Salah Al-Fulaij, NBK’s chief executive officer for Kuwait.

NBK’s chief executive officer for Kuwait speaks to John Everington about the challenges facing the country’s banking sector, the lender’s international expansion, and digital banking brand Weyay.

Q: How resilient is Kuwait’s banking sector in 2023?  

A: The sector is notable for its high liquidity and robust capitalisation, with an overall capital adequacy ratio well above the required minimum level. Additionally, non-performing loans remain low, while loan-loss provisioning is high. The sector’s strong foundations have enabled it to handle the uncertainty caused by the Covid-19 pandemic and other global challenges over the past few years. Meanwhile, government-led pandemic mitigation and recovery actions afterwards have aided the banking system, allowing it to lead a post-pandemic recovery benefitting from a well-capitalised and highly liquid sector balance sheet.

Moreover, increased oil prices and improved business activity have benefitted the overall operating environment in Kuwait. Increases in benchmark interest rates, although somewhat lagging in Kuwait, are benefitting banks in general. Looking ahead, we remain optimistic of an overall stable operating environment in the country, because we expect that high oil prices will continue to support government spending on wages and investments and help boost business confidence. 

During the past few years, Kuwaiti banks have been reporting strong profitability, and the stage is set for sustained growth with companies returning to normal business operations, a rebound in demand for corporate credit, and a preferable interest rate environment.

Business credit recorded 6.8% growth in 2022, the fastest annual expansion since 2013. Meanwhile, domestic credit ended 2022 with growth at 7.7% for the full year, the fastest yearly expansion since 2015.

As for NBK, we started 2023 on a very strong footing after recording exceptional performance in 2022. Against the challenging economic backdrop of 2022, we successfully achieved the highest net profits in our history, demonstrating the value creation inherent in our business model, the continued success of our strategy and our ability to seize opportunities. 

The group recorded a net profit of Kd509.1m ($1.7bn), up 40.5% year on year. This strong profitability growth is driven by solid operational performance and improving cost of risk. Our net operating income reached Kd1.0bn, growing 12.2% year on year.

The group’s balance sheet remains exceptionally strong. During 2022, total assets grew by 9.3% to reach Kd36.3bn, while customer deposits surged by 10.4% to Kd20.2bn, with the overall funding mix remaining stable and favourable to the group. Asset quality remained solid, with the bank’s ratio of non-performing loans to gross loans at 1.42% as of December 2022. Loan loss coverage ratio is at 267%, reflecting the conservative provisioning policy of the group.

Q: What are NBK’s predictions for the coming year in terms of overall credit growth for the banking sector? 

A: Going into 2023, given higher interest rates, a weaker global economic backdrop, and likely softer domestic non-oil growth, we expect slower business credit growth than the multi-year high seen in 2022. However, growth should remain decent by historical standards, helped by still relatively elevated oil prices and an ongoing post-pandemic recovery.

The infrastructure projects market is expected to thrive in 2023, providing momentum to the private sector. Moreover, if we look at the recently announced draft state budget for 2023-24, it pencils in increases in both salaries and subsidies, which, if implemented, should support household spending this year.  

The infrastructure projects market is expected to thrive in 2023

We expect credit to maintain its momentum and remain solid at 5% to 6% in 2023, a marginal deceleration from the 2022 levels. While tighter monetary policy may become a consideration for borrowers, we think that credit demand will remain relatively resilient.

Q: What are the biggest challenges facing Kuwait’s banking sector?

A: Uncertainty is the greatest threat to the global economy. We have witnessed a series of unprecedented shocks over the past few years, beginning with the pandemic, followed by supply chain interruptions, the Russia-Ukraine conflict, persistently high inflation rates, and most recently the bank failures in the US and the rise of a potential contagious risk for other countries’ banking sectors. 

Here in Kuwait, while we expect that the projected rise in government spending will support demand in the economy in the near term, it also adds to longer-term fiscal sustainability pressures, especially in the context of continued over-reliance on volatile oil revenues, limited non-oil revenue streams, a lower capex target and slow reform progress due to legislative gridlock. Given the current political impasse, it may take longer than usual before the budget is approved by parliament, potentially pushing the boost to the economy from higher spending until later in the year.

Q: Is NBK targeting further international expansion?

A: We follow a very successful market expansion strategy that we started implementing more than a decade ago. Today we are satisfied with our geographical coverage and enjoy a wide banking presence with an international footprint spanning the world’s leading financial centres in 13 countries.  

Having said that, we continue to look at any potential opportunities that align with our strategic direction, create synergies with our existing operations and markets, and of course generate added value to our shareholders. 

Going into 2023 and beyond, I believe that our proactive digital transformation strategy and expansion of our digital infrastructure will continue to drive our growth, which is now seen as a springboard for regional growth and expansion, with a special focus on young demographics and retail businesses. 

We have had a very successful experience launching Weyay, the first fully digital bank in Kuwait, and we plan to introduce similar experiences in other regional markets to open new revenue streams.

Meanwhile, we continue to expand our wealth and asset management market share in both local and international markets, with a keen focus on the Saudi market. Our global wealth management division combines the extensive asset management capabilities of NBK Capital with the expertise and client-focused interfaces developed by the private banking group.

We continue to consider Egypt as one of our important growth markets. NBK Egypt has successfully positioned itself as a leading financial institution on the map of private banks operating in Egypt. Given our success so far in the Egyptian market and the fast pace of growth, I am confident that we are on the right track towards further growth and more significant market share, with focus on the growing retail sector.  

Q: How successful has Weyay proved since its launch in 2021? 

A: A key element in Weyay’s success is Kuwait’s young demographic, with 64% of the Kuwaiti population under the age of 34. This factor played a significant influence in the digital bank’s growth, as did the fact that our internet and mobile penetration and usage rates are among the highest in the world. We maintained our relevance by recognising the market’s changing demands and by creating new business models, developing strategic partnerships and committing to continuous innovation. 

Since its launch, Weyay has witnessed consistent growth and managed to exceed its customer acquisition goal by 300%, thanks to our innovative approach of direct engagement with young clients by recognising and meeting their needs in such a way that suits their personality and lifestyle, especially since Weyay’s executives are themselves of a similar age and understand their generation’s demands first-hand.



All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker

For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Top 1000 2023

Request a demonstration to The Banker Database

Join our community

The Banker on Twitter