KFH posts KD 145.8 mln net profit for 2015 – Board recommends 17% cash dividends 10% bonus shares, 31.1 fils EPS

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Hamad Abdulmohsen Al-Marzouq, Chairman, KFH
Hamad Abdulmohsen Al-Marzouq, Chairman, KFH

KUWAIT CITY, Jan 28: Kuwait Finance House (KFH) Chair-man, Hamad Abdulmohsen Al-Marzouq said that KFH, by the Grace of Allah and His Blessings, has posted a net profit of KD 145.8 mln for the fiscal year 2015 compared to KD 126.5 mln for the year 2014, thus marking an increase by 15.3 % over last year. Earnings per share increased to reach 31.1 fils, an increase of 15.3% over the same period last year.

Finance portfolio increased to reach KD 8.127 bln. Net finance income increased to reach KD 392.8 mln for the year 2015 compared to KD 363.4 mln for the preceding year, thus marking an increase by 8.1%. Depositors’ accounts amounted to KD 10.839 bln.

Total Assets reached KD 16.5 bln. It is worth noting that KFH shrank its share in ALAFCO Aviation Lease and Finance Company to 47% from 53%, not to mention that the Gulf Investment Corporation entered as a major shareholder in the said company.

Shareholders’ equity reached KD 1.779 bln, which marks an increase by KD 33 mln or 1.9% over last year.

KFH distributions for the year 2015 are as follows:  2.35% for “Al-Khumasiya” investment deposit, 2.15% for “Al-Mustamera” investment deposit, 1.50% for “Al-Sedra” investment deposit, 1.30% for the 6-month Dimah investment deposit and 0.73 % 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.

Furthermore, capital adequacy ratio (CAR) reached 16.67% thus exceeding the minimum limit of 13%, which confirms KFH’s strong financial position.

 “Despite the unfavorable operational environment and market volatility caused by political developments in the region along with economic developments, such as the drop in oil prices, KFH succeeded in achieving growth across all its financial indicators in 2015. This achievement was in line with the set plans and consistent with the integration and development of the bank’s sectors. The financial results have put KFH on track to achieve sustainable profitability and grow its market share. They will allow the bank to maintain the leadership position locally and globally in the Islamic banking industry, noting that the majority of revenues were generated from the core banking business”, added Al-Marzouq.

He went on to say that the overall results of 2015 confirm the stable growth of KFH where it achieved sustainable growth in profitability over four consecutive quarters. This confirms the bank’s success in increasing profitability, enhancing service quality and business excellence, and boosting customers’ confidence. KFH pursues precise, professional and resilient performance along with prudent management to optimally deal with changes in the business environment.

Efforts were also channeled during the past year toward improving asset quality primarily through reducing the level of NPLs and settling companies’ debts at the Kuwait level and the Group level. This serves in preserving and enforcing KFH and shareholders’ rights while supporting companies to restructure their business and grow. KFH consolidates the concept of cost rationalization through best practices associated with rigorous regulations and through improving cost to income ratio.

The profits give a strong impetus for KFH to maintain stable growth and maintain its outstanding customer service, while continuing the policy of cost rationalization. KFH will continue enhancing its hedging policy to manage regional and international market forces. KFH follows a conservative policy targeting the improvement of precautionary provisions, strengthening the financial position, and diversifying income resources.

Al-Marzouq indicated that KFH took several steps at the Group level to ensure optimal coordination and harmony among group banks and subsidiaries, including harmonization of standards and mechanisms, bolstering cooperation, and exchanging expertise in efforts to take advantage of the different markets in which KFH operates. This contributes to achieving the best results, mitigating risk and unifying procedures and vision which are viewed as a strategic goal to the Group.

He underscored KFH’s unremitting efforts in strengthening its role in boosting the national economy, primarily through corporate finance as per the credit and legislative regulations. KFH has provided a KD 100 million finance facility to Al-Rai Real Estate Company; a subsidiary of Mabani Company for the development of the fourth stage of the Avenues mall. As for retail banking, KFH restructured two services rearranging the contract terms for client finances and settling existing banks’ debts to allow for new financing per Central Bank of Kuwait regulations. KFH is also studying expanding financing to SMEs in collaboration with government agencies as KFH is seen among the most active banks in this sector, and enjoys the largest segment of SMEs clients in Kuwait. KFH pays great interest to this vital sector as SMEs contribute in reducing the unemployment rates while motivate the youth for further contributions in the economy. KFH offers financing to over 25,000 SMEs, which is 35% of the total companies in Kuwait that amount to 70,000 companies.

KFH is continuing its efforts to issue more sovereign as well as corporate Sukuk, which reaffirms its role in syndicating Sukuk that are considered to be an alternative financial instrument to conventional bonds. One of the largest issues in the past year was the USD 500 Million Sukuk issue for Sharjah Islamic Bank through bank’s subsidiary KFH-Investment. KFH will continue its efforts to attract a broad-base of investors to the Sukuk market, be it governments, financial institutions, or investment funds. It is noteworthy that KFH succeeded in leading Sukuk issuances for governments such as Turkey and the Republic of South Africa. Sukuk play significant role in financing governments for implementing infrastructure projects or for bridging their budget deficits. Sukuk can be offered in several sharia forms that address different requirements, capacities and different circumstances.

Al-Marzouq noted that KFH will continue its efforts to further consolidate its role in the local and regional markets, and increase its market share by innovating new products and services. The bank is keen on utilizing technology to offer clients high-end services consistent with security standards. KFH operated seven automated systems in different fields in the bank in line with directives of development. KFH took the initiative in collaboration with Kuwait Clearing Company (KCC) to operate the system of transferring shareholders’ cash dividends to their account, and check collecting system.

KFH has 446 branches of which 64 branches in Kuwait spanning all areas. These branches continue their active role in serving clients and activating the marketing performance. KFH succeeded in offering new banking products and services, not to mention outstanding financial solutions and marketing campaigns encompassing banking cards, investment products and clients financing.

He explained that KFH’s overseas expansion is gaining considerable momentum and it represents a quantum leap of KFH’s efforts to establish strong pillars, and a platform to penetrate new markets, indicating the German market is one of the strongest economies in Europe and KT-Bank AG is a model example serves in penetrating other European markets. He revealed that KT-Bank AG has achieved great success where the financing it offered surpassed Euro 50 mln.

Moreover, KFH-Turkey continues its significant role in offering Turkish companies Sharia-compliant financial solutions that meet their financing requirements, mainly for expansion purposes and the desire to penetrate new markets. KFH-Turkey succeeded in leading and participating in arranging 4 Sukuk issues in Turkey and Malaysia.

Al-Marzouq pointed out the inauguration of the Dragon City, a landmark project of Diyar Al Muharraq that is a subsidiary of KFH-Bahrain, affiliated to KFH-Group. The USD 100 mln project is poised to rake in enormous trade, commerce and investment opportunities in the GCC, the region and China, especially that the project involves over 500 companies from the GCC and China.

He stressed KFH’s readiness to comply with Basel III accords, indicating KFH is fully complaint with the international standards, best international banking practices, and the rigid adherence to Islamic banking guidelines and Sharia legislatives. It is worth noting that international rating agencies affirmed KFH’s positive credit ratings. Also, KFH-Group received around 30 prestigious awards from high-profile international institutions during 2015.

Al-Marzouq extended his thanks to shareholders and clients for their support and confidence in KFH and its businesses throughout the year. He praised the efforts of KFH staff, affirming that high caliber human resources are main pillars for further achievements and milestones at all levels.

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