Chairman of Kuwait Finance House (KFH) Hamad Abdulmohsen Al-Marzouq said that, by the grace of Allah, KFH has reported record net profit of KD 584.5 million attributable to the shareholders of the bank for the year ended 2023, an increase of 63.4 % compared to 2022. The historic profits are the highest-ever recorded in the Kuwaiti banking sector of which government and semi-government share represented KD 224 million, which is higher than the share during the pre-acquisition phase at KD 68.6 million, an increase of 50%.

Additionally, the share of the governmental entities in the Group market cap increased by KD 285 million compared to the pre-acquisition phase in 2021. This reflects a significant benefit for public funds due to the strategy set by KFH Board of Directors.

Earnings per share reached 38.49 fils for the year 2023(after the distribution of the acquisition shares), an increase of 29.6%, compared to 29.7 fils in 2022.

Net Financing income for the year ended 2023 reached KD 965.9 million; an increase of 20.7% compared to last year. Net operating income for the year ended 2023 reached KD 945.4 million, an increase of 30.7% compared to 2022. Financing receivables increased to reach KD 19.4 billion, an increase of KD 624.7 million or 3.3% compared to 2022. Total assets increased to reach KD 38.01 billion, an increase of KD 1.04 billion or 2.8% compared to last year. Total shareholders’ equity reached KD 5.3 billion in 2023. Depositors’ accounts reached KD 21.8 billion, an increase of KD 782.4 million or 3.7% compared to last year. In addition, the capital adequacy ratio reached 18.18% for the year 2023 (17.66% in 2022), which is above the minimum requirement. This percentage confirms the solid financial position of KFH.

Al-Marzouq explained that the solid financial position of KFH Group has enhanced its ability to increase cash dividends to its shareholders this year and for the coming fiscal years. The Board of Directors has proposed cash dividends to shareholders of 10 fils per share for the remaining profits until the end of 2023, in addition to 10 fils in H1 2023, totaling 20% for the year 2023, compared to 15% in the previous year. The Board of Directors also recommended the distribution of bonus shares of 9% of the issued paid capital.

Remarkable performance

Al-Marzouq said that the unprecedented profits recorded by KFH in the first year the success of the acquisition at all levels, transforming KFH into the largest bank in Kuwait in terms of total consolidated assets amounting to KD 38 billion as of 31 December 2023, and the second largest Islamic bank in the world. He noted that the acquisition contributed to enhancing the profitability level, in which KFH successfully recorded the highest-ever profit rates in the local banking sector and the highest returns on the total key indicators.

“KFH successfully achieved the key goals of Group strategy, strengthened its leading position, and overcame different challenges and operating difficulties. Additionally, High liquidity ratios, solid capital base, and strong operating performance resulted in growth in operating income, profits, financings portfolio, and all key financial indicators,” Al Marzouq said.

He pointed out that the Group`s market capitalization has increased and trading in KFH shares attracted record levels of high liquidity. KFH also ranked first on Boursa Kuwait in terms of market capitalization which reached KD 11.4 billion. This reflects the increase of KFH’s capital value for KFH shareholders, a third of whom are governmental and semi-governmental institutions.  

Al Marzouq added that KFH` services expanded to include new strategic countries, including Britain, Egypt, and others following the acquisition of AUB-Bahrain, which proved successful during its first year. He pointed out the completion of converting AUB-Bahrain `s conventional banking services to be compliant with Shariah principles. The bank officially received the approval as a licensed Islamic Bank from the Central Bank of Bahrain (CBB). Since last December, the Bank has offered an integrated range of products and services that are compliant with the provisions and principles of Shariah, including retail and corporate services, saving and investment products, in addition to trade finance and wealth management solutions.

“The acquisition has resulted in dividend and accretion value of 17.9% for the dividend share of each shareholder at KFH as of 31 December 2023 (before synergies)”, added Al-Marzouq “It is expected to increase while achieving synergies in the coming periods, particularly after the completion of the merger with AUB-Kuwait.”

Return on average tangible shareholders’ equity reached 20.5% (before synergies) as of 31 December 2023. It is the highest return on shareholder’s equity in the banking sector.

Foreign investment contribution increased to reach 12.92% as at the end of 2023 compared to 10.34% at the end of 2021 and 7.44% at the end of 2019. This is an increase of 73.6% compared to 2019 end, reflecting the strength of KFH share following the acquisition and indicating the trust confided of investors.

 Al-Marzouq pointed out that KFH is currently in the process of completing the merger by amalgamation with the Ahli United-Kuwait, one the final acquisition stages leading to numerous benefits for both parties and the overall banking industry in Kuwait.

“The new entity has become a source of strength for KFH’s financial position, solidifying its ability to deal with financial challenges, boosting its standing as a leading bank locally, regionally and internationally and supporting the country’s endeavors in transforming Kuwait into a financial hub and a leader of Islamic finance industry in the region taking into account the new employment opportunities offered to nationals” said Al-Marzouq

Supporting corporate and mega projects

Al-Marzouq pointed out that KFH’s new position as a banking entity spread across 11 countries and contributed to boosting its role in the national economies as one of the dominant banks in the Middle East. This also enabled KFH to enter new markets and expand its financing contributions with high efficiency at the regional and local levels.

It is worth noting that KFH participated in financing deals for electricity, petrochemical and aviation projects, amounting to approximately USD 10.5 billion, in addition to many local and regional financing deals. These mega deals confirm the high financing capability and financial strength KFH enjoys.

Meanwhile, he confirmed that KFH has played a vital role for the micro and SME community and succeeded in growing its SME portfolio, ascending as a strategic partner of society.

US$7.5 billion Sukuk transactions

Al Marzouq said that KFH Group expanded its leading role in the international Sukuk market and managed and arranged, through Group investment arm, KFH Capital, over US$7.5 bn in Sukuk issuances for different corporate and sovereign issuers in different sectors and geographies.

Sustainability and CSR

Al Marzouq said that KFH continued its efforts in sustainability and promoting green financing products, at both the retail and corporate levels. It also played an important role in ESG by linking its financial transactions to sustainability. He noted KFH’s participation in the 2023 United Nations Climate Change Conference (COP28) in Dubai.

Al Marzouq said that KFH crowned its sustainability efforts in 2023 by earning several prestigious awards, notably Euromoney “Best Islamic Bank for ESG- global category” award.

He explained that KFH’s social initiatives in 2023 were purposeful and comprehensive as it succeeded in implementing strategic activities with added value and positive impact on all segments of society. Also, KFH was recognized as the “Market Leader” in social responsibility in Kuwait by Euromoney magazine.

Solid financial position

KFH Acting Group Chief Executive Officer, Abdulwahab Iesa Al Rushood, said that KFH maintained its solid balance sheet, enhanced the Group`s financial position, and maintained a strong capital reserve thanks to the following elements: abundant liquidity, continuous diversification of financing, flexible business model, wide geographical spread and the Group`s harmonious performance, among many other elements of strength.

He pointed out that KFH reported the best profit rate and the highest ratios in all key indicators, improved asset quality, developed operating profits, and diversified the revenues, all of which helped achieve financial solidity and sustainable growth.

Digital Transformation

Al Rushood said that KFH leads the competition and expands its customer base and market share in the retail banking sector. He added that KFH is moving forward with its digital transformation strategy, launching innovative digital financial solutions through KFH (mobile application and website), XTMs and KFH-GO. He pointed out that KFH launched Tam, the first Islamic digital bank in Kuwait and Zaheb digital platform, in addition to several innovative banking solutions.

Al Rushood said Euromoney Magazine ranked KFH as a Market Leader- Kuwait in digital solutions in recognition of its outstanding digital solutions.

Empowering local talents

Al Rushood said that KFH successfully empowered local talents and creative thinking at work through its massive recruitment efforts. In 2023, around 400 employees were hired with a noteworthy 99% of the total 2023 hires. The Kuwaitization rate exceeded 81%. In addition, the top positions have been filled during the year with national competencies. Additionally, KFH offered over 83,000 hours of training to 3,116 employees.

Sukuk transactions

Al Rushood said that KFH Group Treasury investment transactions exceeded USD 13 billion in the Primary and Secondary markets. KFH also continued to expand its short-term Sukuk trading in the IILM program.  Group Treasury maintained its position as a Main Market Leader in the short-term IILM Sukuk market.

26 prestigious awards

Al Rushood said that KFH won 26 prestigious awards such as the “World's Best Islamic Financial Institution 2023” award from Global Finance and “Bank of the Year- Kuwait” from The Banker. The awards were in appreciation of KFH`s excellence, innovation, and its advanced services and products. He pointed out that the awards confirm KFH’s pioneering role in digital transformation and the new level KFH reached in banking experience and achieving customers’ aspirations. They also confirm KFH`s strength of financial performance and leadership in the Islamic finance industry.

In conclusion, Al Rushood expressed his appreciation for the support of the Board of Directors and thanked the Central Bank of Kuwait and the regulatory authorities for supporting the banking sector. He also praised the efforts of Executive Management, employees, all partners, and stakeholders for their key role in expanding KFH`s leading position and maintaining its excellence.