B URGAN B ANK G ROUP S HAFAFIYAH P RESENTATION FY 2018 F INANCIAL R ESULTS
FY2018 K EY H IGHLIGHTS … ∆% FY 2017 FY 2018 265.3 +11% 239.4 Revenue KD mn S TRONG E ARNINGS Net Income KD mn 65.2 82.6 +27% G ROWTH 2018 P ERFORMANCE 31.0 +28% 24.2 EPS (1) Fils 10.7 % H IGH 8.3 % RoE (2) +230 BPS S HAREHOLDERS ’ 7.0 12.0 (3) R ETURNS Dividend per share Fils +71% 2.9 % 2.6 % +30 BPS NIM (4) C ONTINUED I MPROVEMENT 42.1 % 45.6 % Cost-to-Income Ratio (350 BPS ) A CROSS K EY M ETRICS 11.9 % 10.9 % +100 BPS CET1 Ratio (1) Earnings per share for shareholders (after AT1 cost); (2) Returns on opening balance of Shareholders’ Equity (after AT1 c ost); (3) Recommended Dividend per share, subject to shareholders’ approval; (4) Net Interest Margin based on Average Interest Earning Assets. 2
R ESULTS D RIVEN BY I MPROVING M ARGINS AND C ONTINUED E FFICIENCY … Revenue (KD mn) & Margins (%) (1) Operating Profit (KD mn) & Efficiency (%) 2.9% 48.5% 45.6% 2.6% +30bps Y-o-Y (2) 42.1% 2.4% (350bps) Y-o-Y (2) +18% Y-o-Y 265 +11% Y-o-Y 239 235 81 69 79 154 130 121 184 171 156 FY 2016 FY 2017 FY 2018 FY 2016 FY 2017 FY 2018 Net Interest Income Non Interest Income Operating Profit Cost to Income Ratio Net Interest Margin Consistent growth Strong Rebound Consistent Reduction Higher Yields; in in in 1 2 3 4 +80bps Y-o-Y Net Interest Income Non-interest Income Cost-to-Income Ratio CAGR Growth (1) NIM based on Average Interest Earning Assets; (2) Represent absolute change. 3
…D ELIVERING S TRONG B OTTOMLINE G ROWTH & I MPROVED R ETURNS Net Income (KD mn) & Earnings Per Share (Fils) RoE (%) (1) & Dividend Per Share (Fils) 31 10.7% +230bps Y-o-Y (2) +28% Y-o-Y 27 24 9.0% 8.3% +27% Y-o-Y +71% Y-o-Y 83 12 68 65 7 5 FY 2016 FY 2017 FY 2018 FY 2016 FY 2017 FY 2018 Net Income Earnings Per Share DPS RoE Strong Increase 71% Higher Dividends & in Improved RoE: +230bps Y-o-Y 1 2 3 5% Bonus Shares EPS; +28% Y-o-Y CAGR Growth (1 ) Returns on opening balance of shareholders’ equity (after AT1 cost); (2) Represents absolute change. 4
…. WHILE A SSET Q UALITY C ONTINUES TO BE S TABLE NPLs (KD mn) & Coverage (%) (1) FY 2016 FY 2017 FY 2018 NPL Ratios (%) 339% +54% Y-o-Y (2) 285% 4.1% 170% +13% Y-o-Y (2) 168% 155% 3.1% 120% 2.7% 2.7% 1.8% 1.6% (4%) Y-o-Y (20bps) Y-o-Y (2) 196 133 128 FY 2016 FY 2017 FY 2018 FY 2016 FY 2017 FY 2018 NPLs Group Coverage Ratio Group NPL Ratio Kuwait NPL Ratio Kuwait Coverage Ratio NPL Ratios Coverage Ratios NPLs declined further Group: Stable at 2.7% Group: Higher at 168% by 1 2 3 Kuwait: Improved to 1.6% Kuwait: Inreased to 339% 4% Y-o-Y CAGR Growth (1) NPL Coverage Ratio based on provisions only; (2) Represents absolute change. 5
… WITH W ELL -D IVERSIFIED L OAN B OOK AND F UNDING S TRUCTURE Customer Loans (KD bn) & Loans by Sector (%) Customer Deposits (KD bn) & Deposits by Type (%) FY 2018 (%) FY 2018 (%) 4.2 4.4 4.3 5% 19% 33% 33% 2% 37% 7% 29% 30% 12% 61% 4.2 3.7 3.8 6% 67% 67% 63% 11% 19% Personal Real estate Demand Saving Manufacturing Commerce Construction Oil & Gas Time Other FY 2016 FY 2017 FY 2018 Others FY 2016 FY 2017 FY 2018 Kuwait International Customer Deposits ^ Kuwait contributes to Time deposits represent 61% 2/3 rds of Well-diversified Portfolio 1 2 3 of Group Customer Deposits Group’s Loan Book 6
…. AND E NHANCED C ORE C APITAL L EVELS Regulatory Capital (KD mn) 2,500 20.0% 17.4% +270bps +220bps +340bps 16.7% 16.2% 18.0% 2,000 16.0% 14.0% 14.0% 11.9% +70bps +40bps +140bps 11.2% 10.9% 1,500 12.0% 10.5% 10.0% 1,001 924 907 1,000 8.0% 170 154 151 146 145 146 6.0% 500 4.0% 686 624 610 2.0% - 0.0% 2016 2017 2018 5,435 5,759 5,716 RWAs CET1 AT1 Tier II CET 1 Ratio CAR Ratio Min. Required CAR Min. Required CET 1 ^ ^ Successful Rights Issue in Continued focus on RWA Strong Profit Generation 1 2 3 Q4 ’ 18 Efficiency Buffers Calculated as excess over minimum required CBK ratios ^ CET1 include retained earnings after dividends 7
… W HILE I MPROVING KPI S FOR K EY B USINESSES OF THE G ROUP C ONTRIBUTION G ROWTH Y O Y (1) KPI FY 2018 (2) L OANS N ET I NCOME L OANS NIM CI R ATIO ∆% ∆% Kuwait 67 % 76 % +2% 2.3 % +20 32.3 % +130 bps bps Turkey (1640 23 % 11 % (18%) 3.7 % +40 42.8 % bps) bps Algeria (10 (880 10 % 11 % +6% 6.9 % 38.7 % bps) bps) (40 Iraq 1 % -0.5 % (22%) 1.4 % 101 % +3130 bps) bps Tunisia (770 0.2 % 3 % +6% 2.5 % 35.8 % +110 bps) bps FY’ 18 Loans Contribution in KD FY’18 Net Income Contribution in KD (1) Growth year on year in KD; (2) KPIs in Local Currency. Note: Contribution percentages are rounded figures. 8
… AND A CHIEVING P ROGRESSIVE G ROWTH O VER T HE L AST 15 Y EARS Total Assets | KD mn Revenues | KD mn 9% 8% 11% 8% 7,312 265.3 3,943 121.1 1,920 54.6 FY 2003 FY 2008 FY 2018 FY 2003 FY 2008 FY 2018 Burgan Bank Revenues Burgan Bank Total Assets Operating Profits before provisions | KD mn Net Income | KD mn 10% 7% 10% 3% 153.5 82.6 87.6 37.1 35.6 20.4 FY 2003 FY 2008 FY 2018 FY 2003 FY 2008 FY 2018 Burgan Bank Net Income Burgan Bank Operating Profits before provisions Burgan Bank 15 years Compounded Annual Growth Rate (CAGR) Kuwait Local Conventional Peers Average CAGR 9 Note: Kuwaiti peers include NBK, CBOK, GBK, ABK. Note 2: All the Banks figures are based from the financial statements sourced from Bloomberg.
I N CONCLUSION FY’18 results underscore the consistent progress made by Burgan Bank In FY’18, Burgan Bank generated strong earnings for its shareholders: Return on Equity: 10.7% (+230 bps) Recommended Dividend Per share: 12 fils (+71%) Burgan Bank shall continue to maintain its focus on: Cautious Growth Prudent Risk Approach Superior Shareholders’ Returns 10
T HANK Y OU 11
D ISCLAIMERS IMPORTANT NOTICE This presentation has been prepared by Burgan Bank K.P.S.C. and is subject to the applicable laws and regulations in the State of Kuwait. It is for information purposes only and it shall not be reproduced or redistributed to any other person without obtaining Burgan Bank K.P.S.C. ’s prior written consent. It does not and shall not constitute either an offer to purchase or buy or a solicitation to purchase or buy or an offer to sell or exchange or a solicitation to sell or exchange any securities of Burgan Bank K.P.S.C.. Neither this presentation nor anything contained herein shall form the basis of any contract, commitment or advice whatsoever. This Presentation must be read in conjunction with all other publicly available information. To the maximum extent permitted by law, Burgan Bank K.P.S.C. and its directors, employees, agents ,consultants, affiliates and subsidiaries expressly exclude all liability and responsibility for any loss or damage arising from the use of, or reliance on, the information contained in this presentation or the website whether or not caused by any negligent act or omission. Neither Burgan Bank K.P.S.C. nor any of its directors, employees, agents, consultants, affiliates, or subsidiaries warrant or represent the correctness, accurateness or completeness of the information provided herein. This document is not to be relied upon in any manner as legal, tax or investment advice. Each recipient hereof shall be responsible for conducting its own investigation and analysis of the information contained herein and shall familiarize and acquaint itself with, and adhere to, the applicable local legislations. Except where otherwise expressly indicated herein, this presentation contains time-sensitive information which is based on currently available information to Burgan Bank K.P.S.C. as of the date stated or, if no date is stated, as of the date of this preparation and accordingly does not guarantee specific future results, performances or achievements. The information and the opinions contained herein are subject to change without notice. None of Burgan Bank K.P.S.C. or any of its subsidiaries or affiliates assume any obligation to update or otherwise revise any such information to reflect information that subsequently becomes available or circumstances existing or changes occurring after the date hereof. FORWARD-LOOKING STATEMENTS All statements included or incorporated by reference in this presentation, other than statements or characterizations of historical fact, are forward-looking statements. Such forward-looking statements are based on Burgan Bank K.P.S.C. ’s current expectations, predictions and estimates and are not guarantees of future performance, achievements or results. Forward-looking statements are subject to and involve risks and uncertainties and actual results, performance or achievements of Burgan Bank K.P.S.C. may differ materially or adversely from those expressed or implied in the forward-looking statements as a result of various factors. In addition, even if Burgan Bank K.P.S.C. ’s results of operations, financial condition and the development of the industry in which it operates are consistent with forward-looking statements contained herein, those results or developments may not be indicative of results or developments in subsequent periods. Burgan Bank K.P.S.C. does not undertake to update any forward-looking statements made herein. Past results are not indicative of future performance. INVESTOR RELATIONS Contact details below for any enquiries related to Burgan Bank K.P.S.C. and Subsidiaries; Email: IR@burgan.com Phone: +965 2298 8852 12
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