“KFH’s policy focuses on increasing sustainable profitability and the core banking business. This has been translated in the 2015 financial results where KFH posted a net profit of KD 145.8 mln, an increase by 15.3 % over last year. The finance portfolio increased by 8.1% to KD 8.127 Bln, which is a healthy rate. KFH continues its efforts in expanding its banking business at the level of the Group while reducing the profits related to market volatility”, said Kuwait Finance House –CEO Mazin Saad Al-Nahedh.
He added in an interview with CNBC Arabiya conducted at KFH headquarters, that KFH’s exposure to stocks is minor, indicating that 92% of guarantees on offered financing are against monetary or real estate guarantees.
Al-Nahedh explained that KFH’s provisions in 2015 reached KD 147 mln, noting that the total provisions of the Group as of the end of 2015 reached KD 668 mln, an increase by 1.83% over the same period last year. These provisions are distributed as KD 492 mln as financing provisions, and KD 176 mln as investment provisions.
He clarified that the non-performing loans NPLs dropped to 1.98% as of end 2015 from 2.46% in 2014. They dropped to 3% from 3.9% for the Group. The coverage of NPLs reached 114%. These numbers puts KFH on the right track. KFH is continuing its prudent policy in setting aside provisions against NPLs, noting that the bank had already set aside provisions against all its NPLs.
Furthermore, capital adequacy ratio (CAR) reached 16.67% after the distribution of profits to shareholders as 17% cash distributions and 10% bonus shares. KFH shrank its share in Alafco Aviation Lease and Finance Company to 47% from 53%, not to mention that the Gulf Investment Corporation entered as a major shareholder in the said company.
Al-Nahedh stated that the fluctuations in oil prices and viewing this commodity as the main source of the economy affect the budget, indicating that the government has taken several steps that contribute in boosting the economy. He calls on further government projects that are considered vital and energize the market. Al-Nahedh voiced hope for the government to issue sukuk or bonds especially that banks enjoy high levels of liquidity which is a chance for them to participate in bridging the budget deficit.