Kuwait Finance House (KFH) held the earnings webcast for highlighting the Group’s financial performance and results during Q1 2026. The webcast was attended by KFH Group Chief Executive Officer, Khaled AlShamlan, Group Chief Financial Officer, Abdulkarim Al-Samdan, and Group Chief Strategy Officer and Acting Group Chief International Banking Officer, Eng. Fahad Al-Mukhaizeem.

KFH Group Chief Executive Officer, Khaled AlShamlan commenced the meeting by shedding light on the Bank’s financial performance for Q1 2026. He said: "KFH reported this quarter a net profit of KD 176.5 million, reflecting a growth of 5% compared to Q1 2025. The earnings per share (EPS) reached 9.59 fils representing an increase of 5% compared to the same period last year. Net financing income reached KD 332 million, 4.1% increase compared to the same period last year. Total operating income for Q1 2026 increased to KD 496.4 million, supported by growth across all core business activities, representing an increase of 6.0% compared to the same period last year. Our cost-to-income ratio reached 31.4% during the first quarter of 2026, compared to 34% for the same period of the previous year, showcasing our commitment to operational excellence. The net operating income for this quarter stands at KD 340.6 million, reflecting an increase of 10.3% compared to the same period last year."

He added:" The growth in financial indicators during the first quarter of this year reflects the Group’s sustained ability to achieve balanced growth amid the rapidly evolving and challenging operating environment at regional and global levels."

AlShamlan pointed out that KFH also held its Ordinary and Extraordinary General Assembly meetings on March 30^th, 2026, where shareholders reaffirmed their confidence and endorsed the Board of Directors for the next 3-year term (2026 to 2028).

"In Q1 2026, KFH continued to strengthen its financial position, with total assets growing to KD 43.6 billion, a 1.9% increase from year-end 2025. Our capital adequacy ratio stands at 19.23%, exceeding regulatory requirements, which underscores our robust capital base. We have diversified our funding sources particularly in infrastructure and productive sectors. This reflects our dedication to driving sustainable growth and maximizing shareholder value," he explained.

AlShamlan emphasized that KFH remains the largest listed company on Boursa Kuwait with a market capitalization of approximately KD 14.4 billion. We are proud to be recognized as the only Kuwaiti bank listed among the top five in S&P’s "Top 20 Middle East and Africa Banks. "Our commitment to empowering the local economy is evident as we provide efficient financing solutions that support the corporate sector while delivering financial services to the retail and SME sectors. This dual focus not only drives commercial growth but also reinforces our economic responsibility," he said.

"At KFH, we recognize the importance of our role in the community, and we are dedicated to making a positive impact. This quarter, we contributed KD 2 million to a national debt-relief initiative, bringing our total contributions towards debt relief to approximately KD 61 million. Our efforts in Corporate Social Responsibility were recognized with the "World’s Best Islamic Bank for CSR" award from Global Finance, highlighting our leadership in sustainable practices," he added.

He added that KFH’s operational efficiency remains a cornerstone of our strategy. "Our commitment to enhancing customer experience through competitive digital solutions has resulted in increased market share. We have invested in technology, ensuring seamless service continuity and high efficiency in delivering all banking services."

He added that KFH strengthened its position in the international market, successfully issuing USD 1 billion in senior unsecured Sukuk under our USD 4 billion Sukuk program. This issuance reinforces the Bank’s financing capacity, enabling it to support infrastructure projects and facilitate clients' regional and international expansion.

"As we move forward, despite recent geopolitical challenges KFH will continue to focus on strategic priorities: enhancing asset quality, improving financial performance, advancing our digital infrastructure, and elevating the customer experience all within a solid risk management framework. We are committed to maintaining our strong financial position while seizing market opportunities to drive future growth. Our strong financial performance in Q1 2026 reflects the effectiveness of our strategies and our ability to navigate challenges in the evolving banking and regional landscape," AlShamlan concluded.

Abdulkarim Al-Samdan, Group Chief Financial Officer:

Meanwhile, Group Chief Financial Officer, Abdulkarim Al-Samdan stated that KFH Group’s financial performance for the first quarter of 2026 demonstrated strong growth in core banking activities, highlighting key indicators across five key areas: The headline performance for the quarter, the main year-on-year earnings drivers, the revenue mix, including margin, fees, and market-related income, balance sheet, liquidity, and capital, asset quality, provisioning, and management priorities, and 2026 expectations.

Regarding Q1 2026 financial highlights, he said: "For the quarter ended 31 March 2026, KFH reported net profit attributable to shareholders of KD 176.5 million, up 5.0% year-on-year, equivalent to 9.59 fils earnings per share for the quarter, compared with 9.13 fils adjusted for the bonus shares issuance."

At the operating level, Net financing income was KD 332.0 million, up 4.1% year-on-year.  Net operating income increased to KD 340.6 million, up 10.3% year-on-year.  The reported Cost-to-income improved to 31.4%, from 34.0% in the same period last year.

On the balance sheet, Total assets stood at KD 43.6 billion, Net financing receivables at KD 21.8 billion, and Total deposits at KD 21.4 billion.  Relative to year-end 2025, both assets and deposits increased by 1.9%, while net financing receivables were broadly stable.

Overall, Q1 2026 reflected four key drivers: stable financing balances, lower margin versus Q4 2025, stronger fee and FX contribution, and continued cost discipline.

Turning to the year-on-year bridge, profit for the period increased from KD 189.4 million in Q1 2025 to KD 219.1 million in Q1 2026, an increase of 15.7%.

The main positive contributors were higher net financing income and higher fees and commissions.  Net financing income increased by KD 13.1 million year-on-year, and fees and commissions income increased by KD 8.7 million.  Together, these two items added KD 21.8 million in incremental income.

In addition, market-related income was positive on the balance, but with a different composition from last year.  Net gain from foreign currencies increased materially, adding KD 43.1 million year-on-year, while investment income declined by KD 36.7 million.  On a net basis, these two items added KD 6.4 million year-on-year.

Operating expenses declined by KD 3.5 million, or 2.2%, providing further support to earnings and resulting in a positive operating leverage for the quarter.  Other income was broadly stable.

These positives were partly offset by modestly higher impairment charges, higher taxation, and a larger share of profit attributable to non-controlling interests.

The difference between profit for the period growth of 15.7% and profit attributable to shareholders growth of 5.0% reflects the higher share of profit attributable to non-controlling interests, which increased from KD 21.3 million in Q1 2025 to KD 42.6 million in Q1 2026.

For comparability, it is important to note that Q1 2025 included a KD 23.8 million gain on the sale of Ahli Bank Oman (ABO). That created a higher comparison base and should therefore be taken into account when assessing the year-on-year performance.

Turning to the core income, Al-Samdan said that the total operating income reached KD 496.4 million, up 6% year-on-year.  Within that, net financing income remained the largest component, representing 66.9% of the total operating income in Q1 2026.

"Net financing income reached KD 332.0 million, up 4.1% year-on-year, despite a more challenging margin environment.  At the group level, net financing margin for the quarter was 2.94%, compared with 3.01% in Q4 2025 and 3.44% in Q1 2025. The sequential decline in margin was mainly driven by liability-side pressure, particularly in Kuwaiti Dinar funding.  Asset repricing is being managed selectively and with a lag, while origination remains focused on transactions that meet our risk-adjusted return thresholds," he added.

As a result, NFM declined sequentially, but net financing income increased year-on-year, supported by disciplined pricing, active funding mix management, and selective origination.

"Despite remaining broadly stable, our full-year expectation for financing receivables remains for low double-digit financing growth."

On fees, net fees and commissions income increased to KD 58.5 million, up 17.5% year-on-year from KD 49.8 million. This reflects stronger customer activity and better contributions from cards, trade finance, and capital markets activity.

The Q1 fee performance is consistent with full-year expectation of fees and commission growth above 15%. 

Moving to Other Operating income, net gain from foreign currencies was KD 59.7 million, materially above the KD 16.7 million in Q1 2025. Of the current quarter’s net gain, 72.5% was driven mainly by higher transaction volumes and better margins in Kuveyt Turk, including precious metals trading. 

FX income was a positive contributor in the quarter, but it remains more volatile than financing income and recurring fee income. We do not assume that Q1 level will repeat each quarter.

Investment income was KD 18.1 million, compared with KD 54.8 million in the corresponding quarter last year. This mainly reflected the absence of larger gains recognized in Q1 2025 as mentioned previously. The year-on-year comparison on this line is therefore primarily a function of prior-period normalization.

Taken together, Al-Samdan emphasized that the income mix in Q1 2026 reflected higher core banking income, continued fee growth, elevated FX income, lower investment income due to the prior-year comparison base, and stable other income.

Turning to cost and operating leverage, total operating expenses for the quarter were KD 155.7 million, down 2.2% year-on-year, contributing to the improvement in the reported cost-to-income ratio to 31.4%.

Within the cost base, Kuveyt Turk represented 48% of the total Group expenses and increased by 8.7% year-on-year, mainly reflecting inflationary pressure.  Excluding Kuveyt Turk, the rest of the Group reduced expenses by 10.4%. 

The cost outcome reflects continued expense discipline across the Group, while preserving investment in controls, technology, and selected capabilities.  The result was positive operating leverage despite inflationary pressure in Turkey.

Turning to asset quality and provisioning. At quarter-end, the Group NPF ratio stood at 1.90%, up 39 basis points from December 2025. While higher sequentially, the ratio remains manageable in absolute terms, with provision coverage of 237.9%. Under IFRS 9, the Stage 3 ratio was 2.41%, and the Stage 2 ratio was 12.73%.

Provisions and impairment charges totaled KD 34.1 million for the quarter, net of recoveries amounting to KD 23.7 million, and including precautionary provision of KD 20 million at the group level above CBK requirements.  In addition, the Group’s consolidated provision balance remained KD 526.2 million above the CBK IFRS 9 ECL. That provides a material buffer and is consistent with a conservative provisioning stance. 

"We continue to review overlays, sector exposures, and stress assumptions regularly, particularly in light of macroeconomic and geopolitical uncertainty,” Al-Samdan revealed.

On Turkey and IAS 29. The IAS 29 hyperinflation effect in Turkey remains part of the group’s earnings profile.  For Q1 2026, net monetary loss was KD 32.2 million, compared with KD 42.1 million in the prior year quarter.

This is an accounting consequence of the inflation environment and the monetary position of the balance sheet. Our approach is unchanged: (i) apply the standard consistently, (ii) present the impact transparently, and (iii) manage the underlying business conservatively.

Turkey remains a significant component of the Group’s earnings and diversification profile as it constitutes 48.7% of net financing income, 55.8% of total operating income, and 32.1% of net profit attributable to shareholders. The business continues to be managed with close attention to capital, liquidity, and risk parameters.

Turning to capital and liquidity. At quarter-end, the group’s capital adequacy ratio was 19.23%.

Relative to 2025 year-end, the movement reflected growth in risk-weighted assets, including sukuk and financing receivables, as well as movements in the fair value reserve and the foreign currency translation reserve.

Even after these movements, the group remains well capitalized relative to regulatory requirements and retains capacity to support measured growth.

On liquidity, the LCR was 250.55% and the NSFR was 123.03%.  These metrics indicate a conservative liquidity position and a stable funding base in the current environment.

On funding, depositor accounts remained the largest funding source, representing 62% of the funding mix.  The key management focus is to balance funding stability, tenor, cost, and regulatory liquidity.  Given the current rate environment, funding cost remains an important variable for margin, particularly in Kuwaiti Dinar.

In summary, Q1 2026 showed disciplined execution across earnings generation, cost efficiency, asset quality, capital strength, and liquidity.  Net profit attributable to shareholders increased by 5.0% year on year, supported by a 10.3% increase in net operating income.  Cost efficiency improved, capital and liquidity positions remained comfortably above regulatory minimum requirements, and provisioning remained conservative.

Al-Samdan highlighted three key points to keep in mind. First, margin pressure persists, and NFM is expected to remain under pressure during 2026. Second, FX income was elevated in Q1 and remains inherently variable. Third, the operating environment continues to warrant prudence, particularly with respect to funding costs, Turkey-related volatility, and asset quality monitoring

He also noted that KFH’s expectations for the main operating drivers in 2026 are as follows:

1. Financing growth to be within low double digit
2. Fees and commission to be at least 15%
3. NFM % to be contracting
4. Cost to income ratio to be below 34%
5. Cost of risk to be between 40 to 50 basis points.

"Against that backdrop, our priorities remain unchanged: protecting risk-adjusted margins, delivering diversified income growth, preserving operating leverage, managing cost of risk conservatively, and maintaining strong capital and liquidity buffers,"he concluded.

Eng. Fahad Al-Mukhaizeem, Group Chief Strategy Officer & Acting Group Chief International Banking Officer 

Meanwhile, Group Chief Strategy Officer & Acting Group Chief International Banking Officer, Eng. Fahad Al-Mukhaizeem shared insights into Kuwait’s economic landscape and KFH’s strategic progress in the first quarter.

He said:"With the ongoing regional tensions, and market volatility, KFH maintained its position as Kuwait’s largest listed company representing 28.6% of total market capitalization, reflecting the strength of our fundamentals and sustained investor confidence."

He added that the global economy enters 2026 with a higher degree of volatility, with the IMF projecting growth of 3.1% and inflation of 4.4%. Rising geopolitical tensions, trade disruptions, and higher energy and logistics costs are weighing on the outlook. While markets remain broadly orderly, global financial stability risks are elevated.

"Kuwait’s economy, like others in the GCC , is facing pressure from regional tensions, reflected in shipping disruptions in the Strait of Hormuz, and higher transport and insurance costs. The impact includes the risk of production disruption and capacity utilization constraints. Kuwait is navigating geopolitical volatility within a long-term fiscal vision, supported by balanced public financial management and continued structural reforms," he explained.

Al-Mukhaizeem said that the Central Bank of Kuwait maintained a prudent monetary stance in Q1 2026, keeping the discount rate unchanged at 3.50% to preserve monetary and financial stability. Inflation moderated to 2.4% in 2025 and eased further to less than 2.1% in March 2026, it is one of the lowest levels since mid-2020. However, it is expected to rise mainly due to higher import costs and other factors. The CBK introduced supportive measures to reinforce banking sector resilience, including easing liquidity requirements, and increasing lending capacity to support stability, credit growth, and broader economic activity.  

"KFH delivered solid performance in Q1 2026, supported by a strong balance sheet, disciplined risk management, and a diversified business model. This reflects the resilience of our core business and our ability to sustain quality growth in a complex operating environment," he added.

Meanwhile, he explained that KFH continued advancing its digital transformation in Q1 2026 by expanding data-driven tools to improve decision-making, customer journeys, and personalization. "We also strengthened digital onboarding and expanded mobile and online banking capabilities to deliver greater accessibility, speed, and convenience and 24/7 availability of digital services, positioning KFH at the forefront of digital innovation in Islamic finance and supporting a more scalable operating model. Even during the recent geopolitical disruptions, all digital services remained fully available to clients."

"KFH continues to strengthen its regional presence by deepening operational and service integration across core markets, including Turkey, Bahrain, Egypt & UK, offering seamless communication channels for customers. The Group is enhancing services and platforms through investments in banking technology and digital solutions, while supporting sustainable growth through Sharia-compliant financing for major projects," he added.

"Looking ahead, KFH remains focused on sustaining a strong financial position, prudent risk management, and sustainable growth. We support Kuwait’s development through project and infrastructure financing, and regional integration. Our diversified model positions us well for resilience and long-term opportunity," Al-Mukhaizeem said.

He added: "Amid the current regional tensions, KFH continues to operate from a position of strength, supported by a resilient business model, disciplined execution within its business continuity framework, and clear strategic priorities. We remain focused on preserving resilience, delivering sustainable growth, and creating long-term value."