#1٦الوطني NBK National Bank of Kuwait Investor Presentation 3Q 2018 Earnings Call#2Disclaimer الوطني NBK 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. 1#3Contents Section 1 Opening remarks Section 2 Financial Performance 9M 2018 Section 3 Appendix Section 4 Questions الوطني NBK 2#4Net Profits 9M 2018 Net Profit 9M 2018 (KDM) 272 Net Profit 3Q 2018 (KDM) الوطني NBK 238 +14.3% 87 H HI 74 9M 2017 9M 2018 3Q 2017 3Q 2018 +17.5% 3#5Contents Section 1 Opening remarks Section 2 Financial Performance 9M 2018 Section 3 Appendix Section 4 Questions الوطني NBK#6Operating Performance 9M 2018 Net Profit (KDM) Operating Surplus (KDM) 92.3 86.5 73.7 3Q 2017 2Q 2018 3Q 2018 272.4 238.4 +14.3% 145.7 158.2 152.6 9M 2017 9M 2018 3Q 2017 2Q 2018 3Q 2018 Operating Income (KDm) 211.1 228.7 219.6 661.8 609.9 +8.5% Operating Income الوطني NBK 459.7 418.9 +9.7% 9M 2017 9M 2018 Non-interest income ■Net interest income & Net income from Islamic Financing 24% 76% 22% 78% 3Q 2017 2Q 2018 3Q 2018 9M 2017 9M 2018 9M 2017 9M 2018 1#7Operating Performance 9M 2018 Net Interest Income (KDm) الوطني NBK Average Interest Earning Assets (KDbn) 161.1 173.2 178.2 515.0 466.3 +10.5% 23.9 3Q 2017 2Q 2018 3Q 2018 9M 2017 9M 2018 9M 2017 Net Interest Margin YTD NIM ➡Qtrly NIM 2.74% 2.71% 25.5 9M 2018 Net Interest Margin drivers +6.5% +0.06% -0.31% +0.35% 2.70% 2.63% 2.63% 2.70% 2.60% 2.62% 2.62% 2.68% 2.55% 2.63% 2.60% 2.61% 2.59% 2.55% 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018 3Q 2018 9M 2017 Loan Others Deposits 9M 2018 2#8Operating Performance 9M 2018 Non-interest income (KDm) ■Net fees and commissions Net gains from dealing in FX ■ Others Operating Expenses (KDm) ■Staff expenses 146.8 143.6 ■ Other operating expenses 17 29 +2.2% 24 الوطني NBK 202.1 191.0 78 +5.8% 82 2 55.5 50.0 41.4 65.4 70.6 67.0 114 102 12 27 29 27 113 120 35 35 39 38 39 42 40 3Q 2017 2Q 2018 3Q 2018 9M 2017 9M 2018 3Q 2017 2Q 2018 3Q 2018 9M 2017 9M 2018 Cost to Income ratio Provisions and Impairments (KDm) ■ Provision charges for credit losses Other impairment losses 146.3 145.4 32.3% 31.3% 30.5% 60.5 51.6 51.5 135 137 59 47 50 50 -0.6% 9M 2017 FY 2017 9M 2018 3Q 2017 2Q 2018 3Q 2018 9M 2017 9M 2018 3#9Operating Performance 9M 2018 Net profit (KDm) - International الوطني NBK Net Profit (KDm) - Domestic / International 72.8 9M 2017 86.6 9M 2018 Net profit (KDm) - Boubyan Bank 34.0 40.4 9M 2017 9M 2018 +19.0% Int'l 31% +18.9% 9M 2017 Dom. 69% Int'l 32% 9M 2018 Dom. 68% Total Assets (KD'bn) - Kuwait/ International / Boubyan Bank BB 15% BB 16% Kuwait Kuwait 47% 51% Int'l 34% Int'l 37% Sep 17 Sep 18 4#10Operating Performance 9M 2018 Total Assets (KDbn) الوطني NBK Loans, Advances and Islamic Financing (KDbn) 25.7 Sep 17 26.0 Dec 17 Customer Deposits (KDbn) 13.8 13.3 27.1 14.5 +4.2% Sep 18 +5.7% 14.1 +2.1% +5.4% 14.5 15.4 +6.2% Sep 17 Dec 17 Sep 18 Funding Mix ■ Due to banks and other Fls ■CD's / GMTN / T2 Bonds ■Customer Deposits 61% 35% 61% 62% 34% 35% Sep 17 Dec 17 Sep 18 Sep 17 Dec 17 Sep 18 +6.5% LO 5#11Performance and Asset Quality ratios 9M 2018 Return on Average Equity Return on Average Assets الوطني NBK 1.36% 11.9% 1.27% 1.28% 10.8% 10.8% 9M 2017 17.5% 15.4% FY 2017 Capital Adequacy Ratios 17.8% 9M 2018 9M 2017 17.2% 15.8% 15.2% Sep 17 Dec 17 Tier 1 Ratio FY 2017 Asset Quality Ratios 323.1% 287.5% 1.42% 1.42% 9M 2018 237.4% 1.37% Sep 18 Sep 17 Dec 17 Sep 18 Loan Loss Coverage Ratio NPL Ratio 6 Capital Adequacy Ratio#12Contents Section 1 Opening remarks Section 2 Financial Performance 9M 2018 Section 3 Appendix Section 4 Questions الوطني NBK 11#13Consolidated Financials 9M 2018 (KD million) Income Statement (KWD million) Interest Income Interest Expense Net Interest Income Murabaha and other Islamic financing income Balance sheet (KWD million) Cash and short term funds الوطني NBK 9M 2017 9M 2018 Sep 2017 Sep 2018 2,744 2,944 546 658 Central Bank of Kuwait bonds 608 798 161 236 Kuwait Government Treasury bonds 1,109 868 385 422 Deposits with banks 2,314 2,306 114 137 Loans, advances and Islamic financing to customers 14,464 15,407 Distribution to depositors and Murabaha costs 33 43 Investment securities 3,271 3,566 Net Income from Islamic financing 81 93 Investment in associates 65 34 Land, premises and equipment 302 352 Net interest income and net income from Islamic financing 466 515 Goodwill and other intangible assets 583 580 Net fees and commissions 102 114 Other assets 209 270 Total Assets 25,669 27,126 Net investment income 16 1 Due to banks and other financial institutions 7,550 Net gains from dealing in foreign currencies 24 29 Customer deposits 13,348 Other operating income 2 2 Certificates of deposit issued 550 Non-interest income 144 147 Global Medium Term Notes (GMTN) 224 Net Operating Income 610 662 Subordinated Tier 2 bonds 125 Staff expenses 113 120 Other liabilities 391 Other administrative expenses Total Liabilities 22,188 64 69 Share capital 592 Depreciation of premises and equipment 11 11 Proposed bonus shares Amortisation of intangible assets 2 2 Statutory reserve 282 Operating Expenses 191 202 Share premium account 803 Op. profit before provision for credit losses and impairment losses Treasury shares (78) 419 460 Treasury share reserve 14 Provision charge for credit losses and impairment losses Operating profit before taxation 146 145 Other reserves 1,340 273 314 Equity attributable to shareholders 2,953 Perpetual Tier 1 Capital Securities 211 Taxation 20 25 Non-controlling interests 317 Non-controlling interest 14 17 Total equity 3,481 Profit attributable to shareholders of the Bank 238 272 Total liabilities and equity 25,669 12#14Performance Measures 9M 2018 % 9M 2017 9M 2018 Return on average assets 1.27% 1.36% Return on average equity 10.8% 11.9% Net interest margin 2.60% 2.70% Cost to income NPLs to gross loans Loan loss reserves to NPLs 31.3% 30.5% 1.42% 1.37% 323.1% 237.4% Common equity tier 1 capital (CET1) 13.9% 13.7% Tier 1 capital 15.4% 15.2% Tier 2 capital 2.1% 2.0% Capital adequacy ratio 17.5 % 17.2 % الوطني NBK 13#15Consolidated Statement Of Income (KD million) الوطني NBK KWD million Interest Income Interest Expense Net Interest Income Murabaha and other Islamic financing income Distribution to depositors and Murabaha costs Net Income from Islamic financing 2015 585 139 446 106 476 22 84 Net interest income and net income from Islamic financing 530 Net fees and commissions 130 Net investment income Net gains from dealing in foreign currencies Other operating income Non-interest income 32 33 3 199 Net Operating Income Staff expenses Other administrative expenses 729 137 77 Depreciation of premises and equipment 15 Amortisation of intangible assets 5 Operating Expenses 235 Op. profit before provision for credit losses and impairment losses 494 Provision charge for credit losses 130 Impairment losses 34 Operating profit before taxation Taxation Non-controlling interest Profit attributable to shareholders of the Bank 330 33 14 282 ༔ ༔སྒྱུ ྂ རྞ c® = €€€b© <ཡྻུ སྒྱུ ིིས× གླ➢R 2016 2017 665 743 190 224 519 128 156 46 94 110 570 629 133 139 20 34 1 2 176 194 745 823 144 154 87 93 16 15 4 3 252 265 557 126 175 27 13 341 369 29 27 17 295 20 322 14#16الوطني Consolidated Statement Of Financial Position (KD million) NBK KWD million Cash and short term funds 2015 2016 2017 3,481 2,687 2,744 Central Bank of Kuwait bonds 804 749 656 Kuwait Government treasury bonds 380 493 1,076 Deposits with banks 1,427 2,408 2,488 Loans, advances and Islamic financing to customers 13,551 13,611 Investment securities 2,784 3,178 14,503 3,349 Investment in associates 93 74 63 Land, premises and equipment 227 255 324 Goodwill and other intangible assets 678 582 582 Other assets 173 201 250 Total Assets Due to banks and other financial institutions Customer deposits Certificates of deposit issued Global medium term notes (GMTN) Subordinated Tier 2 bonds Other liabilities Total Liabilities Share capital Proposed bonus shares Statutory reserve 23,598 24,239 26,035 7,306 7,348 12,059 12,608 7,469 13,780 655 416 491 221 125 125 125 261 337 20,407 20,834 504 564 388 22,474 592 25 28 30 252 282 296 Share premium account 700 803 803 Treasury shares (78) Treasury share reserve 14 14 Other reserves 1,339 (78) 1,272 (78) 14 1,373 Equity attributable to shareholders of the bank 2,756 2,885 3,029 Perpetual Tier 1 Capital Securities 211 211 211 Non-controlling interests 224 309 321 Total equity 3,191 3,405 3,561 Total liabilities and equity 23,598 24,239 26,035 15#17Contents Section 1 Opening remarks Section 2 Financial Performance 9M 2018 Section 3 Appendix Section 4 Questions الوطني NBK 16#18Questions الوطني NBK 17#19Thank you الوطني NBK 18