Kuwait Finance House Group CEO, Mazin Saad AlNahedh said that the positive financial results and the operating profits stemmed from the focus on the core banking activities. They reflect the stable and sustained growth in profitability, encompassing all indicators, confirming the success of our long-term strategy despite the challenging economic and political developments.
He added during the first half 2019 – KFH Earnings Webcast:
“Our efforts have been focused on maintaining profit growth rates and implementing the best banking practices in full compliance with supervisory and sharia directives. This in addition to taking advantage of technology, administrative and organizational plans.”
KFH is involved in nearly every major financial transaction in Kuwait, from financing government and private companies for local projects to financing their ventures abroad and internationally.
Al-Nahedh confirmed that KFH is a key component of the Kuwait 2035 vision as a leading Islamic financial institution enabling national development and growth of the financial services industry, while also helping facilitate the growth and diversification of investment efforts of many other economic sectors.
He added that KFH Group has succeeded in consolidating its position in the Sukuk market. The bank has arranged issuances worth more than USD 5 billion for companies and governments through KFH Capital, the investment arm of KFH. This is in addition to launching a new index for dollar- denominated Sukuk issuances in the global markets.
Regarding the potential Acquisition of AUB Bahrain, Al-Nahedh explained that KFH has disclosed to the regulatory authorities and the market the latest developments in this regard and there are no further updates at this time, and it will disclose as and when any new developments take place.
Group’s Chief Financial Officer at KFH, Shadi Zahran said that the Group has achieved Net Profit After Tax (NPAT) attributable to Shareholders for the period ended 30th June 2019 of KD 107.7mn higher by KD 12.4mn or 13.1% compared to H1 2018 of KD 95.2mn.
The increase in investment income is mainly attributable to finalization of projects and divestments which led to increase in investment income to total operating income to reach 15.4% compared to 7.6% last year. However, the other non-yielding income contribution remained at almost same level of 21%.
Net financing income (NFI) has decreased by KD 27.2 mn or 9.8% compared to same period last year. This is due to increase in COF by KD 63.6 mn which is partly offset by increase in financing income of KD 36.4mn.
Zahran said that financing income increase resulted mainly from the increase in average yielding assets. On the other hand, increase in COF is mainly due to the full effect of increase in benchmark rates impacting financing cost, and the increase in distribution to depositors as a result of higher Group profitability and Mudaraba based deposits concentration.
Furthermore, at KFH-Kuwait, C/I ratio at 36.9% which is below both the local Islamic Banks average of 38.1% and local conventional Banks average of 38.4% (calculated from published financials for Q1-19).
Zahran said the Group total provisions and impairment charge increased by KD 1.9mn or 2.0% to reach KD 99.9mn. Higher provisions on financing by KD36.3 mn is on account of precautionary provision of KD 40mn recorded at Group level on our Turkish subsidiary financing portfolio on conservative basis in view of market outlook.
He continued: “The Group achieved an outstanding growth in deposits during the first half of KD 1.1bn or 9.0% with contribution from all banking operations reflecting the results of investments made in digitalization and depositors confidence in KFH Group.”
Additionally, the favorable deposits mix continues to show very healthy contribution from CASA deposits which represents 45.8% of total Group deposits as at the end of H1 2019 – maintaining same level during the past few years. It is also worth to mention that KFH Kuwait dominates the saving accounts with market share of 41.1% (as per CBK latest published reports, May-19).
Investments in Sukuk at KD 2.1bn increased by KD 582mn or 37.2% since Dec-18 with a growth contribution from all banking entities and the majority of the balance represents investment in Sovereign Sukuks. The growth in Sukuk portfolio is a response of growth in deposits in all markets we operate in with limited good asset quality financing opportunities and Group’s overall Risk profile.
Group Chief Strategy Officer at KFH, Fahad Al-Mukhaizeem covered highlights of Kuwait’s operating environment with an overview on KFH. He also spoke about KFH’s strategy, as well H1-2019 results. Al-Mukhaizeem said:
“On June 25, 2019, (MSCI) announced the conditional upgrade of Boursa Kuwait on its main index for emerging markets. The fruits of the 2035 Development Plan are beginning to be seen in the economic environment for the State of Kuwait concerning the encouragement of foreign investments, in several areas. The most important sign of success is the liquidity enhancement in Boursa Kuwait which shows a rise since the beginning of the year. The average daily trading value has tripled as of the First half of 2019 over the same period last year.”
Al-Mukhaizeem indicated that Moody’s recently affirmed KFH’s long term rating and upgraded KFH’s baseline credit assessment (BCA) to baa3 from ba1, with stable outlook reflecting sustained improvements in the bank’s asset quality and earnings.
He pointed out that KFH won Kuwait’s Best Bank 2019 from both Euromoney Group and Asiamoney which confirms KFH’s leadership and success in Kuwait.
He explained that currently KFH branch network exceeded 509 branches around the world, thus continuing the Key strengths which include Strategic distribution channels in addition to our robust financial performance.
He said that some of the business highlights include opening of the Largest Auto Showroom in the Middle East, with more than 20 car dealerships, valuation services, a ladies’ section, in addition to a charging station for electric vehicles. This achievement strengthens KFH’s role in serving the national economy and the retail market as well.
As a strategy, he said that KFH uses state of the art technology in its digital banking services to meet customer demand. Through the innovative KFH-Go branches customers can perform 90% of their required banking transactions. KFH also introduced the first ever Mobile Deposit for Cheques in Kuwait, through KFH Online app.
Source Zawya