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In an interview with CNBC
- Net Financing Income Increased by 7% after Stopping the Consolidation of ALAFCO
- Nonperforming Finance Ratio Dipped to 1.9% Q1 2016
Kuwait - Group Chief Executive Officer at Kuwait Finance House (KFH), Mazin Saad Al-Nahedh said that the indicators of profitability, asset quality and liquidity are testimony to KFH's strong financial position, indicating that KFH posted net profits of KD 34.1 million for the Q1 of 2016, an increase of 14.1% over the same period last year. He added that KFH's capital adequacy ratio (CAR) reached 17.04%, higher than the required limit.
Al-Nahedh added in an interview with CNBC Arabiya conducted at KFH headquarters that the nonperforming finance ratio at KFH dipped from 1.98% in 2015 to 1.9% in Q1 2016. The provisions coverage for the group reached roughly 116% as of end Q1 2016.
He explained that the net financing income increased by 7% after stopping the consolidation of ALAFCO. This increase is very positive and in line with KFH's strategy.
Al-Nahedh explained that KFH-Turkey comprises the largest share of the external profits, noting that the revenues generated from KFH businesses outside Kuwait represent 40%, which is healthy percentage. KFH-Turkey is working on strengthening its capital position to further expand in financing operations.
Al-Nahedh continued "KFH's investment strategy is based on focusing on the core banking business while exiting assets that consume the capital, affirming the keenness of constantly improving asset quality, diversifying income and achieving sustainable income depending on the core banking business at the bank."
With regards to the Clean Fuels Project, Al-Nahedh said that this project is viewed among the most strategic projects, adding that Islamic and conventional banks participated in the KD-denominated local tranches with a value of KD 900 mln. This value has been increased to KD 1.2 billion as a result of the huge participation turnout to fund this project. He revealed that KFH is about to close the contract with the Kuwait National Petroleum Company (KNPC).
Moreover, Al-Nahedh said that placing Kuwait's rating on review for downgrade might take a toll on the ratings of some local banks due to the indirect support of the government to those banks. He affirmed that Kuwait enjoys several cushions to encounter the drop in oil prices such as the General Reserve Fund, the Kuwait Future Generations Fund and others. In comparison to the GCC countries, Kuwait has the ability to withstand the drop in oil prices for relatively medium periods of time. However, there should be a clear plan to be implemented to bridge the budget deficit while rationalizing cost and diversifying income to avoid the risk of depending on only one income resource. He added "when rating agencies solicit an impaired budget structure in the country without any clear reforms plan, they might downgrade the sovereign rating which is not expected to happen, however if it happened, it might consecutively affect the ratings of the banks as they are part of the country."
He reiterated that the Kuwaiti banks have strong position and good reputation thanks to their prudent management and the compliance to the CBK's regulations of strengthening the capital and improving liquidity and asset quality.
Kuwait Finance House (KFH)
KFH was established in Kuwait in 1977 and is enlisted in the Kuwait Stock Exchange. KFH Group is a global pioneer in the field of Islamic banking services, where it offers a wide array of Islamic products and services, not to mention a high standard of innovation and client service.
KFH manages its operations in the GCC, Asia, and Europe through over 446 branches, including KFH-Turkey, in order to offer services for the bank's clients in Turkey, Malaysia, Saudi Arabia, Bahrain, Germany, Jordan, and Dubai.
KFH's mission is to achieve highest levels of excellence and innovation in the field of client service, while developing common interest for all those concerned with the financial institution. KFH's vision is to spearhead the global development in Islamic financial services, and to upgrade the bank into the level of becoming the most sustainable profitable Islamic bank in the world.
KFH's values include cementing leadership through all its businesses, including leadership in the Islamic banking services worldwide, through innovation and in client service and the development of its employees. In addition, KFH is committed to all its procedures, and to setting up long-life partnerships with the concerned authorities.
For more information, please visit: www.kfh.com
© Press Release 2016
