Kuwait Finance House (KFH) held the earnings webcast for highlighting the Bank’s financial performance during the fiscal year 2023.

AbdulWahab Al-Roshood, Acting Group Chief Executive Officer

AbdulWahab Al-Roshood, Acting Group Chief Executive Officer at KFH said “By the grace of Allah, KFH has reported a record net profit for its shareholders of KD 584.5 million for the year ended 31 December 2023, an increase of 63.4% compared to last year.

Earnings per share reached 38.49 Fils; an increase of 29.6% compared to last year. KFH`s remarkable performance in 2023 was crowned by record annual financial results.”

Al-Roshood added that KFH reported the best profit rate and the highest ratios in all key indicators, improved asset quality, operating profits, and diversified the revenues. These achieved financial solidity and sustainable growth.

“KFH services expanded to include new strategic countries, including UK, Egypt, and others following the acquisition of AUB-Bahrain which proved successful during its first year. We also successfully completed the conversion of AUB-Bahrain`s conventional banking services to be compliant with Shariah principles. The Bank officially received the approval from the Central Bank of Bahrain (CBB) as a licensed Islamic Bank”, added Al-Roshood.

He explained that KFH enjoys strong credit ratings, high liquidity ratios and a healthy capital buffer to support business growth and expansion both locally and globally. In addition, KFH Group Treasury investment transactions exceeded USD 13 billion in the Primary and Secondary markets. KFH also continued to continuously 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.

Al-Roshood said that KFH continued its role in providing financing to corporate and mega projects, especially in the region. These mega deals confirm the high financing capability and financial strength KFH enjoys.  KFH plays a significant role in supporting and financing SMEs as a strategic partner in society.

He added “leading the competition and expanding its customer base and market share in the retail banking sector, KFH is moving forward with its digital transformation strategy, launching innovative digital financial solutions through KFHOnline (mobile application and website), XTMs and KFH-GO. KFH launched Tam, the first Islamic digital bank in Kuwait and Zaheb digital platform, in addition to several innovative banking solutions.”

Al-Roshood pointed out 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. Additionally, KFH participated in the 2023 United Nations Climate Change Conference (COP28) in Dubai.  KFH continues to play exceptional role in social commitment and executing strategic community initiatives inside and outside Kuwait.

Eng. Fahad Al-Mukhaizeem, Group Chief Strategy Officer

Meanwhile, Eng. Fahad Al-Mukhaizeem, Group Chief Strategy Officer covered highlights of the Kuwait operating environment with an overview on KFH. He also shared KFH's strategy, as well as Full Year-2023 results.

Al-Mukhaizeem explained that in 2023, Kuwait’s Central Bank (CBK) increased its discount rate by 75 basis points to 4.25%, as part of its efforts to preserve monetary and financial stability, boost the growth of the various economic sectors, especially the non-oil sectors, contain local inflationary pressures, and maintain the competitiveness and attractiveness of the national currency.

Al-Mukhaizeem added “Kuwait's GDP was estimated to reach KWD 39.6 billion in 2023 and increase to KWD 40.8 billion in 2024 according to the most recent International Monetary Fund (IMF) report released in October 2023. It is also expected that the annual average inflation rate to decline to 3.4% in 2023. Kuwait’s crude oil price stood at USD 79.6 pb as of the end of December 2023, down by 0.72% from the same period of the previous year.”

He pointed out that Kuwait's economic development in 2023 was driven by its diversification efforts, infrastructure investments, and commitment to sustainability. As the country continues to work on attracting foreign investment, fostering non-oil sectors, and prioritizing sustainable practices, Kuwait is well-positioned to achieve long-term economic prosperity. The leadership shifted smoothly, after the passing of the Late Amir, His Highness Shaikh Nawaf Al Ahmad Al Jaber Al Sabah – May Allah have Mercy on his soul– to His Highness the Amir of Kuwait Shaikh Meshal Al Ahmed Al Jaber Al Sabah in December of 2023, May Allah protect him.  This contributes to the stability of the local environment in addition to the formation of a new government led by His Highness the Prime Minister Shaikh Dr. Mohamed Sabah AlSalem Al Sabah to complete the development path.

Nevertheless, it is imperative for Kuwait to continue work on improving the business environment and investing in human capital to ensure sustainable growth. With the right strategies in place, Kuwait can successfully navigate the dynamic global economic landscape and emerge as a model for economic development in the region.

Al-Mukhaizeem said that KFH’s long term credit rating stands at (A) by Fitch with Stable Outlook, and at (A2) by Moody’s with Stable outlook.

 Furthermore, 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.

He mentioned 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. Moreover, Euromoney Magazine has ranked Kuwait Finance House (KFH) as a Market Leader- Kuwait in five categories: Digital Solutions, Corporate Banking, Corporate Social Responsibility (CSR), Investment Banking and Islamic Finance. The awards were in appreciation of KFH`s excellence, innovation, and its advanced services and products.

Al-Mukhaizeem pointed out that KFH ranked first among the largest listed companies on Boursa Kuwait in terms of a market capitalization approximately KWD 10.6 BLN as of the end Of December 2023.

Jamal Al-Humairi, Acting Group Chief Financial Officer (AGCFO) and General Manager Financial Control and Regulatory Reporting

Jamal Al-Humairi, Acting Group Chief Financial Officer (AGCFO) and General Manager Financial Control and Regulatory Reporting presented the financial performance of KFH group for the year ended 31 December 2023.

He said that the Group has achieved Net Profit After Tax attributable to Shareholders for the year ended 31st December 2023 of KD 584.5mn higher by KD 226.8mn or 63.4% compared to 2022 of KD 357.7mn.

The higher profit is mainly from increase in total operating income, lower provision and lower net monetary loss that resulted from the application of IAS-29 “Financial reporting in Hyperinflationary Economies” on the financial statements of Kuwait Turkish Participation Bank (KTPB). Partly offset by an increase in operating expenses and taxation.

Al-Humairi explained that financing income has increased by KD 871.9mn or 65.9% compared to last year due to consolidation of AUB for full year 2023 and increase in yield and average profit earning assets.

Net financing income at KD 965.9mn increased by KD 165.4mn or 20.7% compared to last year mainly due to an increase in financing income by KD 871.9mn offset by increase in finance cost and distribution to depositors by KD 706.4mn.

Net Operating income at KD 945.4mn increased by KD 221.1mn or 30.7% compared to last year; mainly from increase in net financing income by KD 165.4mn, increase in Investment income by KD 140mn, increase in Net gain from foreign currencies by KD 46.8mn and increase in fees and commissions by KD 46.2mn offset mainly by increase in operating expenses by KD 166.5mn.

He added that the total Operating Expenses at KD 515.4mn is KD 166.5mn or 47.7% higher than last year primarily due to consolidation of AUB and increase due to high inflation mainly in Turkey.

Average Yielding Assets is up by 25.9% compared to FY2022 and 69.6% compared to 2021, mainly from the growth in Financing receivables and debt securities.

Looking at provisions and impairments, Al-Humairi pointed out that the Group total impairment charge for 2023 at KD 44.4mn decreased by KD 17.7mn or 28.5% compared to last year.

Al-Humairi said that KFH cautious approach towards provisioning have contributed to credit provision balance exceeding ECL required as per CBK IFRS 9 by KD 548mn as of 31 December 2023.

Al-Humairi highlighted that total Assets at KD 38bn increased by KD 1.04bn or 2.8% in 2023.

Net financing receivables at KD 19.4bn increased by KD 625mn or 3.3%.

Investments in debt securities at KD 7bn has increased  by KD 921mn or 15.1%

Additionally, deposits for 2023 at KD 21.8bn are higher by KD 782mn or 3.7% compared to FY 2022.

The contribution from CASA deposits to total group customer deposits as at the end of 2023 is 42.1% and on overall basis group continues to benefit from a large pool of low-cost deposits.

Contribution of customer deposits to total funding is 71.7% compared to 71.4% in 2022.

In the last slide looking at the key financial ratios which mainly reflects improvement in profitability as explained earlier.

• ROATE from 16.48% to 20.51%
• ROAA from 1.69% to 1.82%
• EPS from 29.71fils to 38.49 fils

Group NPL ratio reached 1.51% (as per CBK calculation) in 2023 .

Provisions Coverage ratio for Group is 308% in 2023.