Kuwait Finance House (KFH) has released the third edition of the Sustainability Report for the year 2022. The purpose of the report is to enhance transparency, accountability, and communication with all stakeholders. The report highlights KFH’s performance according to global Economic, Environmental, Social, and Governance (EESG) key indicators, in addition to a range of sustainability topics.

It also covers KFH’s (ESG) performance and initiatives towards creating positive social and environmental impacts, its approach to responsible financing, and efforts to support the United Nations (UN) SDGs as well as promoting sustainable growth and adherence to Islamic finance principles.

On this occasion, KFH Chairman, Hamad Abdulmohsen Al Marzouq said that KFH has achieved remarkable advancements in putting the Group’s sustainability strategy into action.

He added that KFH has made impressive progress in establishing frameworks, governance policies, sustainability standards, and environmental considerations within a relatively short period, noting that these efforts align with the launch of programs and initiatives in the banking sector of Kuwait.

Al Marzouq stressed KFH’s keenness to ensure that its regulations and frameworks pertaining to sustainability align with the international standards and the Sustainable Development Goals (SDGs). Therefore, KFH has placed a high priority on creating a wide range of comprehensive and diversified programs that cater to the needs and expectations of stakeholders and market demands.

He explained that KFH has integrated sustainability with its digital transformation strategy by making substantial investments in the latest technology within the financial industry. The objective was to promote financial inclusion by broadening the availability of banking accounts, services, and products, as well as offering digital solutions to customers and meeting market needs. Additionally, the strategy aimed to streamline operational costs while improving the overall quality of services provided.

He added that the pioneering shift towards adopting the concept of sustainable banking has yielded favorable outcomes for the Bank. This is evident in the increase in KFH customers’ utilization of digital services, which affirms the Bank’s digital dominance at the banking sector level in a highly global and competitive environment.

Sustainable Finance

Al Marzouq affirmed KFH’s distinctive position in leading sustainability through Green Sukuk, saying that KFH Capital, the Group's investment arm, successfully arranged the issuance of USD 350 million sustainability sukuk for Kuveyt Türk, the first of its kind issued by an Islamic financial institution. It is also the first tier 2 sustainability sukuk issuance transaction globally. Proceeds will be used to finance sustainability projects of green and social projects.

Acquisition & Growth

On a different front, Al Marzouq stated that the regional global expansion of KFH’s network, thanks to the acquisition of Ahli United Bank (AUB), provides strong support for the Group’s activities and operations, in addition to the expansion of innovative services and products the Bank offers on a wider scale.

He said that the Bank’s profitability and socially responsible investments are both positively influenced by its geographical reach. KFH recorded the highest quarterly profit in the Group’s history and the highest in the Kuwaiti banking sector following the acquisition of AUB. These profits play a significant role in the continuation and expansion of various forms of sustainable development.

Community Contributions

Al Marzouq explained that KFH remains committed to the concept of generating shared value to guarantee true sustainability for stakeholders while upholding its high standards in community contributions.

“KFH’s CSR activities include supporting the Institute of Banking Studies and the strategic partnership with Coded Academy. Also, KFH launched a set of awareness messages on banking services and products in sign language to reach out to people with hearing disabilities, in addition to appointing a fully trained staff in sign language in 6 bank branches, to assist customers to complete their financial transactions.” added Al Marzouq.

Al Marzouq thanked shareholders, customers, employees, stakeholders, and all partners for their trust and support of our institution, confirming that KFH will continue focusing its efforts on achieving overall sustainability and innovative sustainable solutions in all communities within its wide network.

He pointed out that through strategic investment and appropriate partnerships, KFH will strengthen its leading position and growth opportunities as the largest bank in Kuwait and the second largest Islamic financial institution in the world.

Qualitative Achievements

KFH Acting Group CEO, Abdulwahab Iesa Al Rushood said that KFH has achieved significant milestones and made substantial progress in its sustainability strategy, primarily due to its distinctive model that integrates core Islamic banking practices with a focus on sustainability.

Al Rushood added that KFH’s unwavering dedication in this regard is geared towards prioritizing sustainability for all and creating an ideal and sustainable work environment within the Bank. These efforts also bolster an all-encompassing infrastructure to harmonize social and economic progress, protect the environment, adhere to sustainable development goals (SDGs), and enhance the well-being of communities.

Through its socially responsible investments (SRIs), Al Rushood mentioned that KFH maintained its commitment to sustainability and expanded its portfolio of Green Finance products for both the retail and corporate fronts.

He noted that KFH was the first bank in Kuwait to receive the Global Sustainability Assessment System GSAS – Gold Level Certificate for KFH Auto; the first eco-friendly showroom that is compliant with sustainability standards.

Al Rushood added that KFH also maintained its strategic alliances with multiple government and private organizations as part of its (Keep it Green) initiative, which was introduced to integrate all its sustainability efforts and adhere to governance and environment standards. Additionally, KFH actively backed various environmental initiatives, including a partnership with Kuwait Scientific Center to implant coral reef in Qaruh Island, in addition to many environment preservation projects such as the beach cleaning and afforestation campaign in collaboration with the Public Authority for Agricultural Affairs, as well as a campaign launched as part of (Keep it Green) in the Assima Mall for recycling plastic bottles.

Innovative Solutions

Al Rushood pointed out that KFH’s success is epitomized by its adoption of innovative and environmentally conscious solutions, as well as strategic collaborations and social endeavours. These efforts emphasize the Bank’s dedication to sustainability and its consistent commitment to environmental preservation as it forges ahead.

He mentioned that KFH’s sustainability initiatives take account of global standards and incorporate digital and smart solutions, while also promoting awareness through resources-efficient practices. These high-quality efforts underpin KFH’s commitment to enhancing its leadership in social responsibility across its daily operations while also enhancing the Group’s overall efficient performance.

Al Rushood emphasized that KFH’s efforts are not limited to the environmental sphere. The sustainability strategy development project is based on comprehensive steps through which the economic, social, and environmental impacts are measured at the operational, business continuity and developmental levels.

He added: “The significant and rapid leaps taken by KFH to enhance the sustainability concept across the banking sector confirms its pioneering role and high capacity to capitalize on it, while fulfilling its socially conscious role at the same time.”

He said that KFH’s sustainability strategy also focuses on upgrading the digitalization process of its corporate banking services and automating the credit operations and financing activities, in addition to consolidating the Group’s brand and offering an added value to shareholders, customers and stakeholders.

He pointed out that KFH sets itself apart through its KFH Go smart branches by aligning its digital transformation efforts with sustainability and staying up to date with cutting-edge techniques and top-tier standards. This also involves embracing innovation in digital banking solutions and enhancing the experience for customers seeking convenient and prompt banking services.

Financial Inclusion

Al Rushood stated that KFH’s commitment to sustainability aligns with its digital transformation strategy, which is founded on several pillars such as the integration of Artificial Intelligence, collaboration with Fintech enterprises, and the development of a robust system infrastructure alongside adaptable and smart solutions to enhance the overall banking journey for customers.

He went on to say that the endeavours and applications in the digitalization field have encompassed various aspects, including e-payments, online account opening, instant card printing and issuance in addition to device performance development, selling and buying gold, and branchless banking.

As a testament to the effectiveness of KFH’s sustainable digital efforts, Al Rushood revealed that the annual growth rate for using digital financial solutions via KFHonline surged to over 32% in 2022. This surge highlights the high calibre and efficiency of the services offered on mobile and other KFH online platforms.

Green Finance

Al Rushood explained that in recent years, KFH, through its Board's Governance and Sustainability Committee, opted to accelerate the incorporation of green finance, digital products, and services in addition to environmental and community-conscious practices as modern tools in the banking industry and integrate them into KFH’s operations.

He indicated that the general direction of KFH focuses on enhancing the issuance of Green Sukuk and green finance products at the retail and corporate levels.

Nurturing employees

Al Rushood said that KFH has invested in the young cadres through its (Forssah) training program, expanded the financial inclusion for the financing services, and consolidated its initiatives for woman empowerment. Consequently, women now hold prominent posts in various business divisions within KFH.

In this respect, he noted that KFH inked a Memorandum of Understanding (MoU) with the UNDP to facilitate the exchange of knowledge on sustainability. This collaboration led to the establishment of a training program for the executive management, aimed at enhancing their sustainability capabilities and fostering greater awareness within the organization.

He confirmed that KFH is moving ahead equipped with a well-defined strategy along with clear performance indicators to track the Bank’s sustainability progress, saying that it is essential to stress that the importance of the sustainability strategy development project is shown in its enhancing of profitability, growth, and performance efficiency, as well as in promoting the ability to meet evolving market trends and customers’ needs. It also solidifies our standing as a world leading Islamic financial institution.

It is worth noting that KFH is the first bank at the local and Islamic sector levels to issue a sustainability report, highlighting its efforts in the sustainable development arena, covering economic growth, natural resources conservation, environmental protection, and social development.