• Revenues increased by 7%, Deposits increased by 6% and Assets increased by 9%.
• Capital Adequacy Ratio improved to approximately 14%
• 10% Cash Dividends, 10% Bonus Shares and 30.80 Fils Earnings per Share
• Transformation Program yielded positive results and opens new opportunities for the future
• Consolidating operations with similar activities contributed to the revenue growth
• Continue to strengthen credit portfolio quality. Reflected positively on KFH’s development and strength
• 10 new products and services were launched; the bank also won prestigious awards last year
• Focus on the local market and financing Kuwaiti companies
• Decrease in NPL ratio from 9.3% to 5.7%
• Noticeable improvement in risk indicators, according to the internal model for risk rating
Kuwait City, Kuwait – XX February 2013: Kuwait Finance House (KFH) posted Net Revenues of 932.8 million KWD for 2012, an increase of 60.7 million KWD, 7% from 2011, resulting in Gross Profit of 262 million KWD, of which 171 million KWD will be distributed as profits for investment depositors as follows:
• 2.147% for Al-Khumasiya Investment Deposit
• 1.932% for Continuous Investment Deposit
• 1.503% for Al-Sedra Investment Deposit
• 1.288% for Saving Investment Deposits
Net shareholders’ profits reached 87.7 million KWD, an increase of 7.4 million KWD and 9% compared to 2011. Earnings per Share is 30.80 Fils, an increase of 2.78 Fils from last year. The Board of Directors recommended granting shareholders 10% Cash Dividends and 10% Bonus Shares subject to approval of general assembly and regulatory authorities.
As a result of implementing initiatives from its recent Capital Improvement Plan, the bank’s Capital Adequacy Ratio increased to approximately 14%.
Total Assets reached to 14.7 billion KWD, an increase of 1.2 billion KWD and 9% from 2011. Deposits also reached to 9.4 billion KWD, an increase of 511 million KWD and 6% from last year. Shareholders' equity increased to 1.3 billion KWD, an increase of 35.7 million KWD compared to 2011.
On behalf of the Board of Directors and the management team, Mohammad Al-Khudairi, Chairman at KFH, said:
“The growth in KFH’s 2012 financial results confirms the success of KFH’s Transformation Program. We consider these results a significant milestone in this strategic program that continues to place KFH on the right track to achieving sustainable profitability, enhance its market share and to confirm its leadership in the Islamic banking industry, the foundations of which have been laid through the bank’s proven track record of success and expansion over the last 34 years”.
Al-Khudairi highlighted the positive results achieved by KFH in 2012, which resulted in a high level of asset quality and improved financing portfolio, after allocating 255.3 million KWD as provisions, also resulting in decrease of NPL ratio from 9.3% to 5.7%. Moreover, there has been a noticeable improvement in risk indicators according to the internal model for risk rating.
Al-Khudairi affirmed that, despite the challenging local and global economic environment, 2012 marked continuous outstanding, safe and strong, operational performance across all KFH businesses. As a result, the balance sheet showed an increase of 8% in Return on Equity and an increase of Net Profits in 9% confirms the success of the development plans implemented by KFH. It also confirms that the implementation of the Transformation Program has come at the right time, and has been implemented professionally at all operating levels. The increase in shareholders’ profits by 9%, and Earnings per Share by 10% reflects KFH’s strong and balanced performance. In addition, the increase in total Revenues of 7% is another indicator that growth is on track and sustainable in-light of expenditure rationalization and maximizing returns based on asset quality, risk diversification and expansion plans.
He stressed that the growth achieved after the first year of the bank’s Transformation Program, undertaken in collaboration with Booz & Co. and other international consultancies, has insured customers are the focal point of all activities and that services are being now implemented according to their requirements. In-line with this Transformation Program, KFH has also consolidated the Retail and Wholesale operations which have contributed to growth in revenues from the retail business and local real estate. Al-Khudairi also stressed that KFH had maintained its credit ratings from major international credit rating agencies. The bank also continued to maintain its capital standards in accordance to regulatory requirements, with the Capital Adequacy Ratio currently at approximately 14%.
The Board of Director’s decision to increase the bank’s capital by 20% is in line with the bank’s confidence in its local and global expansion plans. The Capital raising is also a result of the current transformation program which is restructuring the bank’s operations for sustainable growth.
“KFH aims to make a significant contribution to the economic development of Kuwait by supporting Kuwaiti companies, complying with the highest international standards of banking laws and regulations. KFH also plays a major role in Malaysia, Bahrain and Turkey in strengthening commercial and economic relationships between Kuwait and these countries. In addition, the bank is currently investigating a number of investment opportunities in other international markets, in order to expand its network, which stands at 300 branches around the world, and better serve its customers and clients.”
Other KFH Group companies:
Kuveyt Turk Participation Bank:
With reference to Kuveyt Turk Participation Bank, KFH’s subsidiary in Turkey and neighboring markets, Mohammad added: “KFH continues to successfully expand in Turkey, offering unique products to the Turkish market, including the Gold and Silver accounts. In addition to serving KFH clients in Turkey, the bank, in conjunction with the Turkish Authorities, offers real estate financing for clients wishing to own property in Turkey.
KFH Malaysia and KFH Bahrain:
Commenting on the other Group companies, Mohammad said: “KFH-Malaysia continued to build upon its strong financial position. The bank is in the process of implementing a plan that aims to expand the KFH presence in neighboring countries to fully cater to the high demand for Islamic banking services and products in the region.”
KFH-Bahrain launched a number of new products and services and continues to develop the largest residential project by the private sector in the history of Bahrain, Diyar Al Muharraq, which includes about 3,000 villas. KFH Bahrain also led the largest merger deal for Islamic Banking merging three high profile banks, Elaf Bank, Elaf Bank, Capital Management House (CMH) and Capivest, forming a Financial Institution with total equity of over $340m and assets of over $400m across the MENA region, Europe and Asia, boosting the Islamic finance industry in Bahrain and in the GCC.
“Locally, Al-Khudairi stressed KFH’s continuous efforts to increase its market share in all areas in the local market, through competitive products and services, expanding its customer base and maintaining the quality of its service, with the continuation of leading CSR initiatives, and focus on introducing more technological tools and programs.
In 2012, KFH introduced 10 new services and products that both achieved high client satisfaction and attracted new clients. As a result, the bank received numerous awards, including Best Bank in Financing Companies and Projects from EMEAFinance, Best Islamic Bank in Kuwait from Asia Money, and Best Online Banking Services from Global Finance.
Al-Khudairi highlighted the importance of human resources at KFH and the continuous support they have from staff at all levels of the organization. Kuwaiti Nationals working at KFH make up 62% of the total workforce, and KFH has intensified its efforts in its training to match the transformation process. KFH has also collaborated with the governmental program (employment system restructuring), to attract more professional and talented staff.
He added: “KFH is very keen to serve the community by implementing CSR activities in coordination with official bodies. Over the past year, KFH provided over 21 million KWD to Zakat House, in-line with its aim to support the local community in which it operates.”