KUWAIT CITY, April 28: Boubyan Bank announced that it has completed all the regulatory approvals to issue and market sukuk to strengthen its capital base through additional Common Equity Tier 1 Capital “CET1” instruments as per the instructions of Basel III through a mudaraba structure. The issuance size is expected to reach $250 million.
Boubyan Bank’s Vice-Chairman and CEO, Adel Al-Majed, stated that this would be the first sukuk issuance out of Kuwait since 2007, and the first sukuk issuance for a Kuwaiti Bank with the objective of strengthening its “CET1” capital.
He added: “Boubyan Capital, the investment arm of Boubyan Bank, is the global coordinator on this sukuk issuance together with two major international banks, HSBC and Standard Chartered Bank. In addition, Boubyan Bank has mandated Boubyan Capital, Dubai Islamic Bank, Emirates NBD Capital, HSBC, KFH Capital, National Bank of Kuwait and Standard Chartered Bank as joint lead managers and bookrunners.”
Al-Majed emphasized the importance of Boubyan Capital’s role in arranging and managing the sukuk issuance in cooperation with the major international financial institutions.
Furthermore, he added that an international roadshow to major financial cities to market the sukuk will follow and includes London, Singapore, Hong Kong, Geneva, Zürich, Abu Dhabi and Dubai.
Al-Majed added, “Subscription to Boubyan Bank’s sukuk presents a good investment opportunity considering the Bank’s achievements over the past five years, notable growth in assets and deposits, in addition to rising profits and market share across various metrics. However, investors interested in investing in Boubyan Bank’s sukuk should not base future results’ expectations on the bank’s historical performance when making an investment decision.”
“The ratings of the Bank by international rating agencies are stable and there are positive research reports published about the Bank from time to time. In addition, the Bank has received several distinguished international awards, the most notable of which is the World’s Best Islamic Digital Bank Award from Global Finance in 2015,” Al-Majed stated.
Al-Majed went on to add that most indicators are showing continued and increasing demand for Islamic financial instruments, citing the growth rates over the past two decades and the expectation of a of this positive trend to continue.
In 2015, the Bank continued its growth with a 25% increase in profits at the end of 2015, amounting to a net profit of KD 35.2 million compared to KD 28.2 million in 2014, and an EPS of 17.09 fils compared to 13.70 fils in the prior year.
The Bank’s key indicators showed considerable growth in 2015 where the total assets increased to KD 3.1 billion or by 18%. In addition, operating revenue increased to KD 91.4 million in 2015, or by 17%, while customers’ deposits in 2015 increased to KD 2.4 billion or by 15%.
Furthermore, the Bank’s total equity increased to KD 318 million in 2015 compared to KD 296 million in the previous year. There was also a notable increase in the Bank’s financing portfolio to KD 2.2 billion, or a 20% increase. In addition, the Bank continued to grow its customer base.
Moreover, the Bank’s market share in financing increased to approximately 6.5%, while its market share of retail finance increased to approximately 10%.
Al-Majed stressed the importance of sukuk in the past years as one of the investment instruments sought after by investors globally, which established the significance of Islamic financing instruments among the various international investment instruments.
Al-Majed added that in light of the aforementioned achievements, whether those related to Boubyan Bank and its outlook or those related to sukuk, he is optimistic that the Bank will succeed in raising the sukuk.