17% Cash dividends, 10% Bonus shares, and 32.41 fils Earnings per Share
KUWAIT: Kuwait Finance House (KFH) Chairman, Hamad Abdulmohsen Al-Marzouq, said that KFH has, by the grace of Allah, realized a net profit of KD 184.2 million for the year 2017 for KFH shareholders compared to KD 165.2 million last year i.e. an increase of 11.5%. Total financing income reached KD 740.5 million, i.e. an increase of 3.2% compared to last year. Net financing income reached KD 444.8 million, i.e. an increase of 2.3% over the last year. Total operating income increased to reach KD 713.3 million for the year 2017, ie a growth of 8.1% over the last year. Net operating income increased to reach KD 408.3 million, i.e. a growth of 11.9% over the last year. Earnings per share for 2017 reached 32.41 fils compared to 29.10 fils last year i.e. an increase of 11.4 %. Total general and administrative expenses have declined by KD 1.6 million i.e. a decrease of 2% over the last year.
KFH distributions for the year 2017 were as follows: 2.625% for “Al-Khumasiya” investment deposit, 2.250% for “Al-Mustamera” investment deposit, 1.950% for “Al-Sedra” investment deposit, 2% for the 12-month Dimah investment deposit, 1.875% for the 6-month Dimah investment deposit and 1% for savings investment accounts, and 1.930% for long term investment plans.
The Board of Directors has recommended 17% cash distributions to shareholders and 10% bonus shares subject to general assembly and concerned authorities approval. Total assets increased to reach KD 17.358 billion, i.e. an increase of KD 858.6 million or 5.2% compared to last year. Financing portfolio increased to reach KD 9.216 billion, i.e. an increase of KD 1.041 billion or 12.7% compared to last year. Depositors’ accounts increased to reach KD 11.597 billion, i.e. an increase of KD 880 million or 8.2% compared to last year. Shareholders’ equity increased to reach KD 1.872 billion i.e. an increase of KD 61.8 million or 3.4% compared to last year. KFH’s capital adequacy ratio (CAR) reached 17.76%, (after the recommended distributions) i.e. higher than the required limit of 15%, thus reiterating the strength of KFH financial position.
The best practices
Al-Marzouq stated in a press release that the realized profits confirm the success of KFH strategy and plans to diversify sources of income, mitigate potential risks, optimize costs, increase operational returns, achieve harmony among KFH group banks, ensure suitable growth and profitability, enhance service and risk policies, adhere to regulatory rules and regulations, focus on achieving rewarding returns for shareholders and investors at competitive levels. He indicated that the balance sheet carries several positive indicators namely the steady financial position, sustainable and balanced growth in operational revenues from banking services, annual profit indicators and reduction in operational expenses compared to revenues. This indicates improvement in group performance despite the obstacles faced in the operative environment. KFH has continued its reserved investment policy and cautious management of risks in an effective manner to maintain assets as per the best practices.
Al-Marzouq stated on KFH 40th Anniversary that KFH has far surpassed its competitors as the leader of Islamic finance industry worldwide. These four decades of hard work has placed KFH on solid grounds and rendered it as a major competitor and a reputable organization employing expertise and adopting rational performance in all activities while mastering professional management and endurance against challenges. He reiterated that KFH strategy during the last three years has achieved its goals, thus succeeding in building a firm and accurate conception that is based on realistic ambitions and goals, practical facts, scientific and professional methods that would guarantee the sustainable success of this reputable financial institution and determine the features of its basic role and activity. KFH has parted away from any activities and fields that would distract from the organizational focus on growth and expansion opportunities.
Al-Marzouq stated that KFH group banks in Turkey, Malaysia, Bahrain and Germany have continued their outstanding and successful performance during 2017 in accordance with laid plans and strategies to benefit from the elements of strength in each market in which they operate and achieve more coordination and expansion in joint projects and generalize successful services and products e.g. “Bishara” account is used in Bahrain and Malaysia and XTM machines implementation in Kuwait following the success achieved in Turkey.
He added that KFH Bahrain continues to provide the best services and products in a highly competitive market and assumes a significant role in the execution of major development products in the kingdom. KFH Malaysia is heading towards e-banking services, retail market and trade and industrial finance activities. KFH Turkey has expanded significantly, sector and service wise, in the field of retail finance, corporate finance and new products, namely Sukuks and e-banking services. KT Bank AG in Germany is executing a new strategy to strengthen its existence and pave the way for expanding in Europe.
Al-Marzouq said that KFH was able to introduce during the year more than ten high-tech products and services to suite customers’ demands and requirements. Such services includes the most simple requirements i.e. salary inquiries through (Ratebi link) and most important services i.e. XTM machines with audio and visual services in addition to treasury services at the group level to provide the best liquidity management services possible. KFH website has been developed and ATM machines modernized in shape and service.
E-programs and systems
Foreign currency withdrawal machines have been placed at the airport and KFH Wallet service has been launched to replace credit cards. To facilitate KFH Online services on smart phones the face identification feature Face ID has been activated. KFH has also launched the online finance request services to save customers time and effort. Customers may fill in the determined form and determine the possibility of obtaining finance. The direct sale employee is in direct contact with the customer until the service is completed.
He indicated that efforts are exerted to restructure branches and achieve better performance following the activation of e-programs and systems and the interest which most customers showed towards using these systems. These e-services have strengthened the ties between the human role and technology through direct sale and other communication facilities e.g. call center and KFH accounts on social media. All efforts are exerted to enhance the market share by concluding several cooperation and coordination agreements with several local companies in various fields and organizing marketing and promotional programs to activate the market and support traders’ sales by more than 15 programs of this type. Due focus is also placed on highly profitable products related to customers daily life along with advantages and discounts to increase customers interest i.e. credit cards including Oases club and Al-Khair. Finance products are also provided in regard to education, health along with KFH Concierge to provide highest level of customer care.
Al-Marzouq reiterated KFH keenness and determination to participate in financing major projects which are considered as strategic and significant in KFH business. Several companies and projects were financed as part of KFH contribution to the development efforts and assisting companies to develop their work. KFH has continued its endeavor to introduce the Sukuk product. KFH has participated in the management and issuance of more than US$ 4 Billion Sukuk during 2017. KFH occupied the first position among primary dealers according to the IILM Program with a share approximating 30% of 15 issuances approximating US$ 10 Billion.
He reiterated that financing Kuwaiti companies as per the standard rules and regulations is a continuous practice. Finance shall also be provided continuously to SMEs as they play a significant role in enhancing youth and development of performance. He indicated that KFH aims to make those SMEs as one of the main factors of national economy in order to diversify the sources of income and mitigate pressures on government and contribute to building national expertise in the field of business and development of the private sector.
Overcome all challenges
Al-Marzaouq emphasized that the positive ratings given to KFH by international rating agencies and the high awards granted by all concerned organizations are considered as a positive indicator on the soundness and success of laid plans. He affirmed that KFH considers customers dedication, trust and loyalty as the best prize ever awarded and the true rating of its efforts at the group level.
Al-Marzouq indicated that KFH shall continue to innovate competitive products and services, enhance its market share, focus on customer service, and continue to develop national human resources, focus on the youth segment and enroll them in training programs to receive highest scientific and professional certificates. These efforts shall participate in the creation of leaderships which are able to deal with future challenges and cope with KFH growth and expansion in regional and global markets and make a true added value to national economy.
Al-Marzouq is very optimistic with regards to the power of the Kuwaiti economy and its ability to overcome all challenges by 2018 considering the unprecedented economic and political developments which the world is witnessing. He indicated that Kuwait enjoys strong and variable characteristics to encounter such developments including a strong and stable structure under the worldwide recognized leadership, prospects for growth in GDP in 2018 in view of stability in oil prices and the steadiness of OPEC. The new formed government has expressed its endeavor to uplift economy, continue to develop legislations and attract foreign investments, continue its spending and adopt the partnership concept with the private sector to achieve growth and development. Banks and Kuwait’s general rating has improved and both parties enjoy remarkable liquidity stock.
Al-Marzouq indicated that the most significant positive financial reformation steps which Kuwait has adopted comprised the incorporation of a general debt unit at the Ministry of Finance as the state tends to depend on debt instruments to be the source of covering deficit in the budget, improve coordination among main corporations i.e. Kuwait Investment Authority, Ministry of Finance and Central Bank of Kuwait. The successful issuance of the international Sukuk earlier this year has affirmed institutional transparency and development and trust in national economy.