#1الوطني NBK National Bank of Kuwait Investor Presentation April 2020#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 1#3Contents الوطني NBK Section 1 Overview of NBK Section 2 Strategy and Business Overview Section 3 Operating Environment Section 4 Financial Performance Highlights Section 5 Appendix 2#4NBK is Kuwait's leading banking group الوطني NBK Snapshot Established in 1952 as the first local and home-grown GCC bank, and first shareholding company in Kuwait USD million " Financial snapshot 2017 2018 2019 Background Ownership Operations The leading banking group in Kuwait in terms of assets, customer deposits and customer loans and advances More than 30% market share of assets in Kuwait Ranked amongst the 50 safest banks in the world by Global Finance, named the most valuable banking brand in Kuwait, and top 10 bank in the region by Brand Finance Established by a group of leading Kuwaiti merchants, NBK has retained the same core shareholder base since its inception NBK's shares are listed on the Kuwait Stock Exchange since 1984 with only one shareholder holding owning more than 5% of the Bank's share capital (PIFSS owns 5.60% as of January 2020) NBK's market capitalisation at 31 December 2019 was USD 22.8 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. Total Assets 85,909 90,506 96,587 Loans, advances & Islamic financing 47,855 51,158 54,620 Customer Deposits 45,470 47,480 52,567 Total Equity 11,751 12,214 14,054 Net Operating Income 2,715 2,914 2,955 Net Profit attributable 1,064 1,223 1,324 Cost to Income (%) 32.3% 31.3% 34.0% Net Interest Margin (%) 2.61% 2.69% 2.56% NPL Ratio (%) 1.42% 1.38% 1.10% Credit Ratings Loan Loss Coverage Ratio (%) 287.5% 228.1% 272.2% Rating Agency Long Term Rating Standalone Rating Outlook Return on Average Equity (%) 10.8% 12.0% 12.3% MOODY'S Under Aa3 a3 Review STANDARD Tier 1 Ratio (%) 15.8% 15.3% 15.9% & POOR'S A a- Stable Fitch Ratings Capital Adequacy Ratio (%) 17.8% 17.2% 17.8% AA- a- Stable Notes: Through out the investor presentation, the USD/KD exchange rate used is for year-end figures is .30305 and .30855 for quarterly figures. The rate is based on the Central Bank of Kuwait's closing exchange rates as of 31/12/2019 and 31/3/2020. 3#5Regional and International Geographic Presence الوطني NBK Location Year established/acquired New York 1984 Location Year established/acquired London 1983 Geneva 1984 Paris - 1987 Europe Legal Structure - Branches US Legal Structure - Branches Branch 1 Subsidiary - 2 Subsidiary - 1 Subsidiary - 1 Location Year established/acquired Shanghai 2005 Singapore 1984 Asia Location Year established/acquired Kuwait 1952 Turkey-2007 Egypt - 2007 Iraq - 2005 Lebanon 1996 Jordan 2004 Bahrain 1987 UAE - 2008 Saudi Arabia - 2006 Middle East Legal Structure - Branches Parent - 68 Associate 10 Subsidiary-53 Subsidiary - 5 Subsidiary-3 Branch 1 Branch - 2 Branch - 2 Branch - 3 Legal Structure - Branches Branch - 1 Branch 1 4#6الوطني NBK 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 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 Sound and consistent financial performance Long history of profitability, even throughout the global financial crisis Excellent asset quality with an NPL ratio standing at 1.10% at end-2019 Strong liquidity serving as a buffer in times of need الوطني Largest banking group in Kuwait with dominant market position As at 31 December 2019, 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 " 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 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 5#7Contents الوطني NBK Section 1 Overview of NBK Section 2 Strategy and Business Overview Section 3 Operating Environment Section 4 Financial Performance Highlights Section 5 Appendix CO 6#8NBK's strategy الوطني NBK 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 Expand Regional Presence " 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. ✓ 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. 7#9Kuwait Operations ◉ NBK is a universal bank and the industry leader in all key business segments in Kuwait with an average market share of 30% Corporate Banking Remain the primary banker for most of the local blue-chip companies, and an active player in the mid-market Remain bank of choice among foreign corporations and continue serving 75% of them active in the Kuwaiti market Maintain current market share in excess of 30% in trade finance in Kuwait Offer differentiated services to large corporate clients leveraging other NBK units Increase market share in medium corporate segment through focused teams and relationship management Focus on Government mega projects benefiting from NBK's large capital base Maintain asset quality with emphasis on credit control and risk management ◉ Overview and strategy Consumer Banking Maintain undisputed leadership in retail banking with leading market share and the highest customer penetration among conventional banks Maintain focus on customer service Expand client base with focus on profitable consumer segments such as affluent and mass affluent, and aim to attract new bankable clients such as SMEs Achieve lowest cost of funds among Kuwaiti commercial banks Pioneer innovative multi-channel solutions including state of the art internet, mobile banking and call center services Focus on the evolution to segment of one by providing tailor-made propositions aiming at better cross-sell, increased product penetration, proactive attrition management utilizing the latest tools and technologies Private Banking Continue to provide a unique proposition to HNW clientele in collaboration with NBK Capital and the bank's international network Provide access to best of breed international funds leveraging NBK Banque Privee's wealth management expertise Provide the best service with a dedicated team of over 30 well qualified and experienced private bankers Leverage NBK's strong brand to acquire new clients and retain onshore relationships Broaden the product portfolio to accommodate growing needs 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 8#10International Operations International Operations NBK's international operations has been traditionally contributing up to circa 30% of the Group's bottom line with the Bank aspiring to increase this contribution. The Bank generally aims to maintain a majority stake in its subsidiaries or at least maintain a decision making role. NBK's international presence is a differentiating factor for the Bank and an extension of the MENA franchise enabling better service and strengthening client relationships. Specifically within the MENA region, the Bank is focused on growing its business in existing and new markets through attracting increased corporate and private customers. Meanwhile, across the international locations, the Bank's focus is on servicing its private and corporate customers who are active internationally and growing its business with international companies that are active in the MENA region. Within its international network, NBK is focused on managing risks and costs to improve efficiency and achieve long-term cost savings and productivity gains. International 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 Subsidiary Shanghai 2005 1 Branch Overview of Performance MENA region Revenue Trends (USD mn) Balance Sheet Trends (USD mn) Bahrain 1987 2 Branch Lebanon 1996 3 Subsidiary ■Net Operating Income ■Net Profit ■Segment Assets 728 36,626 Jordan 2004 1 Branch 691 596 32,248 29,991 Iraq 2005 50 Subsidiary Saudi Arabia 2006 3 Branch 372 370 312 Egypt 2007 53 Subsidiary Turkey 2007 10 10 Associate UAE 2008 2 Branch 2017 2018 2019 2017 2018 2019 الوطني NBK 6#11Boubyan Bank (59.9% owned subsidiary) الوطني NBK Market share of Total Assets(%) 6.5% 5.7% 5.5% 5.1% 4.7% 2015 2016 2017 2018 2019 Market share of Total Deposits (%) 8.5% 8.9% 7.9% 7.4% 6.1% 2015 2016 2017 2018 2019 Notes: Market share data based on the consolidated data of all banks operating in Kuwait Highlights Islamic banking has been gaining ground in the Kuwaiti market, representing close to 40% of assets and deposits at year-end 2019. ■ After a series of gradual share acquisitions since 2009, NBK's stake in Boubyan bank reached 58.4% in 2012. Through Boubyan, NBK aims at diversifying its income stream, complementing its product offering as well as targeting a new segment of clients. ■ The size and market share development of Boubyan relative to other Islamic banks leaves significant room for repositioning the bank and acquiring market share. " ■ As the largest single shareholder, NBK is committed to the future growth and transformation of Boubyan Bank and establishing a strong presence in the growing Islamic banking segment. Leading international consulting firms have assisted Boubyan in developing a new strategy aiming to differentiate the bank from other players with a clear focus on HNWI, affluent and mid/large companies. ■ The Bank's transformation and strategy implementation is led by a highly proficient management team with extensive regional banking experience, with key positions filled by NBK veterans aligned with the NBK culture. 10#12Contents الوطني NBK Section 1 Overview of NBK Section 2 Strategy and Business Overview Section 3 Operating Environment Section 4 Financial Performance Highlights Section 5 Appendix 11#13Overview of Kuwait الوطني NBK Overview ■ The State of Kuwait is a sovereign state on the coast of the Arabian Gulf with a population of 4.8 million ■ Kuwait is a constitutional monarchy, headed by His Highness the Emir, Sheikh Sabah 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 globally and a fiscal breakeven lower than some other GCC countries, making it more resilient to low oil prices. It has accumulated substantial fiscal and external surpluses, which serve as a buffer against volatile market conditions ■ 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, consolidating the country's Islamic and Arab identity and Fiscal breakeven oil price 80 80 77 Excl inv inc Incl inv inc 75 73 75 72 70 70 66 65 70 65 60 60 55 55 68 57 54 62 62 57 660 54 55 55 50 48 50 46 45 45 45 45 40 40 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 Key Indicators Sovereign Ratings Current Account Gov Revenues (% GDP) Key economic indicators 2019F 2020F Aa2/AA-AA (M/S/F) $22.1 bn -$3.2 bn 44% 31% Public Debt (% GDP)* 11% 14% * Assumes no debt issued in FY20/21 Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, NBK estimates 12#14Kuwait's Economy الوطني NBK Recent Developments Real GDP (% y/y) Total Non-oil GDP Growth Real GDP is projected to decline 6% in 2020 due to sharply lower oil production as Kuwait adheres to OPEC+ cuts. Growth could rebound to 2.3% in 2021 as these cuts are partially reversed. 6 4.8 4.2 3.0 2.6 4 1.6 2.3 1.0 2 0.4 0.5 2.9 2.3 1.1 1.2 0 Non-oil growth is seen at -4.0 in 2020 on fallout from the Covid pandemic, with the large government sector limiting the drop. 0.6 -4.7 -2 -4 -4.0 -6.0 The government is however looking to cut spending to address the fiscal deficit. The draft budget for FY20/21 is under review and outlays on capex are likely to be curtailed. -6 2013 2014 2015 2016 2017 2018 2019f 2020f 2021f Public Finance and Inflation Consumer Sector Currently at 1.9% (May), inflation will remain low at below 2%, supporting real purchasing power. There is some downside risk from potential softness in residential real estate rents. Consumer spending took a major hit during the lockdown months, but seems to be recovering rapidly. POS/ATM spending was down only 3% y/y in June, with online spending up sharply. The large number of nationals in stable public sector jobs should support the spending outlook, as will loan payment deferrals. Credit Growth Private credit growth has held up relatively well so far in 2020 at 4.5% y/y in May helped by (i) loan repayment deferrals and (ii) rising loans to retail firms. The policy rate has been cut to 1.5%. Deposit growth picked up to 2.7% y/y in May helped by stronger private deposits; government deposits have been solid so far this year, now up 3% y/y. Private credit (change, %y/y) 10 Month end 8 6 4 2 0 May-16 May-17 200 May-18 T -2 -4 64202 4 6 -6 10 12 month average 8 6 4 May-19 Real estate sales 12m average (KD mn) Commercial 150 Residential 0 May-20 200 Investment 150 100 100 Real Estate Activity Property sales were at decent levels early on in the year, but will have been hit by government and business shutdowns. The residential sector could hold up well given solid demand base. 50 50 0 Feb-16 Feb-17 Feb-18 Feb-19 0 Feb-20 Sources: Central Bank of Kuwait, Central Statistical Bureau, Ministry of Finance, Refinitiv, NBK estimates 13#15Kuwait's banking sector Snapshot The Kuwaiti banking sector comprises 23 banks, including 11 domestic banks (five conventional, five Shariah-compliant and one specialized), and branches of 12 international banks (11 conventional and one Islamic). The sector is well regulated by the Central Bank of Kuwait ("CBK") with a number of regulations and supervisory norms to ensure the safety of the banking sector including through strict supervision and imposition of prudential ratios, such as lending limits and concentrations, investment limits, liquidity and capital adequacy. The banking sector has demonstrated strong resilience and elevated levels of financial soundness over the past 10 years. In fact, the sector is very well capitalized, with an average Capital Adequacy Ratio of 18.0% in the four quarters to 4Q19, 5% higher than the required minimum (since dropped to 10.5%). Non-performing loans to total loans stood at 1.5% in 4Q19. Key indicators¹ (USD bn, end year) ■Loans ■ Deposits 3.5 110.7 108.0 114.2 110.8109.8 113.6113.0 116.6116.7 122.1122.0 126.6119.4 102.0 102.1 3.0 95.7 الوطني 2.5 2.0 1.5 Development of the Discount rate (%, end year²) 3.5 3.0 2.5 2.0 1.5 10 1.0 1.0 2012 2013 2014 2015 2016 2017 2018 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Sources: Central Bank of Kuwait / Refinitiv NBK 1Loans refers to total credit facilities to residents and deposits refer to private resident deposits, all as reported by the Central Bank of Kuwait 2 Latest data point is for June 2020 14#16The 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 96,587 National Bank of Kuwait 63,986 23,366 Gulf Bank Boubyan Bank 20,609 17,491 Al-Ahli Bank of Kuwait 16,113 Commercial Bank of... 16,081 Kuwait Finance House Boubyan Bank Burgan Bank Gulf Bank Al-Ahli Bank of Kuwait Ahli United Bank 52,567 44,721 14,345 13,170 13,034 10,955 8,899 Ahli United Bank 14,359 Commercial Bank of Kuwait 8,094 Warba Bank 10,373 Warba Bank 5,629 Kuwait International Bank 8,869 Kuwait International Bank 4,849 0 20,000 40,000 60,000 80,000 100,000 120,000 0 10,000 20,000 30,000 40,000 50,000 60,000 Customer Loans & Advances (USD million) Net Profit attributable (USD million) National Bank of Kuwait 54,620 National Bank of Kuwait Kuwait Finance House Gulf Bank Burgan Bank Boubyan Bank 30,809 Kuwait Finance House 14,643 Burgan Bank 279 14,137 Gulf Bank 210 12,304 Boubyan Bank 207 Al-Ahli Bank of Kuwait 10,611 Ahli United Bank 191 Ahli United Bank 9,961 Al-Ahli Bank of Kuwait 95 Commercial Bank of.. 7,479 Kuwait International Bank 57 Warba Bank 7,464 Warba Bank 55 Kuwait International Bank 0 6,156 10,000 Commercial Bank of Kuwait 20,000 30,000 40,000 50,000 60,000 الوطني NBK 1,324 828 200 400 600 800 1,000 1,200 1,400 Sources: Bank's annual reports. All data as of 31 December 2019 for Balance Sheet items and Income Statement Items. Note: Kuwait Finance House, Boubyan Bank, AUB, KIB and Warba Bank are Islamic banks while Burgan Bank, CBK, Gulf Bank, Al-Ahli Bank of Kuwait are conventional banks. The USD/KD exchange rate used is .30305. The rate is based on the Central Bank of Kuwait's closing exchange rates as of 31/12/2019. 15#17Contents الوطني NBK Section 1 Overview of NBK Section 2 Strategy and Business Overview Section 3 Operating Environment Section 4 Financial Performance Highlights Section 5 Appendix 16#18Operating Performance & Profitability الوطني NBK 2,914 Profitability (USD mn) ■Net Operating Income 2,955 ■Net Profit Operating Income Composition (USD mn) ■NII & NI from Islamic financing ■Non-interest income 2,914 2,955 22% 23% 1,223 1,324 731 729 78% 77% 731 729 349 252 24% 25% 76% 75% 2018 2019 1Q 2019 1Q 2020 2018 2019 1Q 2019 1Q 2020 Return on average assets (%) 1.38% 1.42% 1.59% Return on average equity (%) 14.5% 12.3% 12.0% 1.04% 9.9% 2018 2019 1Q 2019 1Q 2020 2018 2019 1Q 2019 1Q 2020 17#19Operating Performance & Profitability (Cont'd) الوطني NBK 36.7% 1Q 2020 Op. income by type (%) 1Q 2020 Op. income by business line (%) Cost to income (%) FX, 8%. Other, 10% Fees, 17% Consumer & Private Banking, 32% Corporate 14% 34.0% 31.3% 31.6% Inv Bkg & AM, 4% Net Interest Income, 75% Others, 5% Net Interest Margin (%) Intern'l, 26% Islamic Banking, 19% 2018 2019 1Q 2019 1Q 2020 Net Interest Margin drivers 2.69% 2.65% 2.56% -0.18% 2.38% 2.65% -0.37% +0.28% 2.38% 2018 2019 1Q 2019 1Q 2020 1Q 2019 Loans Others Deposits 1Q 2020 18#20Balance Sheet Parameters Net loan portfolio (USD bn) ■Net Loans ◆ Net loan growth YoY (%) 10.4% 8.1% 6.9% 6.8% Loans to assets (USD bn) ■Total Assets ◆ Loans/Assets 58.5% 58.0% 56.5% 56.5% 51.2 54.6 52.0 57.4 90.5 96.6 88.9 99.0 Dec-18 Dec-19 Mar-19 Mar-20 Dec-18 Dec-19 Mar-19 Mar-20 Loan exposure by sector (%) (as at 31 Mar. 2020) الوطني NBK Manftng 8% Financial 8% Telecom, Utls & Transport. 12% Retail & Trade 0% Real estate 21% Other 10% Eng & Constructi on 2% Personal 31% Low loan concentrations (as at 31 Mar. 2020) 85% Assets by Type (as at 31 Mar. 2020) ■Top 20 Customers ■ Others Inv. securities 15% 15% Goodwill and other Other 2% intangible Cash and ST funds 12% Loans, advances and Islamic financing to customers 58% assets 2% CBK Bonds and Kuwait Tbills 5% Deposits with banks 6% 19#21Funding and liquidity positions الوطني NBK Customer Deposits (USD bn) (Total Liabilities) Funding Mix (USD mn) ■Certificates of deposit ■Due to banks and other financial institutions ■■Other liabilities ■Customer Deposits 61% 64% 65% 62% 55.8 52.6 47.5 47.6 Dec-18 Dec-19 Mar-19 Mar-20 34% 30% 31% 28% Dec-18 Dec-19 Mar-19 Mar-20 Overview of Investment Securities¹ - USD 13.9 bn As at 31 December 2019 Others .4% Equities 1% Non-Gov't Debt 36% Notes: Amortized Cost FVPL 5% 19% FVOCI Gov't Debt (non Kuwait) 59% 76% 1Excludes investments in Central Bank of Kuwait Bonds and Kuwait Government Treasury Bonds 20 20#22Capitalization and asset quality Total Equity1 Breakdown (USD mn) ■Share capital ■Retained Earnings 11,331 10,438 ■Statutory reserves Other Reserves & Treasury Shares Prudent capitalization (%) ■ Tier 1 ■ Tier 2 9,977 17.8% 9,961 17.2% 16.9% 16.0% 1.9% 3,384 1.9% 2.0% 3,023 2,245 1,798 1.9% 4,718 4,885 4,340 4,611 15.3% 15.9% 14.9% 14.1% 1,025 1,076 1,007 1,057 2,050 2,153 2,114 2,220 Dec-18 Dec-19 Mar-19 Mar-20 Dec-18 Dec-19 Mar-19 Mar-20 Prudent Provisioning (USD mn) ■Specific Provisions General Provisions Provisions and Impairments (USD mn) Other Impairment Losses Provisions for Credit Losses الوطني NBK 1,669 1,679 593 34 428 24 Non-performing loans (NPLs) Coverage Ratio NPL Ratio 559 272.2% 1,270 1,310 167 228.1% 231.2% 405 206.8% 102 90 1.38% 1.51% 102 1.30% 398 368 2018 2019 77 1.10% 2018 2019 1Q 2019 1Q 2020 Dec-18 Dec-19 Mar-19 Mar-20 ¹Equity here refers to total equity attributable to the shareholders of National Bank of Kuwait S.A.K.P. Notes: 21 224#23Contents Section 1 Overview of NBK Section 2 Strategy and Business Overview Section 3 Operating Environment Section 4 Financial Performance Highlights Section 5 Appendix الوطني NBK 22 22#24Kuwait Selected Mega Projects Project South Al Mutlaa City Sector Value (KD bn) Scope Housing 2.33 30,000 residential units, schools and other facilities Jahra & Sulaibiya Low Cost Housing City Housing 0.6 New Refinery Project (NRP) Low cost housing project north of Kuwait City; 824 Hectares Oil & gas 3.90 New 615,000 bpd refinery by KNPC Status Underway: Overall progress 28%. Major infrastructure works for 18,519 units is 73% complete, for 4,999 units is 62% complete and for 4,770 units is 89% complete. P-1 to P-3 completion expected by 2020. Underway: Progress at 11%. Infrastructure works contract awarded and expected to complete in May 2021. Project is scheduled to complete in 2030. Project was in the execution stage as per latest update in August-19. Underway: Progress at 99%. Technology provider appointed. Construction works are complete on P-1 to P-5. The project is expected to be completed by June 2020 and to operate by end-2021 from June-2021. Clean Fuels Project (CFP) Oil & gas 3.70 Jurassic Non Associated Oil & Gas Reserves Expansion: Phase 2 Oil & gas 1.22 Petrochemical Facility at Al-Zour Oil & gas 2.0 LNG Import and Regasification Terminal Oil & gas 0.80 Al-Zour North (IWPP) - P2 to P5 Power & water 0.5 Al-Khairan Power & Desalination Plant (IWPP) Power & water 0.51 Umm Al Hayman Waste Water (PPP) Power & water 0.47 Specification upgrade and expansion of 2 existing refineries to produce 800,000 b/d. Complete: Overall progress 100%. Construction works completed. Lowest bid for mechanical maintenance contract submitted for $312.7 million. 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. 4 full containment LNG tanks each with a working capacity of 225,500 m and a regasification plant with capacity of 1500 BBTU/day 1800 MW of power generation capacity and 464,100m³ /day of desalination capacity Underway: Progress at 57%. Construction activities completed on West and East Raudhatain field, Sabriyah and Umm Niqa and commissioning is underway. The invitation to bid for JPF-6 and 7 are not yet issued. JPF-4 & 5 bidding have been placed on hold. Planning: FEED works completed. Project tendering could be postponed by KIPIC due to capex restructuring. NBK Capital appointed as financial advisor. Underway: Progress at 96%. Construction works are underway and scheduled to complete by June-2020. Technology provider has been appointed. PQ for maintenance and operation contract completed and awaits tendering. Complete/Planning: Overall progress 53%. P-1 is complete. P-4 & P-5 are under study. KAPP extended bids submission for P-2 & P-3 to 23 July 2020. 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 Bidding/Planning: P-1 is in the main contract PQ stage. P-2 & P-3 are still in the study phase. KAPP extended bids submission for main contract to 23 July 2020. Underway: KAPP signed the award letter and final agreements. Construction is yet to commence. Kabd Municipal Solid Waste Project Power & water 0.3 Waste to energy facility; 50% of all the municipal solid waste produced in Kuwait will be processed at the facility On Hold: The project has been put on hold and the client is likely to cancel the project. Al-Dibdibah Solar PP Power & water 0.5 Capacity to produce 1GW solar project Airport Expansion (New Passenger Building) Transport 1.90 To increase the annual handling capacity of the airport to 20 million passengers and new runways and infrastructure expansion Bidding/Planning: Lowest bid submitted for KD 439 mn. KNPC is weighing options to proceed with awarding, retendering or cancellation given capex restructuring due to the COVID-19 pandemic. Underway/Planning: Overall progress at 61%. Construction works ongoing on Terminal. P-2 contract for landside works is yet to be awarded. Crossroads contract bid submission deadline extended to 5-May 2020. الوطني NBK 23 23#25Consolidated financials 1Q 2020 (USD million) YoY Growth YoY Growth Income Statement (USD million) 1Q-2019 1Q-2020 Balance sheet (USD million) Mar-2019 Mar-2020 (%) (%) Interest Income 795 739 Cash and short term funds 8,988 (7%) 12,227 36% Central Bank of Kuwait bonds 2,649 2,678 1% Interest Expense Net Interest Income 336 300 (11%) Kuwait Government Treasury bonds 2,740 1,984 (28%) 459 439 (4%) Deposits with banks 5,702 6,043 6% Murabaha and other Islamic financing income 161 189 18% Loans, advances and Islamic financing to customers 52,005 57,423 10% Distribution to depositors and Murabaha costs 65 80 24% Investment securities 12,706 14,323 13% Investment in associates 111 21 (81%) Net Income from Islamic financing 96 109 14% Land, premises and equipment 1,328 1,459 10% NII and NI from Islamic financing 555 548 (1%) Goodwill and other intangible assets 1,882 1,896 1% Net fees and commissions 121 124 2% Other assets 740 929 25% Net investment income 21 (11) (151%) Total Assets 88,851 98,983 11% Due to banks and other financial institutions 23,777 23,797 0% Net gains from dealing in foreign currencies 32 63 95% Customer deposits 47,568 55,812 17% Other operating income 1 4 204% Certificates of deposit issued 2,186 1,967 (10%) Non-interest income 176 180 2% Global Medium Term Notes (GMTN) 727 768 6% Subordinated Tier 2 bonds 404 405 0% Net Operating Income 731 729 0% Sukuk issued - 752 NM Staff expenses 136 148 9% Other liabilities 2,443 2,787 14% Other administrative expenses 72 92 28% Total Liabilities 77,105 86,287 12% Depreciation of premises and equipment 20 26 30% Share capital 2,114 2,220 5% Proposed bonus shares NM Amortisation of intangible assets 3 1 (47%) Statutory reserve 1,007 1,057 5% Operating Expenses 231 267 16% Share premium account 2,603 2,603 0% Pre-provision profits (and impairments) 500 461 (8%) Treasury shares (212) (127) (40%) Provision charge for credit losses and impairment losses Treasury share reserve 45 81 79% 102 167 64% Other reserves 4,420 4,126 (7%) Operating profit before taxation 399 294 (26%) Equity attributable to shareholders 9,977 9,961 0% Taxation 30 29 (4%) Perpetual Tier 1 Capital Securities 683 1,421 108% Non-controlling interests 1,085 1,314 21% Non-controlling interest 19 13 (29%) Total equity 11,746 12,695 8% Profit attributable to shareholders of the Bank 349 252 (28%) Total liabilities and equity 88,851 98,983 11% الوطني NBK 24 24#26Consolidated Statement Of Income (USD million) USD million Interest Income Interest Expense Net Interest Income Murabaha and other Islamic financing income 2017 2018 2019 2,450 2,961 3,255 738 1,092 1,391 1,712 1,869 1,864 514 614 697 Finance cost and Distribution to depositors 151 204 287 Net Income from Islamic financing 363 410 410 Net interest income and net income from Islamic financing 2,075 2,278 2,274 Net fees and commissions 457 496 519 Net investment income 65 7 28 Net gains from dealing in foreign currencies 111 129 130 Other operating income 5 LO 5 5 Non-interest income 639 636 681 Net Operating Income 2,715 2,914 2,955 Staff expenses 510 528 580 Other administrative expenses 306 325 326 Depreciation of premises and equipment 50 49 87 Amortisation of intangible assets 10 10 11 Operating Expenses 876 912 1,004 Op. profit before provision for credit losses and impairment losses 1,839 2,003 1,951 Provision charge for credit losses 577 559 405 Impairment losses 44 34 Operating profit before taxation 1,218 1,410 24 1,523 Taxation Non-controlling interest 88 110 117 66 Profit attributable to shareholders of the Bank 1,064 77 1,223 82 1,324 الوطني NBK 25 25#27Consolidated Statement Of Financial Position (USD million) USD million Cash and short term funds Central Bank of Kuwait bonds Kuwait Government treasury bonds 2017 2018 2019 9,053 9,789 12,497 2,163 2,672 2,716 3,551 2,878 2,185 Deposits with banks 8,210 7,801 6,300 Loans, advances and Islamic financing to customers 47,855 51,158 54,620 Investment securities 11,051 12,137 13,907 Investment in associates 209 104 116 Land, premises and equipment 1,070 1,197 1,431 Goodwill and other intangible assets 1,920 1,910 1,924 Other assets 825 859 892 Total Assets 85,909 90,506 96,587 Due to banks and other financial institutions 24,647 26,697 25,019 Customer deposits 45,470 47,480 52,567 Certificates of deposit issued 1,620 1,489 1,777 Global medium term notes (GMTN) 730 726 750 Subordinated Tier 2 bonds 412 412 412 Other liabilities 1,280 1,489 2,008 Total Liabilities Share capital Proposed bonus shares Statutory reserve 74,158 78,293 82,533 1,953 2,050 2,153 98 103 108 976 1,025 1,076 Share premium account 2,650 2,650 2,650 Treasury shares (257) (216) (130) Treasury share reserve 46 46 83 Other reserves 4,530 4,780 5,391 Equity attributable to shareholders of the bank 9,996 10,438 11,331 Perpetual Tier 1 Capital Securities 695 695 1,447 Non-controlling interests 1,059 1,080 1,277 Total equity 11,751 12,214 14,054 Total liabilities and equity 85,909 90,506 96,587 الوطني NBK 26#28Contact Contact Investor Relations E: [email protected] National Bank of Kuwait (NBK) PO Box 95, 13001 Safat Kuwait Abdullah Al Ahmad Street, Sharq State of Kuwait. Useful information Download copies of NBK's: Financial statements Earnings release Annual report 2019 الوطني NBK 27 27