Latest news with #DomesticMinimumTop-upTax
CairoScene
05-05-2025
- Business
- CairoScene
Ministry of Finance Sets Domestic Tax for Multinational Enterprises
As a transitional measure, some newly established MNE groups will not be subject to the tax in their initial phase. Feb 09, 2025 The Ministry of Finance has introduced the Domestic Minimum Top-up Tax (DMTT), a new measure aligned with the OECD's global tax framework. The tax applies to multinational enterprises (MNEs) operating in the UAE with annual global revenues of USD 775 million or more in at least two of the past four financial years. The DMTT aims to ensure compliance with international tax standards while maintaining the UAE's appeal as an investment hub. It includes a Substance-Based Income Exclusion, reducing taxable income based on payroll and tangible asset values. Certain entities, such as investment firms and businesses meeting de minimis criteria, will be exempt. As a transitional measure, newly established MNE groups will not be subject to the tax in their initial phase, provided they are not controlled by a parent entity subject to a Qualified Income Inclusion Rule in another jurisdiction. The policy follows the OECD's GloBE Model Rules, with further guidance outlined in Cabinet Decision No. 142 of 2024.
Al Bawaba
30-04-2025
- Business
- Al Bawaba
ADCB reports 20% YoY rise in profit before tax to AED 2.907 bn in Q1'25, with net profit after tax(1) at AED 2.446 bn
Abu Dhabi Commercial Bank PJSC (ADCB) today reported its financial results for the first quarter of 2025 (Q1'25). Selected financial metrics for Q1'25 2.907 bn Profit before tax (AED) 2.446 bn Net profit after tax(1) (AED) 13.7% Return on average equity (post-tax) 29.2% Cost to income ratio +13% Net loan growth (YoY) +15% Customer deposit growth (YoY) 0.49% Cost of risk 2.24% Non-performing loan ratio 12.59% CET1 ratio ______________________________ _____________________ 15th consecutive quarter of growth (2) in profit before tax marked by well-diversified income streams and improved efficiencies amid continued strength in UAE economic fundamentals Key highlights – Q1'25 vs. Q1'24 Profit before tax of AED 2.907 bn increased 20% Net profit after tax (1) stood at AED 2.446 bn Net interest income of AED 3.394 bn increased 3% Non-interest income of AED 1.619 bn increased 26% Operating income of AED 5.013 bn increased 9% Cost to income ratio of 29.2% improved by 170 basis points Operating profit before impairment charge of AED 3.548 bn increased 12% 15th consecutive quarter of growth(2) in profit before tax marked by well-diversified income streams and improved efficiencies amid continued strength in UAE economic fundamentals Key highlights – Q1'25 vs. Q1'24 Profit before tax of AED 2.907 bn increased 20%Net profit after tax(1) stood at AED 2.446 bnNet interest income of AED 3.394 bn increased 3%Non-interest income of AED 1.619 bn increased 26%Operating income of AED 5.013 bn increased 9%Cost to income ratio of 29.2% improved by 170 basis pointsOperating profit before impairment charge of AED 3.548 bn increased 12% (1) For Q1 2025, ADCB has provisioned for tax at a rate of 15% based on the Domestic Minimum Top-up Tax (DMTT) introduced by the UAE on 1 January 2025, versus the 9% corporate income tax rate applied in 2024. Therefore, year-on-year comparison is not on a like-for-like basis. For more information, please see note 3 of Q1'25 financial statements (2) Excluding net loss on discontinued operations (as applicable) and one-off gain recorded from the divestment of an 80% stake in Abu Dhabi Commercial Properties (ADCP) in Q4'23 ___________________________________________________ Continuation of strong loan and deposit growth, accompanied by high asset quality Total assets of AED 680 bn increased 14% YoY and 4% QoQNet loans of AED 359 bn were up 13% YoY (AED 41 bn) and 3% QoQ (AED 9 bn)Total customer deposits of AED 442 bn increased 15% YoY (AED 58 bn) and 5% QoQ (AED 21 bn)Current and savings account (CASA) deposits increased 10% YoY (AED 18 bn) and 6% QoQ (AED 12 bn) to AED 198 bn at March-end, accounting for 45% of total customer depositsCapital adequacy and CET1 ratios were 16.07% and 12.59% respectively compared to 16.13% and 12.56% as at Dec-endLiquidity coverage ratio (LCR) stood at 138.6%, while loan to deposit (LTD) ratio was 81.4%Cost of risk improved to 0.49% in Q1'25 from 0.72% in Q4'24 and 0.67% in Q1'24. The NPL ratio improved further to 2.24% from 3.04% at Dec-end and 3.44% in March'24. Provision coverage ratio was 150.1%, up from 110.0% at Dec-end, when including collateral it was 260% ___________________________________________________ Key recent business and operational highlights In January 2025, ADCB launched an ambitious five-year strategy aimed at doubling net profit to AED 20 billion by 2030, while delivering sustained growth in dividends and return on equity. Aligned with the UAE's economic transformation, the strategy sets clear targets and prioritises digital innovation, customer experience, sustainability and long-term value creation for shareholders. In January 2025, Al Hilal Bank appointed Jamal Al Awadhi as Chief Executive Officer to lead its next phase of digital growth. With a strong track record in innovation and leadership, Jamal Al Awadhi will drive the Bank's ambition to redefine Shari'ah-compliant digital retail banking in the UAE. ADCB announced in January 2025 that it had achieved 100% Emiratisation across all banking roles in its Al Ain branches – a first for the UAE financial sector. This milestone underscores the Bank's leadership in empowering national talent and supporting the UAE's Emiratisation agenda. ADCB was included in the FTSE4Good Index Series in January 2025, reflecting strong performance across environmental, social, and governance (ESG) criteria. The independent assessment by FTSE Russell places ADCB above the global financial industry average, further elevating its profile among ESG-focused investors. In March 2025, ADCB's long-term credit rating was upgraded to 'A+' by S&P Global Ratings, placing the Bank among its top three highest-rated banks in the MENA region. The upgrade reflects ADCB's strong financial position, high asset quality, and disciplined risk management. In April 2025, ADCB launched Meedaf, a pioneering financial services venture designed to help banks and financial institutions across the UAE and GCC region enhance operational efficiency, reduce costs, and remain competitive through innovation and advanced technologies. In April 2025, ADCB was named the strongest banking brand in the UAE, with its brand value rising 17% year-on-year to AED 12.3 billion, according to Brand Finance's latest global rankings. The Bank achieved a brand strength score of 81.5 ('AAA-') and climbed seven places to 102nd globally. ___________________________________________________ Commentary on Q1'25 financial results ADCB entered 2025 with solid momentum, embarking on a new Board-endorsed five-year strategy to drive long-term sustainable expansion. The Bank recorded a 15th consecutive quarter of growth in profit before tax, which rose 20% year on year to AED 2.907 billion, marked by high-quality growth across core businesses. First-quarter net profit after tax(1) was AED 2.446 billion, delivering a return on average equity of 13.7%. In the first quarter, the Bank continued to benefit from well-balanced income streams, with operating income rising 9% year on year, primarily driven by a sharp 26% increase in non-interest income across all main line items. In parallel with top-line growth, ADCB delivered further gains in operational efficiency, with the cost-to-income ratio improving by 170 basis points year on year to 29.2% in the first quarter. Operating expenses decreased 6% quarter on quarter as the Bank continued to focus on disciplined cost management while deploying targeted investment in talent and technology to drive higher productivity and an enhanced customer experience. The UAE's robust economic fundamentals continued to support a healthy credit pipeline. Net loans increased by approximately AED 9 billion during the quarter, led by the financial institutions, energy and transport and communication sectors, while exposure to government-related entities (GREs) remained significant at 27% of gross loans. Notably, asset quality continued to strengthen considerably, with the non-performing loan ratio declining to 2.24%, while cost of risk improved by 18 basis points year on year to 0.49%, remaining within our guidance. The strong financial position was recognised in March with an upgrade by S&P Global Ratings to a credit rating of 'A+', placing ADCB among its three highest-rated banks in the MENA region, reflecting the robust capital base, asset quality, risk management culture and control framework. The ratings upgrade affirmed the Bank's position as a high quality issuer in international capital markets. ADCB successfully priced a USD 600 million dual-listed Formosa bond in February at a favourable spread of 105 basis points above SOFR with the issuance allocated predominantly to Asian investors due to strong demand. ADCB's trusted franchise and a strategic focus on service excellence are driving customer growth and substantial inflows of deposits, which increased by AED 21 billion in the first quarter, including AED 12 billion of current and savings account (CASA) deposits. This leading market position was reflected in a 17% year on year increase in our brand value to AED 12.3 billion, according to the 2025 Brand Finance report, placing ADCB as the highest-rated banking brand in the UAE, for the second 2024 consecutive year. (1) For Q1 2025, ADCB has provisioned for tax at a rate of 15% based on the Domestic Minimum Top-up Tax (DMTT) introduced by the UAE on 1 January 2025, versus the 9% corporate income tax rate applied in 2024. Therefore, year-on-year comparison is not on a like-for-like basis. For more information, please see note 3 of Q1'25 financial statements (2) Excluding net loss on discontinued operations (as applicable) and one-off gain recorded from the divestment of an 80% stake in Abu Dhabi Commercial Properties (ADCP) in Q4'23 ___________________________________________________ Enhanced efficiencies and business growth ADCB's investment in digital and AI technologies is delivering tangible impact, enabling the Bank to serve a fast-growing customer base with greater speed, convenience, and efficiency. In the first quarter, the Retail Banking Group (RBG) welcomed over 89,000 new customers, with 71% onboarded through digital channels. Key digital transformation initiatives were rolled out during the quarter, including multi-CASA and multi-currency account opening features and enhancements to automated approval processes. As a result, an increasing share of credit card and personal loan applications were approved through straight-through processing, with no human intervention. In parallel, targeted AI initiatives were launched to support revenue generation, improve customer experience and drive efficiencies at an enterprise-wide level. The Corporate and Investment Banking Group (CIBG) continued to deepen and diversify its client base, establishing over 100 new banking relationships in the large corporate and GRE segment during the quarter. In the SME and mid-sized corporate segment, more than 2,000 new relationships were added. CIBG maintains a market-leading fee-to-income ratio, supported by an expanding working capital proposition, as well as cross-border transaction banking and liquidity management capabilities. The Group reinforced its capital markets advisory profile through lead roles in a number of key transactions, including a USD 500 million green sukuk issuance by Aldar Properties and a USD 1 billion sukuk issued by the Ras Al Khaimah Investment and Development Office. The Private Banking and Wealth Management Group continued its strong trajectory, recording a 46% increase in assets under management (AUM) over the past 12 months. ADCB Private's offering of investment advisory alongside core banking services is attracting significant numbers of high-net-worth individuals, with 7% growth in clients during the quarter. Launch of Meedaf to unlock new income streams In line with the five-year strategy launched in January, which aims to double net profit to AED 20 billion by 2030, ADCB has unveiled Meedaf, a strategic venture designed to expand beyond traditional banking and unlock new income streams. Launched in early April and operating within Abu Dhabi Global Market (ADGM), Meedaf will provide specialised operational services to financial institutions across the UAE and GCC, leveraging advanced digital solutions to enhance efficiency and create long-term value across the sector. Meanwhile, ADCB continues to make strong progress in embedding global best practices across its sustainability framework. The Bank has published its 2024 ESG Report, which includes its first double materiality assessment aligned with GRI and IFRS standards, extensive stakeholder engagement across the value chain, and third-party assurance of Scope 3 financed emissions. The Bank's approach to ESG has been recognised through a 'Regional top-rated' badge by Sustainalytics for the Middle East and Africa region. ADCB is also contributing to national sustainable finance policy development as a knowledge partner to the Global Climate Finance Centre (GCFC), working alongside key UAE government entities to help shape sector-wide ESG KPIs and targets for 2025. A strong capital base, diversified business model, and a disciplined approach to risk management form the robust foundations for ADCB's enduring expansion and resilience. The Bank benefits from a business-friendly operating environment in the UAE, which continues to grow as a preferred destination for capital and talent. ADCB remains well equipped to navigate global market and economic uncertainty, to create sustainable value while contributing to the stability and development of the economy. © 2000 - 2025 Al Bawaba (
Zawya
29-04-2025
- Business
- Zawya
ADCB reports 20% YoY rise in profit before tax to AED 2.907bln in Q1'25
Abu Dhabi, 29 April 2025 – Abu Dhabi Commercial Bank PJSC (ADCB) today reported its financial results for the first quarter of 2025 (Q1'25). 15th consecutive quarter of growth(2) in profit before tax marked by well-diversified income streams and improved efficiencies amid continued strength in UAE economic fundamentals Key highlights – Q1'25 vs. Q1'24 Profit before tax of AED 2.907 bn increased 20% Net profit after tax(1) stood at AED 2.446 bn Net interest income of AED 3.394 bn increased 3% Non-interest income of AED 1.619 bn increased 26% Operating income of AED 5.013 bn increased 9% Cost to income ratio of 29.2% improved by 170 basis points Operating profit before impairment charge of AED 3.548 bn increased 12% (1) For Q1 2025, ADCB has provisioned for tax at a rate of 15% based on the Domestic Minimum Top-up Tax (DMTT) introduced by the UAE on 1 January 2025, versus the 9% corporate income tax rate applied in 2024. Therefore, year-on-year comparison is not on a like-for-like basis. For more information, please see note 3 of Q1'25 financial statements (2) Excluding net loss on discontinued operations (as applicable) and one-off gain recorded from the divestment of an 80% stake in Abu Dhabi Commercial Properties (ADCP) in Q4'23 Continuation of strong loan and deposit growth, accompanied by high asset quality Total assets of AED 680 bn increased 14% YoY and 4% QoQ Net loans of AED 359 bn were up 13% YoY (AED 41 bn) and 3% QoQ (AED 9 bn) Total customer deposits of AED 442 bn increased 15% YoY (AED 58 bn) and 5% QoQ (AED 21 bn) Current and savings account (CASA) deposits increased 10% YoY (AED 18 bn) and 6% QoQ (AED 12 bn) to AED 198 bn at March-end, accounting for 45% of total customer deposits Capital adequacy and CET1 ratios were 16.07% and 12.59% respectively compared to 16.13% and 12.56% as at Dec-end Liquidity coverage ratio (LCR) stood at 138.6%, while loan to deposit (LTD) ratio was 81.4% Cost of risk improved to 0.49% in Q1'25 from 0.72% in Q4'24 and 0.67% in Q1'24. The NPL ratio improved further to 2.24% from 3.04% at Dec-end and 3.44% in March'24. Provision coverage ratio was 150.1%, up from 110.0% at Dec-end, when including collateral it was 260% Key recent business and operational highlights In January 2025, ADCB launched an ambitious five-year strategy aimed at doubling net profit to AED 20 billion by 2030, while delivering sustained growth in dividends and return on equity. Aligned with the UAE's economic transformation, the strategy sets clear targets and prioritises digital innovation, customer experience, sustainability and long-term value creation for shareholders. In January 2025, Al Hilal Bank appointed Jamal Al Awadhi as Chief Executive Officer to lead its next phase of digital growth. With a strong track record in innovation and leadership, Jamal Al Awadhi will drive the Bank's ambition to redefine Shari'ah-compliant digital retail banking in the UAE. ADCB announced in January 2025 that it had achieved 100% Emiratisation across all banking roles in its Al Ain branches – a first for the UAE financial sector. This milestone underscores the Bank's leadership in empowering national talent and supporting the UAE's Emiratisation agenda. ADCB was included in the FTSE4Good Index Series in January 2025, reflecting strong performance across environmental, social, and governance (ESG) criteria. The independent assessment by FTSE Russell places ADCB above the global financial industry average, further elevating its profile among ESG-focused investors. In March 2025, ADCB's long-term credit rating was upgraded to 'A+' by S&P Global Ratings, placing the Bank among its top three highest-rated banks in the MENA region. The upgrade reflects ADCB's strong financial position, high asset quality, and disciplined risk management. In April 2025, ADCB launched Meedaf, a pioneering financial services venture designed to help banks and financial institutions across the UAE and GCC region enhance operational efficiency, reduce costs, and remain competitive through innovation and advanced technologies. In April 2025, ADCB was named the strongest banking brand in the UAE, with its brand value rising 17% year-on-year to AED 12.3 billion, according to Brand Finance's latest global rankings. The Bank achieved a brand strength score of 81.5 ('AAA-') and climbed seven places to 102nd globally. Commentary on Q1'25 financial results ADCB entered 2025 with solid momentum, embarking on a new Board-endorsed five-year strategy to drive long-term sustainable expansion. The Bank recorded a 15th consecutive quarter of growth in profit before tax, which rose 20% year on year to AED 2.907 billion, marked by high-quality growth across core businesses. First-quarter net profit after tax(1) was AED 2.446 billion, delivering a return on average equity of 13.7%. In the first quarter, the Bank continued to benefit from well-balanced income streams, with operating income rising 9% year on year, primarily driven by a sharp 26% increase in non-interest income across all main line items. In parallel with top-line growth, ADCB delivered further gains in operational efficiency, with the cost-to-income ratio improving by 170 basis points year on year to 29.2% in the first quarter. Operating expenses decreased 6% quarter on quarter as the Bank continued to focus on disciplined cost management while deploying targeted investment in talent and technology to drive higher productivity and an enhanced customer experience. The UAE's robust economic fundamentals continued to support a healthy credit pipeline. Net loans increased by approximately AED 9 billion during the quarter, led by the financial institutions, energy and transport and communication sectors, while exposure to government-related entities (GREs) remained significant at 27% of gross loans. Notably, asset quality continued to strengthen considerably, with the non-performing loan ratio declining to 2.24%, while cost of risk improved by 18 basis points year on year to 0.49%, remaining within our guidance. The strong financial position was recognised in March with an upgrade by S&P Global Ratings to a credit rating of 'A+', placing ADCB among its three highest-rated banks in the MENA region, reflecting the robust capital base, asset quality, risk management culture and control framework. The ratings upgrade affirmed the Bank's position as a high quality issuer in international capital markets. ADCB successfully priced a USD 600 million dual-listed Formosa bond in February at a favourable spread of 105 basis points above SOFR with the issuance allocated predominantly to Asian investors due to strong demand. ADCB's trusted franchise and a strategic focus on service excellence are driving customer growth and substantial inflows of deposits, which increased by AED 21 billion in the first quarter, including AED 12 billion of current and savings account (CASA) deposits. This leading market position was reflected in a 17% year on year increase in our brand value to AED 12.3 billion, according to the 2025 Brand Finance report, placing ADCB as the highest-rated banking brand in the UAE, for the second 2024 consecutive year. (1) For Q1 2025, ADCB has provisioned for tax at a rate of 15% based on the Domestic Minimum Top-up Tax (DMTT) introduced by the UAE on 1 January 2025, versus the 9% corporate income tax rate applied in 2024. Therefore, year-on-year comparison is not on a like-for-like basis. For more information, please see note 3 of Q1'25 financial statements (2) Excluding net loss on discontinued operations (as applicable) and one-off gain recorded from the divestment of an 80% stake in Abu Dhabi Commercial Properties (ADCP) in Q4'23 Enhanced efficiencies and business growth ADCB's investment in digital and AI technologies is delivering tangible impact, enabling the Bank to serve a fast-growing customer base with greater speed, convenience, and efficiency. In the first quarter, the Retail Banking Group (RBG) welcomed over 89,000 new customers, with 71% onboarded through digital channels. Key digital transformation initiatives were rolled out during the quarter, including multi-CASA and multi-currency account opening features and enhancements to automated approval processes. As a result, an increasing share of credit card and personal loan applications were approved through straight-through processing, with no human intervention. In parallel, targeted AI initiatives were launched to support revenue generation, improve customer experience and drive efficiencies at an enterprise-wide level. The Corporate and Investment Banking Group (CIBG) continued to deepen and diversify its client base, establishing over 100 new banking relationships in the large corporate and GRE segment during the quarter. In the SME and mid-sized corporate segment, more than 2,000 new relationships were added. CIBG maintains a market-leading fee-to-income ratio, supported by an expanding working capital proposition, as well as cross-border transaction banking and liquidity management capabilities. The Group reinforced its capital markets advisory profile through lead roles in a number of key transactions, including a USD 500 million green sukuk issuance by Aldar Properties and a USD 1 billion sukuk issued by the Ras Al Khaimah Investment and Development Office. The Private Banking and Wealth Management Group continued its strong trajectory, recording a 46% increase in assets under management (AUM) over the past 12 months. ADCB Private's offering of investment advisory alongside core banking services is attracting significant numbers of high-net-worth individuals, with 7% growth in clients during the quarter. Launch of Meedaf to unlock new income streams In line with the five-year strategy launched in January, which aims to double net profit to AED 20 billion by 2030, ADCB has unveiled Meedaf, a strategic venture designed to expand beyond traditional banking and unlock new income streams. Launched in early April and operating within Abu Dhabi Global Market (ADGM), Meedaf will provide specialised operational services to financial institutions across the UAE and GCC, leveraging advanced digital solutions to enhance efficiency and create long-term value across the sector. Meanwhile, ADCB continues to make strong progress in embedding global best practices across its sustainability framework. The Bank has published its 2024 ESG Report, which includes its first double materiality assessment aligned with GRI and IFRS standards, extensive stakeholder engagement across the value chain, and third-party assurance of Scope 3 financed emissions. The Bank's approach to ESG has been recognised through a 'Regional top-rated' badge by Sustainalytics for the Middle East and Africa region. ADCB is also contributing to national sustainable finance policy development as a knowledge partner to the Global Climate Finance Centre (GCFC), working alongside key UAE government entities to help shape sector-wide ESG KPIs and targets for 2025. A strong capital base, diversified business model, and a disciplined approach to risk management form the robust foundations for ADCB's enduring expansion and resilience. The Bank benefits from a business-friendly operating environment in the UAE, which continues to grow as a preferred destination for capital and talent. ADCB remains well equipped to navigate global market and economic uncertainty, to create sustainable value while contributing to the stability and development of the economy. Ala'a Eraiqat Group Chief Executive Officer Deepak Khullar Group Chief Financial Officer
Arab Times
23-04-2025
- Business
- Arab Times
Al Sager: NBK Not Only Overcomes Challenges — It Transforms Them into Opportunities for a Stronger, More Sustainable Fu ture
KUWAIT CITY, Apr 23: Mr. Isam Al-Sager, Vice Chairman and Group CEO of National Bank of Kuwait (NBK), expressed unwavering confidence in the bank's ability to swiftly adapt to the evolving economic landscape, all while maintaining its leadership position in the local market. On the sidelines of the analyst conference call for the first quarter of 2025, Al-Sager stated, "We not only overcome these challenges, but we seize them as opportunities to build a stronger and more sustainable future." He emphasized that NBK continues to enhance its flexibility, investment, and technology, all while maintaining a steadfast commitment to the highest quality standards in addressing the evolving needs of its customers. He highlighted that NBK's regional and international presence remains a key factor in mitigating risks, stabilizing revenue, and improving operational efficiency. He further stressed that the Group's ongoing goal is to drive value and profitability by strengthening the integration of its businesses and expanding cross-selling opportunities across the various markets in which it operates. Al-Sager emphasized that the Group's wealth management business will continue to leverage its extensive experience in delivering a comprehensive approach to portfolio management, advisory services, and investment opportunities. Meanwhile, its Islamic banking arm, represented by Boubyan Bank, will further reinforce NBK's distinctive position in the local market and play a pivotal role in diversifying its sources of profitability. He attributed the 8.5% year-on-year decrease in the bank's net profit for the first three months of 2025 primarily to the introduction of the new Domestic Minimum Top-up Tax (DMTT), which took effect this quarter. This led to an increase in the effective tax rate to 16.3% in 1Q2025, compared to 9.2% in the corresponding period of 2024. He noted that, excluding the impact of the new tax, pre-tax profit actually saw a 0.8% year-on-year increase, reaching KD 173.4 million in the first quarter of 2025. Al-Sager stated that the Group's returns remained robust despite the impact of the new tax system, with the return on average assets reaching 1.33% in the first quarter of 2025. Meanwhile, the return on average shareholders' equity stood at 13.1%. He also highlighted that the Group's loan portfolio is strategically allocated, with 70% originating from Kuwait and 30% generated through its international presence. 'NBK reaffirms its unwavering commitment to sustainability and advancing its sustainable financial agenda. The successful issuance of the first green bonds in 2024 stands as one of the bank's most significant achievements, attracting strong interest from international investors and reaffirming the market's confidence in our ESG strategy,' Al-Sager added. He highlighted that the bank continues to make significant strides in integrating climate-related standards into its operations, with a particular focus on reducing the carbon footprint of its investment portfolio and effectively managing climate risks. He noted that these efforts align with leading international standards, strengthening NBK's role as a key player in supporting Kuwait's commitment to achieving carbon neutrality, while also reflecting its crucial role in driving the transition toward a low-emission economy. Kuwait's Economy On the performance of the Kuwaiti economy, Al-Sager stated that despite the slowdown in macroeconomic activity in 2024, the near-term growth outlook for 2025 remains optimistic. He attributed this positive outlook to several key factors, including the anticipated easing of voluntary production cuts by OPEC+, the gradual recovery of consumer spending, credit growth, the resurgence of momentum in project market activities, and the potential acceleration of public investment. He explained that, supported by these factors, Kuwait's GDP is expected to grow by 3.0% in 2025. Regarding the projects market, Al-Sager noted, 'The market experienced some slowdown in the first quarter of 2025, following a strong year of activity in 2024. The value of projects awarded in the first quarter reached over KD 400 million. However, the outlook remains promising, with projects in preparation estimated to exceed KD 10 billion, reflecting the government's strong commitment to advancing its development and reform agenda at an accelerated pace'. As for the short-term outlook for oil prices, Al-Sager remarked that as the government continues to focus on implementing its development plan, oil price fluctuations have become less impactful on capital spending. He explained that this type of spending now accounts for less than 10% of the total government budget, reducing the likelihood of significant savings should oil revenues face pressure. He also noted that the first two years of capital spending will primarily focus on addressing infrastructure gaps, with the provision of basic services to meet population growth remaining a key priority. He stated that the recently approved Financing and Liquidity Law provides the government with greater flexibility in managing its financial resources, enabling the issuance of debt instruments worth up to KD 30 billion. On the mortgage law, Al-Sager explained that several important meetings have recently been held to approve the law, including discussions with the Public Authority for Population Welfare to sign advisory service agreements with real estate developers. He indicated that the law is expected to be approved due to its strategic importance, particularly given the more than 100,000 pending housing applications and the growing population of Kuwaiti youth, which adds approximately 10,000 new applications annually. Furthermore, Al-Sager emphasized that the banking sector's strong liquidity position strengthens its ability to play a key role in addressing the housing problem in Kuwait. The GCC & The Global Economy Al-Sager pointed out that, supported by robust fiscal reserves, ambitious economic reform programs, continued progress in major projects, and strong demand, the economies of the GCC are expected to maintain relatively strong performance in 2025. However, he cautioned that tightening global financial conditions could dampen investment and trade flows, increase financing costs, and potentially lead to a decline in demand, along with volatile oil prices. Regarding the global economy, Al-Sager noted that it has recently navigated a complex environment marked by shifting monetary policies and escalating geopolitical tensions. He pointed out that the recent trade war and tariffs imposed by the US administration have cast a shadow over the economic landscape, potentially contributing to higher inflation rates and a slowdown in growth, further deepening the uncertainty surrounding the global economic outlook. Robust Operational Performance In the meantime, Mr. Sujit Ronghe, NBK Group Chief Financial Officer, stated that despite the impact of the new tax regime, the Group maintained strong operating performance in the first quarter of 2025, driven by significant growth in business activities, particularly in lending and investment. He highlighted that the operating income mix remains well-balanced, with non-interest income comprising 24% of total revenue sources. Ronghe emphasized that NBK Group's financial position remains robust, characterized by high levels of credit quality, strong capitalization, and the bank's ability to generate operating profits that enhance its capacity to absorb credit losses. He further noted that the Group continues to leverage its unique advantage among Kuwaiti banks, particularly through its broad geographical presence via a network of overseas branches and subsidiaries, along with its ability to offer both conventional and Islamic banking services. He highlighted that operating income during the first quarter of 2025 was distributed across key business segments, with overseas branches and subsidiaries contributing 26%, Islamic banking 22%, consumer banking 20%, corporate banking 12%, and NBK Wealth 9%. Ronghe further explained that overseas branches and subsidiaries accounted for 27% of the Group's net profit during the first quarter of 2025, while Islamic banking contributed 19%, corporate banking 17%, consumer banking 16%, and NBK Wealth's contribution reached 10%. He also noted that IBG and Boubyan Bank collectively contributed 44% and 23%, respectively, to the Group's total assets, reinforcing the Group's strategy of diversifying its revenue sources. Ronghe noted that the Group's loans and advances saw impressive growth during the first quarter of 2025, reaching KD 24.6 billion, reflecting a 9.9% increase compared to March 2024 and a 3.8% rise on a quarterly basis. This growth was driven by higher loan volumes in both Kuwait and international markets, across conventional and Islamic banking services. He further pointed out that, amidst the prevailing economic uncertainty, loan growth in 2025 is expected to remain in the single-digit range. However, any improvement in global conditions, a faster pace of project implementation, or the approval of the mortgage law in Kuwait could significantly boost the growth of loan activities. Regarding the recently implemented DMTT tax in Kuwait and its impact on the bank's profits for the current year, Ronghe stated: "The executive regulations of the law are expected to be issued within six months of its adoption. In the absence of detailed regulations at this stage, current estimates suggest that the effective tax rate for 2025 will range between 16% and 17% of pre-tax profits. He pointed out that the net interest margin for the first quarter of 2025 was impacted, reaching 2.45%, due to an unfavorable shift in the asset mix, along with the annual effect of the depreciation of the Egyptian pound and the decline in historically high interest rates. However, the recent approval of the Finance and Liquidity Law in Kuwait boosts expectations for the upcoming issuance of sovereign debt instruments this year, which will allow the bank to repurpose liquidity into interest-bearing assets. He emphasized the bank's capacity to provide the necessary financing for development projects currently in the pipelines, supported by its diversified and stable financing base, which aligns with NBK's strategy for sustainable growth. Regarding his outlook for the operating environment, Ronghe stated: 'Despite the prevailing uncertainty in the economic landscape, we remain cautiously optimistic that the overall operating environment, although challenging, stabilize in due course during 2025'.
