One of Kuwait's key success stories is Kuwait Finance House (KFH) -a heavily traded stock on the local stock exchange and a major player in the economy. Founded in 1975, it currently has assets worth a massive €7.3 billion. Profits rose almost 10 per cent in 2001 to €137 million and shareholders count on receiving dividends in the region of four per cent. Part of its growth is due to the popularity of Islamic banking, but also the strengthened price of oil during 2000 and 2001 despite a temporary slide after the tragic events of 11th September. KFH's role in the Kuwait economy since the invasion has been very pronounced and, not surprisingly, construction and real estate have featured heavily in its activities. General manager Jassar Al-Jassar says that 1994-1995 saw a doubling of profits on account of the rebuilding. "I think we have contributed considerably to the Kuwait economy and in the area of real- estate finance especially. We have played a major role in financing family groups and government construction," he says. Although its origins in 1975 reflected the attempts of the Gulf states to assert their cultural and financial independence from Western banks, many of KFH's developments mirror those of its Western counterparts, such as heavy investment in technology and customer-driven product offerings. The bank has an internet banking service available in Arabic as well as English, called Tamweel Net, and a separate banking service for women. By the end of 2002 there will be 30 branches in Kuwait, and Al-Jassar envisages a one-stop shop situation for customers so that each client can have all the services they require under one roof’. Looking to the future, AI-Jassar is very enthusiastic about the opening up of the Kuwaiti marketplace to foreign banks in 2003. He says: "I think the competition will be good for everyone, not least the customers. But we will preserve our special position in Islamic banking. This sector has higher barriers to entry for outsiders. Conventional and Islamic banking are two different ball games; credibility plays a big role and KFH has plenty because it was one of the earliest Islamic banks to open." There may be increased head-to-head competition from other established Islamic banks as well -but he welcomes this too. "By opening the doors it will be cut-throat competition, but that is how it should be; the weaker should leave the table and the stronger move up;' he says. Al-Jassar says KFH is already a key rival for many conventional banks and competes on an international level. "We recently got the licence for Bahrain and are already in Turkey and Malaysia. We will soon be in Saudi Arabia, Egypt, Morocco, the UAE and Oman -and will be in the States this year as well,” he says. One of the earliest entrants to Kuwait is likely to be HSBC, which already has a very strong Gulf presence. Al-Jassar says: "We welcome HSBC. We have an excellent relationship with it, and strong strategic alliances with Deutsche Bank and Citibank as well. Being Islamic means we can provide services for them, and vice versa. Prospects remain good for KFH as long as oil prices remain buoyant. While the Middle East continues to look troubled, whether on account of the West Bank or Iraq, the Gulf Co-operation Council is set to prosper AN INTRODUCTION TO ISLAMIC BANKING The one thing Islamic banks cannot provide is interest-bearing loans, deemed usu