AbdulWahab Al-Rushood- Acting Group Chief Executive Officer
Acting Group Chief Executive Officer at KFH- AbdulWahab Al-Rushood highlighted the Bank’s financial performance until end of Q3 2021, indicating KFH has, by the grace of Allah, reported KD 168.1 Million Net profit for shareholders until end of Q3 2021; an increase of 66.1% compared to the same period last year.
Earnings per share reached 20.08 fils; an increase of 66.0% compared to the same period last year.
Financing receivables reached KD 11.3 Billion an increase of 5.6 % compared to end of year 2020.
Depositors’ accounts reached KD 16.0 Billion an increase of 4.5% compared to end of year 2020.
Total assets reached KD 21.97 Billion, an increase of KD 469 million or 2.2% compared to end of year 2020.
Shareholders’ equity reached KD 1.9 Billion; same level as end of year 2020.
Al-Rushood pointed out that KFH has successfully achieved solid financial results for the nine months ended 30 September 2021 despite the challenges Coronavirus imposed on the operating environment locally and globally. KFH enjoys high liquidity ratio and solid capital base that support business growth and adherence to regulatory requirements. Also, the importance of continuous improvement of asset quality and developing credit facility policies and governance systems within best practices.
He underlined KFH`s role in sustainability through issuing Green Sukuk, indicating that the Bank has succeeded in arranging sustainability sukuk issuance transaction for KFH-Turkey amounting to USD 350 Million. The sustainability Sukuk issuance is considered as the first of its kind to be issued by an Islamic financial institution and the first tier 2 sustainability Sukuk issuance transaction globally.
Al-Rushood highlighted the successful issuance of $ 750 million AT1 Mudaraba Sukuk by KFH, which is the largest issuance in Kuwait in terms of size, with its subscription orders exceeding $ 2 billion, by close to 3 times the targeted issue size.
He mentioned that KFH is moving forward in its leading national role through supporting and financing the government development projects, providing wide range of retail and corporate banking and financial solutions as well as SMEs. KFH has a diversified financing portfolio that covers different vital sectors including energy, water, power, infrastructure, and construction.
Shadi Zahran- Group Chief Financial Officer
Meanwhile, Group Chief Financial Officer at KFH- Shadi Zahran presented the financial performance of KFH Group until end of Q3 2021, saying the Group has achieved Net Profit After Tax attributable to Shareholders for the period ended 30th September 2021 of KD 168.1mn higher by KD 66.9mn or 66.1% compared to 9M-20 of KD 101.2mn.
The higher profits are mainly from lower provisions offset by lower investment income and net finance income.
Zahran added that net financing income has witnessed a decrease by KD (7.5)mn or (1.7)% compared to same period last year mainly due to increase in COF and drop in the yield.
He said that the increase in COF by (6.5)mn or (3)% is mainly from our subsidiary in Turkey due to impact of the increase in benchmark rates by Central Bank of Turkey (CBT). CBT benchmark rate as of Sept 2021 was 18% compared to 10.25% in Sept 2020.
Net Operating income at KD 364.3mn decreased by KD (37.5)mn or (9.3)% compared to same period last year; the decrease is mainly from Investment income by KD (34.2)mn.
The decrease in investment income by KD (34.2)mn is mainly due loss on Islamic derivative transactions (mainly currency & commodity swaps entered by our subsidiary Kuwait Turk) partly offset by increase in other investment income.
Zahran pointed out that despite the decrease in net financing income, contribution of net financing income to operating income increased from 72% to 75% due to lower investment income.
At KFH-Kuwait, C/I ratio at 30.65% is still below both to the local Islamic Banks average of 43.2% and local conventional Banks average of 40.6% (calculated from published financials for H1-21)
Zahran indicated that Average Yielding Assets is up by 5.4% compared to FY2020 and 6.1% for 12 months as compared to Sep-20, resulted mainly from the growth in Financing receivables. Avg. financing receivables is up by KD 0.6bn compared to 2020 and by KD 1bn compared to 9M-20.
Looking at provisions and impairments, Zahran explained that the Group total impairment charge decreased by KD 127.7mn or 52% to reach KD 118.2mn for 9M-21.
Group has continued to adopt conservative approach towards provisioning and recorded precautionary general provision.
Zahran said: “As we used to highlight KFH group credit provisions as of 30th Sep 2021 exceeds required IFRS 9 ECL as per CBK by KD 314mn.
Total Assets at KD 22bn increased by KD 0.5bn or 2.2% as at the end of 9M-21.
Financing receivables at KD 11.3bn increased by 5.6%. Growth in financing receivables mainly in Kuwait from both Corporate and Retail, while a slight decline in Turkey mainly due to devaluation of Turkish Lira. Overall growth in financing receivable excluding the impact of TL devaluation was around 8.3%.
Investments in Sukuk at KD 2.7bn is maintained at the 2020 level.
He added that deposits as for 9M-21 at KD 16bn are KD 0.7bn or 4.5% above December 2020 level. Growth in Deposits excluding the impact of decline in Turkish Lira was 5.9%.
The group was able to maintain favorable deposits mix with healthy contribution from CASA deposits at 53% of total group deposits as at the end of 9M-21 compared to 52.4% as of Sep 2020.
Customer deposits as a percentage of total funding at 84.9% reflects healthy funding mix and shows robust liquidity.
Zahran pointed out that the key performance ratios which reflects improvement in profitability except for the C/I ratio which deteriorated as explained earlier.
- ROAE from 6.94% to 11.82%
- ROAA from 0.87% to 1.31%
- EPS from 12.10 fils to 20.08 fils
NPL ratio improved to reach 1.88% (as per CBK calculation) in 9M-21 compared to 2.20% for 2020.
Provisions Coverage ratio for Group is 289% in 9M-21 compared to 223% for 2020.
Fahad Al-Mukhaizeem- Group Chief Strategy Officer
Meanwhile, Group Chief Strategy Officer at KFH- Fahad Al-Mukhaizeem highlighted the Kuwait operating environment with an overview on KFH and its strategy.
Al-Mukhaizeem said that Kuwait's coronavirus vaccination program began in December 2020, and as at late September over 60% of the population had received a first dose, and more than 20% of the population is now fully vaccinated. The main economic benefits of high vaccine coverage are likely to be felt in the final quarter of 2021. According to the latest forecasts to the International Monetary Fund, Kuwait’s economy will continue its post-pandemic recovery in 2022 with a 4.3% growth, supported by external economic conditions and a further rise in global oil prices.
For interest rates, Al-Mukhaizeem indicated that the Central Bank of Kuwait kept the interest rate at 1.5% after the last cut of 100 basis points on the 16th of March 2020.
Al-Mukhaizeem pointed out that “KFH” enjoys a high creditworthiness, indicating Fitch Ratings affirmed Kuwait Finance House Long-Term Issuer Default Rating at 'A+' with a Negative Outlook as a result of revising the outlooks on 11 Kuwaiti banks to Negative from Stable, following a similar action on Kuwait's sovereign rating in February 2021, and Moody’s assigned an A2 long-term deposit rating with a Stable Outlook.
He added that KFH Group has recently been named as the Best Islamic Financial Institution in the World by Global Finance Magazine, the Bank of the year in the Middle East and in Kuwait by The Banker, and the Best Domestic bank in Kuwait by AsiaMoney.
Al-Mukhaizeem said that the leading role KFH plays in its social responsibility continues as the bank focuses on education, health and environmental activities, workforce, youth and entrepreneurs support, as well as dealing with society as corner stone of the Bank’s strategy. Further, as per the MSCI ESG Ratings Kuwait Finance House is the highest rated entity within Kuwait compared to its peers.
Al-Mukhaizeem said that KFH adopts an innovation strategy for its banking solutions with the number of e-banking transactions implemented by KFH customers through KFHOnline on the website or the mobile app exceeded 113 million transactions for the first nine months of 2021, an increase of 26% compared to the same period last year. The high demand from customers for digital services reaffirms the importance of providing diversified solutions that match the customer needs.
He went on to say that KFH continues to play a pivotal role in the local and regional economies within which it operates.