Kuwait Finance House is a commercial bank operating in accordance with Islamic Shari'a. The group is organized into three major business segments: retail and corporate banking, direct investment and treasury services.

KFH’s principal activity is retail and corporate banking, which includes commodity and real estate Murabaha finance, local leasing, Wakala and Istisna’s facilities. This division’s contribution to the bank’s total revenues increased by 7.5% from KWD523 million (USD1.91 billion) in 2007 to KWD623 million (USD2.28 billion) in 2008.

The direct investment division’s principal activity is managing direct equity, real estate investments, overseeing subsidiaries, affiliates and other KFHKFH-owned funds and portfolios. The contribution of this division to the total operating revenues grew by 1.67% from KWD193.6 million (USD708.6 million) in 2007 to KWD220.9 million (USD808.6 million) in 2008. The direct investment division’s portfolio is diversified to include banking, investment, commercial, real estate, health care, asset management services and other investments that are all in accordance with Islamic principles.

The treasury division includes liquidity management, international Murabaha investments, exchange of deposits with banks and financial institutions and international banking relationships. Its contribution to total revenues decreased by 8.29% from KWD87.4 million (USD319.9 million) in 2007 to KWD19.7 million (USD72.1 million) in 2008.

KFHKFH was established in 1977, as Kuwait’s first Islamic bank and as of 2009, it has operations in 20 countries. The bank’s direct operations are located in Turkey, Bahrain, the UAE, Saudi Arabia, Jordan, Morocco, Malaysia, Singapore, Australia and Germany. KFHKFH also has foreign investments in the UK, the US, Indonesia, China and Hong Kong, among others.

The bank is also expanding regionally after receiving an approval, in 2009, by the Saudi Arabian Monetary Agency to establish the Saudi Kuwaiti Finance House (Saudi-KFHKFH) with a capital of SAR500 million (USD133.6 million) . It also established earlier in 2008 Baitak Real Estate Investment Company, a real estate company with capital of about 2.5 billion riyals, to invest in real estate projects in Saudi Arabia.

KFHKFH is considered to be the Gulf’s second largest Islamic bank by virtue of its total assets, which amounted to KWD10.54 billion (USD38.39 billion). It is also the second largest bank in Kuwait, after the National bank of KuwaitNational bank of Kuwait, and the number one Islamic bank in Kuwait, in terms of its assets also as of December 2008.

Listed on the Kuwait Stock ExchangeKuwait Stock Exchange, KFHKFH was the second most profitable Kuwaiti listed bank, at the end of 2008, with a profit of KWD157 million (USD 571.8 million) declining by 43% from 2007. The reason behind this decrease was due to a rise in defaulting loans, which led to KWD165.2 million (USD601.7 million) in provisions being set aside and leading to diminished earnings. Another factor is the decrease in income from investments, which totaled KWD164 million (USD597.3 million), in 2008 compared to KWD259.2 million (USD945.8 million), in 2007.

The bank plans to expand further throughout the Middle East by establishing a Kuwait Finance House in Jordan, and is also considering investing in Algeria and all the GCC countries to diversify its sources of income and operating activities.