - 66 branches Iraq 4 branches Lebanon - 2 branches Bahrain - 2 branches UAE-2 branches KSA 3 branches 165 305 Balance Sheet Trends (USD bn) ■Segment Assets 43.7 36.7 33.6 2019 2020 2019 2020 2021 2021 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 Achievements and Recognitions We launched the First Digital Bank in Kuwait Increased Digital Adoption at a high rate Weyay Bank Existing Business We've made money easy We use super-smart, super-secure Customer acquisition technology to offer you simple banking Customer Retention = My Accounts Last was 2022 Accounts Cards Current Account 3726636636 C+ 10.060.320 KWD NBK Visa Signature Credit Card VISA 3720636636 Prepaid Cards 10.060.320 KWD 2020 2021 MOB activation 50.4% 58.5% ratio* Digital Transaction ratio for all self service channels * * For targeted segments 97.2% 97.6% Recognition from International Awards DIGITAL BEST BANK GILOBAL AWARD 2021 Best Consumer Digital Bank Best Online Product Offerings Best Bill Payment & Presentment Best Mobile Banking App Best in Social Media Marketing & Services GRANICE Best in Lending Most Innovative Digital Bank INNOVATION BEST FINANCIAL IN LABS 2021 GLOBAL FINANCE Best Financial Innovation Labs 2021 (Group Digital Office) The Banker INNOVATION IN DIGITAL BANKING AWARDS 2021 Innovation in Digital Banking Awards 2021 National Bank of Kuwait 12#13PUBLIC Sustainability is Embedded in NBK's DNA and Strategy... NBK is deeply committed to our sustainability journey. We view our efforts at improving our sustainability as integral to improving our business performance and enhancing our positive impact in the world Key Highlights Sustainability Pillars Source: National Bank of Kuwait Contributing to Economic Development Serving Customers Leading in Governance Respecting and Developing People Giving Back Caring for to Our Community Our Environment 74.6% 94% Kuwaitization Rate Customer Satisfaction Score 45% Female Employees 41K Employee Training Hours 4.3% Community Investments to Pre Tax Profits LEED Gold Certification for New Headquarters Building National Bank of Kuwait 13#14PUBLIC ...Having Long Engaged in Sustainability Initiatives and with Stakeholders NBK has supported national efforts, adopted frameworks and aligned itself with global initiatives, following a stakeholder-focused and standards-aligned approach to promote sustainability Major ESG Initiatives, Commitments and Partnerships بورصة الكويت GRI كويت جديدة NEWKUWAIT BOURSA KUWAIT WOMEN'S SUSTAINABLE DEVELOPMENT GOALS 1 3 4 EMPOWERMENT ⚫ PRINCIPLES M 10 11 12 Q AB 17 SUSTAINABLE EQUALITY 13 14 15 16 MEANS E x Y GOALS 2016/2017 Human Rights Statement 2020 A Pioneering Sustainability Journey, Recognised Externally FTSE4Good Included in FTSE Russell's FTSE4Good Index Series 2019 Present REFINITIV™ R Included in Refinitiv AFE Low Carbon Select Index MENA 2020 Present - GLOBAL FINANCE Most Innovative Digital Bank in Kuwait 2021 Source: National Bank of Kuwait CDP DISCLOSURE INSIGHT ACTION Weyay 2021 Sustainable Financing Framework 2022 The Banker GLOBAL FINANCIAL INTELLIGENCE SINCE 1926 Brand Finance Innovation in Digital Banking Award Middle East 2021 Number 1 Banking Brand in Kuwait 2021 National Bank of Kuwait 14#15PUBLIC 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 15#16PUBLIC Overview 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 4.5 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 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 Exc. investment income 90 Incl. investment income 80 70 68 60 62 62 54 50 46 98 74 74 72 66 55 55 48 65 63 100 90 88 80 80 75 70 70 53 35 60 60 60 50 45 40 40 40 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 Key Indicators Sovereign Ratings Key economic indicators 2021e 2022f A1/A+ / AA- (M/S/F) $26 bn $58 bn Government Revenues* (% GDP) 44% 49% 5% 3.5% Current Account Public Debt* (% GDP) *Fiscal year Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, NBK estimates National Bank of Kuwait 16#17PUBLIC Kuwait's Economy GDP Growth Public Finance and Inflation Consumer Sector Recent Developments Following a decline of 8.9% in 2020 due to the twin shocks of Covid-19 and lower oil activity/prices, output is estimated to have rebounded by 1.1% in 2021, led by gains in private consumption and non-oil activity more broadly (+3.5%). Oil sector GDP is estimated to have contracted by 1% in 2021 in line with Kuwait's participation in the OPEC+ production cut agreement. Looking ahead, headline GDP growth could reach 8.4% in 2022 on oil (+13.1%) and non-oil sector output gains (+3.1%), with the latter benefitting from consumer, real estate and refining sector output gains. The fiscal deficit in FY21/22 is estimated to have narrowed to 8.5% of GDP from 33% the year before. With oil prices forecast to average about $100/bbl in 2022, the fiscal balance could post a surplus of 7.8% of GDP in FY22/23 on modest increase in expenditures. Inflation averaged 3.4% in 2021 and likely peaked at 4.7% y/y in April 2022 amid elevated global food and commodity prices, rising housing rents and robust domestic demand. Inflation is forecast to average 3.9% in 2022. Consumer spending remains strong (+20% y/y to KD2.9bn in August), according to one metric, benefitting during the summer from the retirees cash allowance, healthy consumer borrowing and positive sentiment. Credit Growth Private credit expanded by 9.5% y/y in July on gains in household credit (+13.1% y/y) and corporate credit (+6.6% y/y), both of which are running at multi-year high rates of growth. The CBK followed the US Fed and raised its key discount rate five times since March, by a total of 125 bps to 2.75%, with more rate rises expected in 2022. Deposit growth, having turned positive in January, accelerated to 7.7% y/y in July on increasing private sector deposits (+8.3% y/y) and rising government sector deposits (+4.5% y/y). Real Estate Activity Real GDP (% y/y) Total Non-oil 8.4 10 10 40 5.7 3.8 3.4 5 3.1 2.4 2.5 5 1.5 1.1 0.5 -0.1 3.1 0.6 0 0 2.4 3.5 1.1 -0.6 -5 -5 -8.8 -5.3 -10 -8.9 -10 2013 2014 2015 2016 2017 2018 2019 2020 2021e 2022f Private credit (change, % y/y) 12 10 2086 + 4 2 0 Jul-19 Jan-20 Total Jul-20 Jan-21 12m avg 8 12 2200 642 10 Jul-21 Real estate sales 12m average (KD mn) 250 Commercial 200 150 In 2021, property sales reached a 7-year high of KD3.7 billion, driven by buoyant residential sector activity. In June 2022, total sales were up 12% y/y to KD349 million. Final approval of a mortgage law in 2022-23 could boost activity (and prices) as well. 100 550 Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, Refinitiv, Haver, NBK estimates Residential Investment 0 Jan-22 Jul-22 300 200 100 Jun-18 Jun-19 Jun-20 Jun-21 0 Jun-22 National Bank of Kuwait 17#18PUBLIC Kuwait's Banking Sector Snapshot 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 18.6% in 1Q22, higher than the required minimum. Non-performing loans to total loans stood at 1.4% in 1Q22. 80 61282222 140 100 Key indicators (USD bn, end year) 1 0 2013 2014 Development of the Discount rate (%, end year) ■Loans ■Deposits 3.5 3.5 3.0 3.0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 2015 2016 2017 2018 2019 2020 2021 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022* Source: Central Bank of Kuwait / Refinitiv;* as of Sept 2022 Source: Central Bank of Kuwait / Refinitiv 'Loans 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 June 2022) National Bank of Kuwait 18#19PUBLIC 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 Boubyan Bank Burgan Bank 109,939 72,027 National Bank of Kuwait Kuwait Finance House 60,433 52,453 24,304 Boubyan Bank 18,575 23,388 Gulf Bank 14,228 Gulf Bank 21,672 Burgan Bank 13,758 Al-Ahli Bank of Kuwait 18,603 Al-Ahli Bank of Kuwait 12,937 Ahli United Bank 15,119 Ahli United Bank 10,281 Commercial Bank of Kuwait 14,180 Warba Bank 7,567 Warba Bank 11,835 Kuwait International Bank 10,364 Commercial Bank of Kuwait Kuwait International Bank 7,007 0 20,000 40,000 60,000 80,000 100,000 120,000 0 6,815 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Customer Loans & Advances (USD million) Net Profit attributable (USD million) National Bank of Kuwait Kuwait Finance House 65,198 National Bank of Kuwait 37,538 Boubyan Bank 18,225 Kuwait Finance House Commercial Bank of Kuwait 1,198 805 181 Gulf Bank 15,989 Boubyan Bank 160 Burgan Bank 14,861 Burgan Bank 150 Al-Ahli Bank of Kuwait 11,197 Gulf Bank 139 Ahli United Bank 11,048 Kuwait International Bank 8,208 Ahli United Bank Al-Ahli Bank of Kuwait 103 90 Warba Bank Commercial Bank of Kuwait 8,177 Warba Bank 53 7,531 Kuwait International Bank 36 10,000 20,000 30,000 40,000 50,000 60,000 70,000 0 200 400 600 800 1,000 1,200 1,400 Sources: Bank's annual reports. All data as of 31 December 2021 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 19#20PUBLIC 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 20#21PUBLIC Operating Performance & Profitability 2,785 814 Profitability (USD mn) ■Net Operating Income 2,996 ■Net Profit 1,475 1,198 524 1,566 Operating Income Composition (USD mn) ■NII & NI from Islamic financing 2,996 2,785 26% 25% ■ Non-interest income 1,566 1,475 27% 26% 775 75% 74% 74% 73% 2020 2021 1H 2021 1H 2022 2020 2021 1H 2021 1H 2022 0.82% Return on average assets (%) 1.15% 1.05% 1.42% Return on average equity (%) 10.2% 9.2% 7.0% 13.6% 2020 2021 1H 2021 1H 2022 2020 2021 1H 2021 1H 2022 National Bank of Kuwait 21#22PUBLIC Operating Performance & Profitability (cont'd) 1H 2022 Op. income by type (%) Others, 2% FX, 6% Fees, 19% 1H 2022 Op. income by business line (%) Consumer & Private Banking, 32% Corporate, 14% Net Interest Income, 73% Others, 3% Net Interest Margin (%) 2.21% 2.21% Intern'l, 25% Cost to income (%) 39.6% 39.2% 37.0% 37.6% Inv Bkg & AM, 4% Islamic Banking, 22% 2020 2021 1H 2021 1H 2022 Net Interest Margin Drivers 2.28% 2.18% 2.28% 0.12% -0.23% 0.01% 2.18% 2020 2021 1H 2021 1H 2022 1H 2021 Loans Deposits Others 1H 2022 National Bank of Kuwait 22#23PUBLIC Balance Sheet Parameters Net loan portfolio (USD bn) ■Net Loans 65.2 57.9 12.7% 5.7% Dec-20 Dec-21 ◆ Net loan growth YoY (%) 65.7 60.3 5.3% Loans to assets (USD bn) ■Total Assets 109.9 ◆Loans/Assets 111.8 103.0 98.2 58.9% 59.3% 58.6% 58.7% 8.8% Jun-21 Jun-22 Dec-20 Dec-21 Low loan concentrations (as at 30 June. 2022) Loan exposure by sector (%) (as at 30 June. 2022) Crude Oil & Gases, 7% Manufacturing, Other, 12% 8% Financial 6% Trade & Commerce, 6% Real Estate, 20% Construction, 2% Personal, 35% -Purchase of Securities, 4% 84% Jun-21 Jun-22 Assets by Type (as at 30 June. 2022) Goodwill and other intangible assets, 2% Other, 3% Cash and ST funds, 15% ■Top 20 Customers ■ Others Inv. securities, 15% 16% CBK Bonds and Kuwait Tbills, 3% Deposits with banks, 3% Loans, advances and Islamic financing to customers, 59% National Bank of Kuwait 23#24PUBLIC Funding and Liquidity Positions Funding Mix (Total Liabilities) ■Customer deposits Deposits from other Fls Due to banks Other borrowed funds CDs 12% 14% 12% 13% 11% 11% 14% 13% Customer and FI Deposits (USD bn) ■Customer Deposits ■FI Deposits 10.4 12.1 9.7 12.3 60.4 61.7 56.5 56.7 67% 63% 64% 63% 2020 2021 Jun-21 Jun-22 Dec-20 Loans to Customer and other FI Deposits Ratio (%) 92.1% 87.4% 87.6% 88.7% 2020 2021 Jun-21 Notes:¹Excludes investments in Central Bank of Kuwait Bonds and Kuwait Government Treasury Bonds Jun-22 Non-Gov't Debt, 33% Dec-21 Jun-21 Jun-22 Overview of Investment Securities¹ - USD 16.2 bn Other, 4% Equities, 1% As at 31 Dec. 2021 Gov't Debt (non Kuwait), 62% FVOCI 75% FVPL 5% Amortized Cost 20% National Bank of Kuwait 24#25PUBLIC Capitalization and Asset Quality Total Equity¹ Breakdown (USD mn) Prudent capitalization (%) ■ Share capital ■Statutory reserves ■Retained Earnings ■ Tier 1 Other Reserves & Treasury Shares ■ Tier 2 18.4% 18.1% 18.2% 17.3% 11,701 11,262 10,942 10,902 3,555 2,625 3,142 2,669 2.4% 2.4% 2.5% 2.4% 5,002 4,579 4,771 16.0% 15.7% 15.7% 4,403 14.9% 1,132 1,189 1,117 1,173 2,265 2,378 2,345 2,462 Dec-20 Dec-21 Jun-21 Jun-22 Prudent Provisioning (USD mn) ■Specific Provisions ■General Provisions 1,682 2,272 Dec-20 Provisions and Impairments Charges (USD mn) ■ Provisions for Credit Losses Other Impairment Losses 815 2,094 95 1,706 1,685 438 39 1,313 720 317 565 369 409 2019 2020 2021 Dec-21 220% Jun-21 Jun-22 Asset Quality Ratios (%) Loan Loss Coverage Ratio 300% 2.45% NPL Ratio 311% 399 1.72% 307 69 152% 1.24% 1.04% 41 28 2020 2021 1H 2021 1H 2022 Dec-20 Dec-21 Jun-21 Jun-22 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#26PUBLIC Expected Credit Losses (ECL) 1H 2022 Financial Statements ECL Disclosure (USDm) Total Gross Loans (USDbn) ■ Stage 1 Stage 2 ☐ Stage 3 30 June 2022 Stage1 Stage 2 Stage 3 Total 68.3 62.7 67.3 3% 1% 1% Loans, advances and Islamic financing to customers 62,691 4,750 845 68,286 9% 8% 7% Contingent liabilities 12,848 2,036 77 14,961 91% 88% 92% Commitments (revocable and irrevocable) to extend credit 22,542 3,241 1 25,783 ECL allowance for credit facilities Stage 3 54% 504 512 677 1,693 Jun 21 ECL Allowance for Credit Facilities Dec 21 Jun 22 CBK Credit Provisions vs IFRS 9 ECL (USDM) 2,458 Stage 1 21% Stage 3 35% Stage 1 29% Stage 3 40% Stage 1 30% 401 Stage 2 25% Stage 2 36% Stage 2 30% 2,057 CBK Provision ■ ECL⭑ 2,208 681 Excess over ECL 2,733 1,040 1,527 1,693 Jun-21 (USD 2,057m) Dec-21 (USD 1,527m) Jun-22 (USD 1,693m) Jun 21 Dec 21 Jun 22 * ECLS as per CBK guidelines National Bank of Kuwait 26#27PUBLIC 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 27#28PUBLIC Kuwait Selected Mega Projects Project South Al Mutlaa City Sector NPV (KD bn) Scope Housing 3.5 30,000 residential units, schools and other facilities Status Underway: Companies have submitted their consultancy bids for South Al-Mutlaa Wastewater Treatment Plant. Jahra & Sulaibiya Low Cost Housing City Housing 0.4 Low cost housing project north of Kuwait City; 824 Hectares Kuwait Environmental Remediation Programme (KERP) Clean Fuels Project (CFP) Oil & gas 0.65 Environmental remediation project to address the environmental damage resulting from the Gulf War Oil & gas 3.70 Specification upgrade and expansion of 2 existing refineries to produce 800,000 b/d Underway: Infrastructure works completed. Project was in the execution stage as per latest update in June-2021 and scheduled to complete in 2030. Construction works on an infrastructure package are completed. Underway: Five zones has been awarded as part of the North and South excavation, transportation and remediation projects with a combined value of KD 305 mn. P-3 bids submission closed by end-March 2022; KD 150 mn. 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 0.1 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 commenced in December 2021. 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 0.5 Al-Khairan Power & Desalination Plant (IWPP) Power & water 0.02 Umm Al Hayman Waste Water (PPP) Power & water 0.47 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 Net capacity of a min 1,500 MW of power and a min 125 MIGD of desalinated water Initial treatment capacity of 500,000 m³/d. Plant may replace Riqqa WWTP in future 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 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-2022. Bidding/Planning: Consultancy contract bids submitted in November 2021. 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 sometime in 2022. The P-4 & P-5 in the initial stage of development, Bidding/Planning: The client is expected to issue the request for pre-qualification by Q4, 2022, and is also expected to issue the request for proposals by Q2, 2023. Project is expected to reach financial closure by Q2, 2024. 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. IPO will open for citizens once construction is completed. On Hold: The project has been put on hold. Kuwait Metropolitan Rapid Transit Transport 5.4 5.4 Airport Expansion (New Passenger Building) Transport 0.4 165 km transit line running across Kuwait. 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: DGCA has announced that the Fatwa and Legislation Department has approved the US$ 976 million contract for the global operator of the T2 passenger terminal. Construction works have progressed to 64% on New Passenger Terminal 2 project. National Bank of Kuwait 28#29PUBLIC 1,063 243 820 Consolidated financials 1H 2022 (USD million) Income Statement (USD million) Interest Income Interest Expense Net Interest Income 1H 2021 1H 2022 YoY Growth (%) Balance sheet (USD million) June-21 June-22 YoY Growth (%) 1,215 14% Cash and short term funds 14,209 16,585 17% 369 52% Central Bank of Kuwait bonds 2,706 2,765 2% Kuwait Government Treasury bonds 1,461 870 (40%) 846 3% Deposits with banks 4,203 3,812 (9%) Murabaha and other Islamic financing income 367 419 14% Loans, advances and Islamic financing to customers 60,329 65,661 9% Distribution to depositors and Murabaha costs 100 130 30% Investment securities 15,437 16,742 8% Net Income from Islamic financing 267 289 8% Investment in associates 14 12 (13%) NII and NI from Islamic financing 1,088 1,136 4% Land, premises and equipment 1,434 1,513 5% Net fees and commissions 265 294 11% Goodwill and other intangible assets 1,893 1,862 (2%) Net investment income 59 35 (41%) Other assets (incl. assets held for sale) 1,276 1,958 53% Total Assets Net gains from dealing in foreign currencies 52 98 90% Due to banks 10,572 102,963 111,779 12,976 9% 23% Other operating income 11 3 (75%) Non-interest income 388 430 11% Deposits from other financial institutions Customer deposits 12,146 12,303 1% 56,734 61,692 9% Net Operating Income 1,475 1,566 6% Certificates of deposit issued 4,569 4,404 (4%) Other borrowed funds 2,674 3,916 46% Staff expenses 308 351 14% Other administrative expenses 188 198 5% Other liabilities (incl. liabilities directly associated with assets held for sale) 2,378 1,955 (18%) Total Liabilities 89,072 97,245 9% Depreciation of premises and equipment 55 62 13% Share capital 2,345 2,462 5% Amortisation of intangible assets 3 3 0% Proposed bonus shares NA Operating Expenses 555 614 11% Statutory reserve 1,117 1,173 5% Pre-provision profits (and impairments) 921 951 3% Share premium account 2,618 2,618 0% Treasury share reserve 114 114 0% Provision charge for credit losses and impairment losses 317 69 (78%) Other reserves 4,708 4,894 4% Operating profit before taxation 604 883 46% Equity attributable to shareholders 10,902 11,262 3% Taxation 54 72 34% Perpetual Tier 1 Capital Securities 1,431 1,431 0% Non-controlling interests 1,556 1,841 18% Non-controlling interest 26 36 37% Total equity 13,890 14,534 5% Profit attributable to shareholders of the Bank 524 775 48% Total liabilities and equity 102,963 111,779 9% National Bank of Kuwait 29#30PUBLIC Consolidated Statement Of Income (USD million) USD million Interest Income Interest Expense Net Interest Income 2019 2020 2021 3,261 2,502 2,185 1,394 882 512 1,867 1,621 1,673 Murabaha and other Islamic financing income 699 744 753 Finance cost and Distribution to depositors 288 271 214 Net Income from Islamic financing 411 474 539 Net interest income and net income from Islamic financing 2,278 2,094 2,212 Net fees and commissions 520 483 546 Net investment income 28 7 92 Net gains from dealing in foreign currencies 130 126 132 Other operating income 5 76 13 Non-interest income Net Operating Income 682 691 784 2,960 2,785 2,996 Staff expenses 581 577 665 Other administrative expenses 327 337 404 Depreciation of premises and equipment 88 111 113 Amortisation of intangible assets 11 5 5 Operating Expenses 1,006 1,030 1,187 Op. profit before provision for credit losses and impairment losses 1,955 1,755 1,810 Provision charge for credit losses 405 720 399 Impairment losses 24 95 39 Operating profit before taxation 1,526 941 1,371 Taxation Directors' remuneration Non-controlling interest Profit attributable to shareholders of the Bank 117 85 113 0 82 41 61 1,327 814 1,198 National Bank of Kuwait 30#31PUBLIC Consolidated 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 2019 2020 2021 12,520 12,904 16,800 2,721 2,745 2,744 2,189 1,530 1,379 6,311 3,396 2,927 54,719 57,866 65,198 13,932 15,632 16,234 117 17 12 1,433 1,411 1,508 Goodwill and other intangible assets 1,927 1,924 1,922 Other assets 893 814 1,216 Total Assets 96,763 98,239 109,939 Due to banks 11,920 10,090 13,549 Deposits from other financial institutions 13,144 9,683 10,366 Customer deposits 52,663 56,543 60,433 Certificates of deposit issued 1,781 3,038 4,428 Other borrowed funds 1,164 2,673 4,187 Other liabilities Total Liabilities Share capital Proposed bonus shares Statutory reserve 2,012 2,522 2,209 82,683 84,550 95,172 2,157 2,265 2,378 108 113 119 1,078 1,132 1,189 Share premium account 2,655 2,655 2,655 Treasury shares (130) Treasury share reserve 83 116 116 Other reserves 5,400 4,662 5,245 Equity attributable to shareholders of the bank 11,351 10,942 11,701 Perpetual Tier 1 Capital Securities 1,449 1,449 1,451 Non-controlling interests 1,279 1,298 1,615 Total equity 14,080 13,689 14,767 Total liabilities and equity 96,763 98,239 109,939 National Bank of Kuwait 31#32PUBLIC 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 32#33الوطني NBK National Bank of Kuwait Investor Presentation September 2022