Thursday , December 14 2017

KFH 2016 net profit rises 13.3% to KD 165.2mn – Board proposes 17% cash dividend, 10% bonus shares; EPS 32.01 fils

Hamad Abdulmohsen Al-Marzouq, KFH Chairman.

KUWAIT CITY, Jan 31: Chairman of Kuwait Finance House (KFH) Hamad Abdulmohsen Al-Marzouq said that KFH has, by the grace of Allah, realized a net profit of KD 165.2 million for the year 2016 for KFH shareholders as compared to KD 145.8 million for the same period last year i.e. an increase of 13.3%.

Finance revenues reached KD 717.9 million, i.e. a growth of 13.5% over the same period last year after the de-consolidation of ALAFCO due to de-consolidation as of end 2015.

Net operating revenues reached KD 364.7 million, i.e. a growth of 8.2% over the same period last year, after excluding the revenues of nonrecurring investments.

Earnings per share as of end 2016 reached 32.01 fils compared to 28.27 fils over the same period last year i.e. an increase of 13.2%.

In line with the cost optimization plan, KFH’s total operating expenses have dropped for the second year in a row by 11% i.e. KD 35.5 million over the same period last year. The drop was KD 31.5 million, i.e. 8% in 2015 over 2014.

KFH distributions for the year 2016 are as follows:  2.40% for “Al-Khumasiya” investment deposit, 2.20% for “Al-Mustamera” investment deposit, 1.50% for “Al-Sedra” investment deposit, 1.425% for the 6-month Dimah investment deposit and 0.650% for savings investment accounts.

The Board of Directors has recommended 17% as cash distributions to shareholders and 10% as bonus shares subject to general assembly and concerned authorities approval.

Total assets reached KD 16.50 billion, the Finance portfolio reached KD 8.18 billion, Depositors’ accounts reached KD 10.66 billion.

Shareholders’ equity reached KD 1.81 billion an increase by KD 31.3 million or 1.8% compared to year ended 2015.

KFH’s capital adequacy ratio (CAR) reached 17.88%, (after the recommended distributions) higher than the required limit of 15%, thus reiterating the strength of KFH financial position.

Al-Marzouq stated that the profits reiterate the commitment in implementing the successful strategy and plans of KFH Board of Directors for the past 3 years, which achieved its main goals. We have maintained the bank’s key strengths by analyzing the potential risks. The year 2016 was the year of sustainable growth especially that KFH improved the service quality and enhanced the risk policies and the regulatory compliance standards. KFH has focused on achieving attractive returns for shareholders and customers in a sustainable and balanced manner, especially after putting the bank on track by targeting the core banking business, and the operating revenues from banking businesses now comprise a major part of the results.

Al-Marzouq pointed out that KFH indicators are characterized by stability and are in line with the bank’s new strategy such as the operating income, the investment revenues, and the profitability indicators calculated on an annual basis, not to mention the reduction in the operating expenses in comparison to the revenues. This confirms the improved performance of the Group that has 481 branches over the world, of which 65 branches in Kuwait. KFH continued its prudent investment policy and efficient risk management in accordance with the best practices.

Al-Marzouq continued: “KFH managed to close most of the outstanding issues, mainly the nonperforming financing where the end of the year 2016 witnessed a drop in the non performing financing over the total credit portfolio, by using all the available means to achieve this. Also, KFH managed to structure the investment portfolio as per best standards to ensure asset quality and achieve sustainable profits, indicating rearranging the real estate portfolio recently has contributed in protecting such assets from the real estate market fluctuations”.

KFH aimed to settle the status of its subsidiaries and associates either by complete or partial divestiture, or by consolidating companies of same businesses, not to mention restructuring and developing other companies to be considered as investment arms.  KFH has accomplished procedural and organizational issues such as the organizational structure of the bank to be consistent with the most recent developments, yet to identify the relationship on Group level including the compensation and benefits policy, the principles of cost optimization, centralized operations, systems automation and performance measurement.

Al-Marzouq stressed the ceaseless efforts of KFH in strengthening its role in boosting the national economy, primarily through corporate finance as per the credit and legislative regulations. KFH offered financing to large corporations and is currently studying financing other ones along with financing the country’s large-scale development projects, of which is the Clean Fuel project where KFH’s portion of the financing was the largest representing the Islamic banks. KFH shows interest in participating in financing the country’s development projects of infrastructure, energy, transportations, real estate development, etc. The bank considers financing such projects is a national, economic and social goal. Moreover, KFH continues its unremitting efforts to offer credit facilities for SMEs where it has the largest share of SMEs segment. It is worth noting that KFH inked an agreement with the National Fund for SMEs Development.

He indicated that KFH has become a primary dealer and a global Sukuk market maker. KFH arranged and participated in several Sukuk issuances in the regional and global markets. KFH-Group volume traded in the Sukuk market reached $11.4 billion for the year 2016. KFH participated in the sovereign debt issuances issued by the Central Bank of Kuwait (CBK) to help bridge the budget deficit. KFH’s share in the subscription was the largest among Islamic banks. The bank is continuing its efforts in innovating competitive products and services, and to increasing its market share and prioritizing customer services. KFH is keen on improving and honing the skills of its human resources, particularly the national labor by attracting, training and qualifying them in an attempt to build generations of leaders who are able to take responsibility.

Al-Marzouq said that the positive ratings from the international rating agencies and the awards KFH received last year confirm the healthy performance and the success in achieving the bank’s goals.

He added that KFH Group is successfully achieving its goals based on the markets in which it operates. Every Group bank in Turkey, Malaysia, Saudi Arabia, Bahrain and Germany is working in a way consistent with the nature of those markets, in line with the strategy of KFH. This adds more resilience to the modus operandi of the Group banks, yet qualifies them to tap opportunities and utilize any positive development. He explained that KFH is looking forward to further growth in the operations of its units in the upcoming period, indicating that markets diversification is an advantage and a source of strength.

Al-Marzouq expressed his confidence that the Kuwaiti banking sector is capable of assuming the role of supporting the government’s directives with respect to the economic vision, most importantly financing the budget deficit and the development projects. He added that the banking system in Kuwait remained sound and stable with a high liquidity level and strong asset quality. This allows the banks to take part in such issues, while strengthens the role of private sector and promotes harmony with the government to achieve its goals according to the plans and economic development vision.

Al-Marzouq expressed his thanks and appreciation to all shareholders and clients for their support and confidence. He extended his thanks to the CBK and the regulatory authorities. He hailed the efforts of KFH’s executive management and employees for their outstanding performance that yielded positive results, emphasizing the importance of maintaining the leadership position of KFH Group at all levels.

 

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