EXCPR™: THE MOST IMPORTANT PERFORMANCE INDICATORS FOR LOCAL BANKS IN KUWAIT

THE MOST IMPORTANT PERFORMANCE INDICATORS FOR LOCAL BANKS IN KUWAIT

Fourth Quarter Report 2019

Corporate financial statements and indicators are important as they contribute to understanding the company's activity during the previous phase, in addition to evaluating the decisions currently taken by the executive management. In this regard, EXCPR Co. released the fourth quarter 2019 report on the most important KPIs for local banks in Kuwait, which can be relied upon to understand the accumulated additions achieved by these financial institutions. In addition, what has invited the company to continue its efforts in redirecting its sources towards the launch of the second version of these reports is full faith in the additions that such indicators can provide to members of the Board of Directors, executive management, investors and shareholders, as well as stakeholders. Additionally, many local banks have the financial statements of their institution compared to previous years, while they may lack to compare their performance towards the market and other competing banks.

MARKET SHARE

Market share is one of the most important indicators that the board members rely on to monitor periodically, because of its importance in measuring the performance of executive management in front of the activity of competitors in the market. In this regard, The Results of EXCPR Co. indicate that NBK continues to lead the local banking sector with a market share of 31.9%, compared to 24.9% for KFH. Burgan Bank held a market share of 9.2%, while Gulf Bank came in fourth with a market share of about 7.3% of the total domestic market size. The following figure shows the distribution of local banks relative to the market share of total revenues generated.

NET PROFIT

As for the net profit model, which is one of the platforms that the Banking Board of Directors adopts to read accurately, as it is an addition that mimics its financial wishes and to other investors, NBK is also considered one of the best local banks in terms of net profit, with an estimated value of KD 401 million. KFH ranked second in the domestic market with net profit of KD 251 million. The net profit of local banks in Kuwait was about KD 106 million per year, as described in the following figure:

ASSET PER EMPLOYEE

Another management indicator that contributes to the awareness of banking and banking activity, like other leading global banks, is the so-called total asset value relative to the bank's numbers of employees. By tracking this indicator, the effectiveness of banks' human assets can be measured in managing and amplifying the value of assets that these institutions know. Understanding and measuring these indicators with other competing companies may have an impact on re-laying off employees or employing more towards wealth generation. In this regard, the results of EXCPR Co. indicate that the greatest percentage of this indicator was that each employee working at NBK was equivalent to an asset value of about KD 13.1 million (up from KD 12.3 million in the previous quarter). Burgan Bank ranked second in terms of measuring the bank's assets against employees, with a value of approximately KD 9.6 million per employee. KFH came in third place with a remaining KD 7.6 million per working employee, and the results indicate that the average assets of local banks relative to the number of employees have been recorded at KD 6.6 million per employee, as described in the following figure:

ANNUAL DIVIDENDS

Annual distributions are also a sign of interest to investors and traders on Boursa Kuwait, in order to achieve more wealth. As for the cash dividends distributed by local banks in Kuwait, NBK has issued the scene with annual distributions of 35 fils per share. KFH ranked second with cash distributions of 20 fils per share. The third place came in the share of The United National Bank at 15 fils per share, compared to the average distribution rate of 12 fils per share for the banking sector in general. As for the grant profits distributed by these local banks over the past years, KFH has increased its existing distribution rate by 10%, compared to 3.5% for the rest of the banking sector in 2019. The following figure shows the distributions of the banking sector in Kuwait:

CHANGE IN NET PROFIT

The change in net profit from the important signs of bank activity compared to last year is also the general comparison with the rest of the market. By tracking this indicator, the growth of financial companies can be closely monitored and the future to which they are headed can be read. Warba Bank, which was recently established, led by 29.9%, compared with a growth of 12.2% for Gulf Bank. Boubyan Bank ranked third with a net profit of 11.6%, compared to 3.5% for the sector's growth rate, as shown in the following illustration:

RETURN ON EQUITY

The ROE shareholders' equity index is of additional importance to most international companies in comparing the performance of companies and the effectiveness of their executive departments in achieving their functions. This indicator has therefore been inferred, monitored and projected to the banking sector in Kuwait, in order to enable understanding of the overall picture of the competitive situation of the rest of the banks. The results indicate that the best local banks in terms of the ratio of returns on shareholders' equity were the share of KFH by 12.7% (which was 12.1% in the previous quarter). NBK and Ahli United accounted for 10.7% and 10.3%, respectively. Boubyan Bank came in fourth place with 10.1% return on equity, compared to 8% for the banking sector rate in Kuwait, as shown in the following:

MARKET CAPITALIZATION

Kuwait's banking and banking sector is of great importance to stakeholders, with a total market value of KD 18 billion – equivalent to USD 60 billion. The market value of banks is also one of the most important indicators that show the confidence of investors in their types of institutions and groups in addition to individuals, in order to achieve overall satisfaction with the performance of the board of directors represented by their executive management. The results of EXCPR Co. indicate that about 36% of the total market value of local banks was in the interest of NBK. KFH came in second with 31% (compared to 28% for third quarter results). Boubyan Bank was able to maintain its third place by achieving 10% of the total market value of the banking sector in Kuwait, which accounted for about KD 1.8 billion. The following figure shows the market value ratio of the rest of Kuwait’s local banks and banks:

Finally, as is known, the executive management and board of directors of banks and banks have many more financial and administrative results, which should be reduced to general indicators and results that are easy to understand and track, so that the necessary decisions are made and the guidance that will modify the course of action towards the desired strategic objectives is made. Performance measurement indicators and the choice of the best are the basis for continued competition in the markets and the amplification of the expected profit margin, and tracking those data and equations is significant in raising the efficiency of the organization, thereby achieving the highest level of value added expected for stakeholders. Today, we are standing in the face of the Corona pandemic, which has wiped out all the different commercial sectors, which require the development of production lines to meet the needs of stakeholders and keep enterprises from collapsing.