Despite challenges, Al-Dawli achieves overwhelmingly positive results in 2016, says Chairman
KUWAIT CITY, March 18: The 2016 Annual General Meeting (AGM) for Kuwait International Bank (KIB) was held on Saturday, attended by 74.43 percent of shareholders approved the recommendation of the Bank’s Board of Directors to distribute cash dividends of 10 percent of the share nominal value (ie 10 fils per share) to shareholders.
Chairman of KIB, Sheikh Mohammed Jarrah Al-Sabah, spoke about the Bank’s stellar performance in 2016, saying: “In spite of the many economic challenges we have witnessed this year, KIB was able to achieve overwhelmingly positive results; strengthening its financial position, enhancing its shareholders’ equity, witnessing improvement across all key performance indicators, restructuring many of its activities and improving internal operations.” The Bank’s financial statements for the fiscal year ended 31 December 2016 revealed that KIB posted a 14 percent increase in net profits, which reached KD 18.2 million, compared to KD 16 million in the year prior.
This robust performance reflected positively on earnings per share (EPS), which reached 19.50 fils, compared to 17.14 fils in 2015. The financial statements also revealed an overall positive performance during 2016, resulting in significant growth in revenue. Financing revenues grew by 12 percent, an increase of KD 7.8 million to reach KD 71 million, compared to KD 63.2 million recorded during 2015. Meanwhile, Acting Chief Executive Officer at KIB, Mohammad Said El Saka noted that the Bank’s assets increased by KD 56 million, a 3 percent increase to reach KD 1.85 billion, compared to KD 1.79 billion at the end of the previous year.
This increase was achieved as a result of growth in the financing portfolio, which saw an 8 percent increase of KD 95 million to reach KD 1.27 billion, compared to KD 1.17 billion at the end of 2015. The investment portfolio also grew by 17 percent to reach KD 128 million compared to KD 109 million at the end of last year. Customer deposits increased by 10 percent to reach about KD 1.12 billion compared to KD 1.02 billion at the end of the previous year. In his statement, El Saka also said that not only has the Bank reported impressive growth in assets, KIB’s asset quality also continued to improve substantially, with Non-Performing Loans (NPL) ratio maintained at 1.4 percent.
Furthermore, the total provision coverage ratio increased to 231 percent compared to the previous year’s 199 percent, and total provisions and collaterals coverage ratio increased to 368 percent, compared to 327 percent of the year prior. Al Saka also pointed out that KIB continues to maintain high levels of capital adequacy ratio (CAR), well above the regulatory requirements of the Central Bank of Kuwait in accordance with Basel III.
CAR stood at 20.5 percent, while the financial leverage ratio was 10.7 percent. Additionally, in line with the improvement of performance indicators, return on equity (ROE) reached 7.2 percent, compared with 6.5 percent for the previous year.
In turn, this resulted in an increase in distributions to depositors’ accounts since the beginning of 2016, whereby the annualized return on the ArzaqDeposits in Kuwaiti Dinars increased to 2.15 percent in the first quarter, 2.25 percent in the second quarter, 2.35 percent in the third quarter and finally 2.55 percent in the fourth quarter.
This resulted in an average of 2.325 percent for the year 2016. On the other hand, Al Boushra Kuwaiti Dinar three year deposits were offered 3.0625 percent. Within this context, Al-Jarrah lauded the efforts made by KIB’s Board of Directors, its executive management and its employees, stating that these efforts have been vital towards boosting the Bank’s performance. In 2016, Fitch Ratings affirmed KIB’s Long Term Issuer Default Rating (IDR) at “A+”, with a “Stable” Outlook,while upgrading the Bank’s Viability Rating (VR) due to KIB’s improved financial indicators, successful implementation of its strategic objectives and the restructuring of its business activities. In its statement regarding the upgrade, Fitch noted that KIB’s rating reflects the Bank’s new and experienced management team, the successful execution of its strategy, as well as its improved asset quality and the expected increase in its earnings.
In light of these positive results, KIB has continued to forge ahead with the implementation of its comprehensive strategic plan, which was launched in 2015. The plan has focused on propelling KIB towards becoming the “Islamic Bank of Choice” in Kuwait, and helping it become the leading employer for local talents in the country. This strategy aims to bring about a comprehensive transformation across all sectors of the Bank in terms of better asset quality, healthy capital buffer, improved performance, increase in profitability.
As a key part of its strategy, the Bank has focused on driving internal transformation — rolling out a new governance model, reviewing the structure of Board and Management committees,and introducing new committees, in addition to reviewing the delegation of authority within the organizational structure in order to enhance effectiveness and the Bank’s overall governance model. The Bank implemented a number of key changes to its organizational structure in an effort to enhance its operations and its offerings to customers.
Within this context, KIB has added a number of experienced and qualified professionals to its team, with the aim of helping the Bank achieve its strategic objectives.
On another note, in an effort to develop its service/product offerings to its customers, KIB has worked on enhancing and streamlining many of its products and services. The Bank focused on enhancing its digital offerings and its presence across all digital platforms, with a particular emphasis on simplifying processes and developing distribution channels by expanding its branch and ATM networks. KIB has also developed a new business model to better serve the Bank’s corporate customers. KIB will focus in 2017 to ensure smooth implementation of the next phase of its strategic plan.
One of the key touchstones of this phase will be continuing to work on developing the products and services on offer to customers, whilst also ensuring more effective and efficient internal operations. KIB’s achievements during the year were recognized by various international agencies. These include “Best Islamic Bank — GCC” from World Finance, “Best Sharia Compliant Bank — MENA” from Cfi.co and “Best Banking Vision” from CPI Financial. KIB was also honored for excellence in labor nationalization policies in the private sector across the GCC. Al-Jarrah concluded by expressing his gratitude towards the Central Bank of Kuwait for the guidance and the Board of Directors, Fatwa & Sharia Board, the executive management, employees and customers for their support with which KIB could achieve this remarkable performance.