Kuwaiti banks: Room for de-rating

Research evidence excerpt

Kuwaiti banks: Room for de-rating

Contents

Investment summary 3

KFH: risk of higher COR + mispricing of Türkiye in COE 3

NBK: modest ROAE and EPS CAGR in the next 3Y 3

Delays likely on policy reforms and project execution 3

International ops: highest share among MENA banks 4

Asset quality risks set to rise 4

Risks: Faster-than-expected growth, Türkiye 4

Theme 1: Slower credit growth in 2026E, rebound from 2027E 5

Project awards: 0.6x correlation to loan growth 6

Mortgage law: Positive when passed, but cannibalization likely 7

Theme 2: Going global = Higher COE (KFH), lower ROE (NBK) 11

KFH: Rising Türkiye = higher ROE, but also higher COE 11

NBK: More international = lower ROE 13

Theme 3: Potential asset quality deterioration 15

Asset quality trends during previous “stress” scenarios 16

Valuation premium unwarranted 21

Liquidity position: stable in Apr vs. Mar 26

Positioning: Most UW sector in EEMEA 27

NBK vs. KFH: 7 key differences 29

Initiate on KFH: COE not fully captures TK 37

DuPont analysis: 11.6/21.9% next 4Y avg. RoAE/RoTE 38

Gordon growth model: Initiate at U/P with PO KD0.650 38

Consensus: EPS growth story well captured, see no upside 40

P&L: 16% 3Y EPS CAGR led by reducing hyperinflation loss 41

BS drivers: 11% 3Y CAGR with strong TK tailwinds 42

Capital: sufficient for BS growth and rising DPS 44

NBK: 3% 3Y EPS CAGR amid 11-12% ROE 45

DuPont analysis: 11.6% next 4Y avg. RoAE 46

Gordon growth model: PO KD0.806 46

Consensus: we are in-line with consensus net income 48

P&L: lower NIM, higher CIR & CoR = 3% EPS CAGR 49

BS drivers: 8% loan growth 3Y CAGR, flat LDR 50

Capital: sufficient, not excessive 52

Appendix: CBK data 53

Impact of GCC conflict on Kuwait 55

Quarterly trackers and summary financials 57

2 Kuwaiti banks | 18 May 2026

CR