Chairman of Kuwait Finance House (KFH) Hamad Abdulmohsen Al-Marzouq said that “KFH has, by the grace of Allah, reported a KD 169.10million net profit to shareholders until end of Q3 2018 compared to KD 137.87million for the same period last year i.e. an increase of 22.7%.
Net Financing income until end of Q3 2018 reached KD 404.82million i.e. a growth of 25.4% compared to the same period last year. Total operating income until the end of Q3 2018 reached KD 589.61 million, i.e. a growth of 12.3 % compared to the same period last year and net operating income reached KD 367.47million, i.e. a growth of 17.9% compared to the same period last year.
Earnings per share reached 27.04 fils, compared to 22.06 fils for the same period last year i.e. an increase of 22.6%.
Despite a real growth in the business, the decline in the Turkish currency rate against Kuwaiti Dinar during the third quarter of the current year has a negative impact on the consolidated balances as at the date of the interim condensed consolidated financial information. After excluding this effect, the total assets of the Group increased by 4.3%. The financing portfolio increased by 6.8%, and depositors’ accounts increased by 4.4% compared to year ended 31 December 2017.
Al-Marzouq explained that the realized profits are attributed to the efficient execution of the Bank’s strategy approved by the Board of Directors and the long-term plans implemented by the executive management by focusing on diversifying sources of strength, mitigating risk, rationalizing cost, increasing operating income resulting from core banking business and achieving harmony among Group banks to ensure sustainable profitability.
He added in a press release, that the indicators of the balance sheet are all positive, which demonstrates the robust financial position of the Bank, not to mention reinforces the stable and sustainable growth in profits over 4 years of outstanding performance, and 3 consecutive quarters until the end of the 3rd quarter of the current year. All key indicators recorded growth. Return on average equity (ROAE), return on average assets (ROAA) compared to the end of year 2017, and the earning per share (EPS) all surged. Also, Net financing income increased, the operating income of banking business grew compared to the same period last year, as this represents a major source of the group income. Further, cost to income ratio (C/I) has decreased compared to the same period last year, which reflects the improvement in the Group's performance despite the difficulties in the operating environment. This confirms the sound performance of the Group as KFH continues its prudent investment policy, effective risk management while maintaining improved asset quality as per the best practices in this field.
Al-Marzouq illustrated that KFH has developed many scenarios to deal with the developments in the banking sector on the regional and global levels, and the prospects for the future of banks at all levels, most notably the increasing competition in the banking industry. He said that the emergence of several mergers and acquisition deals confirm that a new banking world is underway heading to establishing large banks that enhance the capacity of these entities to secure local and international funding sources at a competitive cost, while enhancing the credit limits of those banks, thus increasing profits.
Al-Marzouq pointed out that KFH’s overseas operations are characterized by the geographical diversification that contributes in increasing liquidity, improving financing capability and asset quality, thus boosting profitability. KFH Group banks in Turkey, Malaysia, Bahrain and Germany have continued their successful performance in accordance with the set plans and strategies to benefit from the elements of strength in each market in which they operate. KFH Group Banks achieve further coordination and collaboration in different joint ventures.
Al-Marzouq expressed his confidence in the Bank’s strong financial hedge and the resilient mechanisms to deal with the economic conditions and the regional developments in their markets in an efficient manner. This reduces the effects of market fluctuations in the long and medium terms.
He continued: “Despite the sharp fluctuations in the Turkish lira, the position of KFH-Turkey is strong. This is attributable to the credit facilities granted in Turkish lira, the credit facilities granted in hard currency as well as the good credit growth and the increased credit margin of financing which enabled the Bank to overcome the impact of these fluctuations and mitigate risk.
Moreover, He said that KFH pays great attention to the technological side of rolling out high-end services, indicating Fintech is in line with KFH strategy of offering round the clock high-quality, cost-effective, advanced and innovative services. During Q3, KFH uniquely provided several Artificial Intelligence AI services. KFH signed a partnership agreement with Ernst & Young (EY) to launch an ambitious Robotic Process Automation (RPA) program as the first Bank in Kuwait to integrate Artificial Intelligence into operation. This increases productivity and reduces operational costs, yet allows the Bank to keep abreast of the international trend of utilizing AI, the most influencing element in the modern technology. KFH launched chatbot built on Microsoft technologies, in a move that promises to drive digital transformation by improving customer engagement. The chatbot is available to customers 24/7, on KFH’s most popular engagement channels, including the website KFH.com and mobile app KFHonline. KFH launched a centralized SWIFT network system for global payments at the group level. The Bank rolled out new system on its ATMs that accelerates the process of customers’ claims transactions, while minimizing error as it is an automated system. KFH offers “request Financing online” for its customers in efforts to save their time and efforts.
Al-Marzouq stressed KFH keenness on financing major and infrastructure projects in line with its strategy in supporting the national economy. This allows the banking sector to diversify its financing portfolio, indicating Kuwaiti banks enjoy high degree of liquidity and high solvency ratios. KFH succeeded in closing several credit facility deals in oil and gas, infrastructure, transportation, energy and real estate sectors within the framework of achieving the comprehensive development. The most recent deal was a contract of credit facility with Kuwait Integrated Petroleum Industries Company (KIPIC) where KFH participated in financing the company’s $2.3 billion Liquefied Natural Gas (LNG) import. KFH was selected to lead the deal of the Islamic banks for their share in the $500 million. KFH is currently studying different other projects to finance.
KFH continues its efforts in financing Kuwaiti companies and supporting them in improving their businesses and expansion plans as per credit regulations. KFH pays great attention to the small and medium enterprises SMEs. The Bank enjoys great share in financing SMEs as they play a significant role in supporting the youth segment and improving the performance of the entrepreneurs. This contributes in diversifying income resources, creating new jobs while building national expertise in business.
KFH has strong retail activities thanks to its role as a leading provider of Shariah-compliant financial products and services, which is a fundamental pillar of the Bank’s business. Efforts have been exerted to promote market share by establishing cooperation and partnership agreements with many local companies in various fields, and by organizing marketing and promotional programs to energize the market. KFH continues to provide the highest level of service quality, while paying great attention to customers, and innovating new products and services.
At the level of deposits, KFH offers wide range of investment deposits with competitive yield. This contributes in attracting new segments of customers, while providing the best savings programs that help customers to financially plan for their lives and the future of their children. KFH uniquely offers a range of diversified banking cards, accompanied by a wide range of discounts and prizes. This differentiates the Bank’s customers, and increases the usage volume of the cards locally and globally. This also contributes in achieving a secure payment system across the world.
Al-Marzouq reiterated that the positive ratings of KFH by international rating agencies, and the prestigious international awards from global institutions, most recently the Safest Islamic Bank award in the GCC- 2018 by Global Finance Magazine affirm KFH role in leading the international development of Islamic financial services. The ratings and the awards represent an impetus for maintaining growth, indicating KFH will continue its prudent policy to face any local and global challenges. KFH strengthens its precautionary provisions and its financial position by focusing on core banking business while improving its asset quality.
He stressed the significant role of the human resources at the Bank, indicating KFH works tirelessly on qualifying and honing the skills of its human capital; mainly the national youth. This paves the way for creating leaders who are able to deal with the future challenges, while coping with the growth of the Bank in the regional and international markets, which adds genuine value to the capacity of the national economy.
He mentioned that KFH achieved great success in the social sustainability strategy in different initiatives including education, health, youth, and people with special needs to confirm the leadership of the Bank in social responsibility.
Al-Marzouq concluded by conveying his sincere thanks to all shareholders and customers for their continuous and valuable support and trust in KFH activities and business. He extended his appreciation to all regulatory authorities for their support. He appreciated the efforts of KFH staff and the executive management for their distinguished performance, emphasizing the importance of maintaining the pioneering position of KFH in all fields.