92% of KFH’s profits made in 2018...sustainable: CEO
Bank to exit non-core assets in 2019
KUWAIT CITY, Feb 9: The Group Chief Executive Officer at Kuwait Finance House (KFH), Mazin Saad AlNahedh said that KFH’s sustainable profits reached 92% of the total profits recorded in 2018. This affirms the success of KFH’s strategy that focuses on core banking business and reflects the record net profits growth.
Al-Nahedh added during TV interviews to comment on the financial results for 2018 that the profit was mainly driven by revenue increase from the core business. Net financing income increased by 18.5% from KD 82.4 million the previous year to KD 527.3 million in 2018. Total operating income increased by 4.6% to KD746 million, while total operating expenses decreased by KD 12.6 million or the equivalent of 4.1%. Net operating income increased by 11.1% to KD 453.5 million.
He further said that the Group’s financing portfolio increased by 1.8% in 2018, despite the decline in the Turkish currency rate against the Kuwaiti dinar, especially during the third quarter. The drop had an impact on the consolidated balance as of the date of the consolidated financial statements. Excluding this impact, the financing portfolio increased by 7.4%, along with the increase of all types of financing, in particular the corporate financing. Retail financing under KFH Kuwait was 3.5%, higher than the market’s 2.9% growth rate, according to the latest data by the Central Bank of Kuwait (CBK).
As quality of KFH’s assets improved, the Group’s non performing debts decreased to 1.99%, as per the CBK’s accounting principles, compared to 2.65% for last year. The coverage ratio of provisions and collaterals for non-performing debts stood at 520.14% and 247.07% for KFH solo and the Group respectively. At the end of 2018, total provisions reached KD 619.6 million for the Group.
Al-Nahedh pointed out that the contribution of KFH subsidiaries in the net operating income rose to about 39.2%, mainly from KFH Turkey with a 34% contribution. Despite the decline in the value of the Turkish lira, KFH Turkey continues to maintain strong and sustained growth rates at all levels of its financing portfolio, deposits, total assets and profits.
KFH Turkey registered the second lowest non-performing financing ratio in Turkey, at around 1.82%.
Al-Nahedh said that all the financial indicators of KFH Turkey exceeded the minimum regulatory requirements and stand at good levels, pointing out that the recent reforms and the improvement of the currency value will help stabilize the financial situation in Turkey.
Al-Nahedh expected KFH to exit noncore assets of nearly KD 150 million in 2019. The bank achieved KD 21.9 million profits of the total exiting deals that reached KD90 million at the end of 2018, compared to KD57.6 million in 2017.
Meanwhile, KFH achieved a net profit of KD 227.4 million for the year 2018, in comparison to KD 184.2 million last year, an increase of 23.5%. EPS reached 36.36 fils compared to 29.46 fils in 2017, an increase of 23.4%.