Ahli United Bank continues its solid performance
AGM held with 93.78% attendance and approval on all clauses
KUWAIT:
Chairman Dr Anwar AlMudhaf assured that “In 2016, Ahli United Bank accomplished a new achievement, adding distinction to the Bank’s remarkable record. We successfully issued a $200 million Additional Tier 1 Perpetual Sukuk, listed on NASDAQ Dubai and the Irish Stock Exchange. I am delighted to confirm that following strong demand for the Sukuk from investors in the Middle East, Asia and Europe, we enjoyed an oversubscription of the issuance by more than three times. This surely mirrored the investors’ trust in Ahli United Bank and the generally positive economic climate in Kuwait”. His speech came during the Bank’s 2016 AGM held on 30 March 2017 with 93.78 percent attendance, which approved a cash dividend of 12 percent and bonus shares of 8 percent of issued and paid up capital (12 fils per share and 8 shares per 100 shares, respectively).
75 years of success
Ahli United Bank’s journey dates back to more than 75 years, when the Bank opened on 28 February 1942 as the first bank in Kuwait. the Bank was the pioneer of the banking sector in Kuwait, assembling the first team of ambitious Kuwaiti bankers who promoted the development of the sector locally and in the Arabian Gulf region.
Dr Al-Mudhaf explained that “Through many decades and under varying political, economic and social circumstances, the Bank succeeded in developing and expanding its operations under different names, until the year 1971, when it became a 100 percent Kuwaitiowned establishment, “Bank of Kuwait & Middle East”. In 2002 the Bank became a member of the renowned and respected Ahli United Bank Group. However, a major event in the Bank’s proud journey was the conversion to our revered Islamic Sharia as of 1 April 2010.“During these 75 years, the Bank was able to withstand and overcome various challenges of the Kuwait market, thanks to the trust and loyalty of our many customers and staff, who have remained with us over the years. For the past few years, the region’s future has been unpredictable, adversely affecting all economic sectors as well as capital markets in Kuwait and the region”, he added.
Moreover, the fall in oil prices has impacted the economy and government budget. Despite all of these challenges, Ahli United Bank has relentlessly striven to seize every growth opportunity it could, building on a set of factors, including: our long and proven track record; our customers’ trust, passed from one generation to another; our financial strength and our solid capital base; and the efforts of our Executive Management, guided by the directives of the Board of Directors, adopting the latest technology and the best development models in the banking sector.
Strong financial index
The Bank maintained a Return on Equity (ROE) of 11 percent in 2016, which ranks among the highest rates in the domestic and regional markets. The Return on Assets (ROA) in 2016 recording a rate of 1 percent. As for the Earnings Per Share (EPS), this reached 25.9 Kuwaiti fils per share (27.4 Kuwaiti fils per share in 2015), which reflected the Bank’s continued strong financial standing and ability to diversify and enhance its income sources.
He added, “In 2016, Ahli United Bank strove to decrease its credit concentration ratio avoiding relatively costly and concentrated deposits. The Bank’s total assets dropped by 5 percent between 2015 and 2016, from KD 3.9 billion to KD 3.7 billion as a result of the regulatory changes in Finance/ Deposit Ratio.
Based on all those positive results, the Board of Directors is recommending to the Bank’s ordinary General Assembly a cash distribution of 12 percent and bonus shares of 8 percent of the issued and paid up capital to the shareholders (12 Kuwaiti fils per share and 8 shares for every 100 shares respectively), which was approved by the Central Bank of Kuwait on 9 February 2017.
Keeping high credit ratings
Dr Al-Mudhaf explained, “Ahli United Bank continues to enjoy high credit ratings given by renowned international credit rating agencies such as Fitch, Moody’s and Capital Intelligence. Accordingly, the Bank maintained a credit rating of A+ on the long term and F1 on the short term with stable outlook by Fitch Ratings Agency, and a rating of A2 on local currency with stable outlook by Moody’s. As for Capital Intelligence, the agency fixed the Bank’s long-term credit rating of foreign currency to A+ and enhanced the short-term foreign currency rating to A2. All these ratings confirm the strong credit standing, capital quality and stability of the Bank’s growth rates in the future.
Supporting and developing banking products and services
Dr Al-Mudhaf pointed that, “the Bank’s continuous quest to ensure it remains at the forefront of banking technology is in line with Ahli United Bank’s development of new systems and software in 2016, including the launch of a new mobile banking application. The Bank also made many upgrades to its systems and services, including the upgrade of the Customer Service Management systems across its branches and the upgrade of the ATM and Customer Credit Card services and privileges, as well as the corporate website”.
Awards received by the bank
Speaking of the awards the Bank received, Dr Al-Mudhaf said “As we reached our 75th year of operation, it gives me great pleasure to see the international banking community recognizing Ahli United Bank’s long journey of remarkable achievements. In 2016, the Bank received many prestigious awards including but not limited to the “Best Islamic Bank - Kuwait” Award for the fourth consecutive year from the internationally renowned The Banker magazine, and the “Second Safest Islamic Bank in Kuwait and the Fourth in the GCC” Award from Global Finance magazine for the second year in a row. I’m sure you agree with me that such recognition from these prestigious entities of the international banking community which have granted these awards to the Bank for many consecutive years is the living proof of Ahli United Bank’s ongoing success and a confirmation of its leading position among Islamic banks in the region”.
Social responsibility
Regarding social responsibility, Dr Al-Mudhaf said “The Bank’s social responsibility is an intrinsic part of its identity. Being the oldest bank operating in Kuwait, Ahli United Bank has a long record of social contributions stretching across many decades and implemented at various times. The Bank has put together an active social plan that tackles different social causes in Kuwaiti society with the aim of constantly improving citizens’ lives and bringing valuable support to many social initiatives and events, whether educational, charitable or health related. It is important to mention that in 2016, the Bank paid particular attention to our special needs children. With this in mind, Ahli United Bank invested tangible efforts towards supporting those people and facilitating their life while helping their social integration, through social and health activities”.
The human capital
Dr Al-Mudhaf assured that, “Ahli United Bank’s human capital is the institution’s cornerstone. Accordingly, our top priority remains to maintain this capital’s growth and development. Consequently, the Bank was keen on implementing the Toumouh program, aiming at recruiting the best national talent, growing their skills, and preparing them to hold leadership positions through advanced trainings. The program also aims at providing an attractive work environment for our competent national youth.
In 2016, many training sessions took place, including leadership, antimoney laundering, risk management, and cyber crimes’ fighting programs, in addition to general awareness workshops about health and safety.”
Thanks and recognitions
Dr Al-Mudhaf ended by saying, “On behalf of all the members of the Board of Directors, the Bank’s Executive Management and myself, please allow me to express my sincere gratitude to His Highness the Amir of the State of Kuwait Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah (may God keep him safe and sound), and to His Highness the Crown Prince Sheikh Nawaf AlAhmad Al-Jaber Al-Sabah (may God keep him safe and sound), and to His Highness the Prime Minister Sheikh Jaber Al-Mubarak Al-Hamad Al-Sabah (may God keep him safe and sound), for their continuous support to Kuwait’s banking sector.
I would also like to extend my thanks and appreciation to the Central Bank of Kuwait, headed by the Governor Dr Mohamad Youssef Al-Hashel, as well as to the Capital Markets Authority and all other supervisory bodies in Kuwait for their positive role in supporting Ahli United Bank.
Last but not least, I would like to thank Ahli United Bank’s Fatwa & Sharia Supervisory Board for their untiring and supportive efforts, as well as the members of the Board of Directors, the Bank’s staff, and all our stakeholders for their loyalty, trust, and many contributions which have come together to achieve the growth and success of this prestigious financial establishment.
Milestone events
Richard W L Groves, the Chief Executive Officer, added: “It is a great honor to be the Chief Executive Officer of the Bank during the 75th anniversary of its commencement of operations in Kuwait. One can look back at the many accomplishments and achievements, and many milestone events over the year with great pride, but perhaps more importantly, we can look forward to a promising and dynamic future in the years to come.”
“Ahli United Bank, reported a further year of strong underlying growth, with an operating profit of KD 77.2 million. The net profit attributable to shareholders was KD 40.3 million as compared with KD 42.8 million in 2015. Again, the Bank had to apply additional precautionary provisioning reflecting a continued challenging operating environment.”
Groves added, “The increase in operating profit underscored the strength of the Bank’s core businesses of Corporate Banking, Retail banking, Private Banking and Wealth Management, and Treasury, coupled with an effective risk and control framework.”
Groves said, “Ahli United Bank remains committed to the successful implementation of its strategic 5-year plan (2015-2019), which aims at preserving and enhancing the Bank’s leading position in the Islamic Banking sector by focusing on customer satisfaction and working according to the best international standards. Our vision is ‘to become a leading innovative Islamic Bank that operates according to international standards, whilst placing customers first’; and this is the driving force behind everything we do.”
He added, “Despite the regional and international challenges that have reflected on our business environment in 2016, we were able to enhance the Bank’s capital by issuing an $200 million Additional Tier 1 Perpetual Sukuk which has been listed on NASDAQ Dubai and the Irish Stock Exchange in October. Demand exceeded expectations, especially from investors in the Middle East, Asia and Europe, which resulted in an over-subscription of the issuance by more than three times, confirming once more the Bank’s position as a leading Islamic financial institution in Kuwait. The success of the Sukuk issuance was cemented with a ceremonial ringing of the opening bell at NASDAQ Dubai in November, a proud moment for all involved.
Credit ratings
Groves added, “The international credit rating agencies, Fitch, Moody’s and Capital Intelligence, have continued to favorably report on the Bank’s credit rating in terms of credit standing, capital quality and the stability of growth rates in the future, thus recognizing the Bank’s ability to maintain solid growth rates year after year. Accordingly, the Bank maintained a credit rating of A+ on the long term and F1 on the short term with stable outlook by Fitch Ratings Agency, and a rating of A2 on local currency with stable outlook by Moody’s.
The Bank received many prestigious awards mirroring the Bank’s positive business performance, which was a clear indicator of our sound approach and constructive efforts.
Groves pointed out that “In 2016, Ahli United Bank received the ‘Best Islamic Bank - Kuwait’ Award for the fourth consecutive year from the internationally renowned The Banker magazine, which counts as one of the most prestigious annual awards for excellence in Islamic Banking. The highly acclaimed Global Finance magazine also commended the Bank in 2016, as the ‘Second Safest Islamic Bank in Kuwait’ and ‘the Fourth Safest Islamic Bank in the GCC’ for the second year in a row”.
Groves added, “Ahli United Bank has always aimed to improve its performance through the adoption of cutting-edge technologies that are aligned with fast-paced technological advances, which would eventually help us provide highquality banking services. As a proof of our successful commitment to this objective, the Bank received the Commerzbank Annual Award for Outstanding Performance in Straight-Through-Processing (STP) of Payments for the fifth year in a row. The award recognized the Bank’s operational efficiency in processing financial and commercial payments in Euro. The Bank also won Citibank’s coveted STP Excellence Award for the fourth year running, which recognized the Bank’s excellence in SWIFT automated processing of transfers and deposits along with applying the latest ground breaking technologies to drive STP compliant services to best international standards”.
Groves added: “In 2016, Ahli United Bank was also the first Kuwaiti Bank to receive the Health, Safety & Environment Excellence Award from the American Society of Safety Engineers - Kuwait Chapter (ASSE). This particular award recognized the Bank’s efforts in terms of employees’ safety, as well as health and environmental safety, confirming AUB’s pioneering role and strategic planning in terms of Corporate Social Responsibility as well as its unconditional commitment to protecting the environment and ensuring its employees’ wellbeing and the Kuwaiti society’s welfare”. Customer protection
“Moreover, the Bank considered customers’ needs and best interests as a top priority. All the Bank’s initiatives should benefit, in one way or another, our valued customers, whose trust is a pillar of everything we endeavor. Consequently, our Complaints and Customer Protection Department - established in 2015 focused in 2016 on enhancing our customer service performance in compliance with best international banking standards and practices in this field. As a result, we successfully issued our Customer Protection Manual Guidelines for Kuwait in November, which was approved as an internal document to be adopted by all stakeholders”. He added, “We have also had our (ISO 9001:2008) and ISO German Quality Certificate ‘TUV NORD’ revalidated, which confirms our unwavering efforts towards providing the best banking services”.
Groves continued, “Our biggest 2016 achievement in terms of customer service was undoubtedly the enhancement of our e-channels to meet our customers’ needs by offering them the best, most convenient and flexible services based on the latest technologies in the banking sector. Along this line, we launched our Mobile Banking services enabling customers to access their accounts around the clock, on the go and in all safety via their smart phones. The application features a wide range of benefits such as allowing customers to check detailed account statements, transfer funds between accounts locally and internationally, pay off their credit cards, and track their transactions’ dates and credit cards, in addition to other banking operations through their mobiles, anytime and anywhere, without the need to drop by the Bank. Furthermore, Ahli United Bank launched a service that enables customers to issue a Personal Identification Number (PIN) to access the Mobile Banking service via ATM. Multiple other updates were also made to the Call Centre’s system with the purpose of improving customer experience in communicating with the Centre, which added further round-the-clock benefits and convenience to our customers. Additionally, the Bank introduced the new Arabic version of its official website”
In terms of new customers’ offers and opportunities, Groves explained that, “Ahli United Bank delivered several attractive ideas including the ‘Pearl Instant Discount’ program that enables customers to benefit from special discounts upon using their Credit or Debit Cards at a select number of retail outlets included in the program. The Bank reinforced its branches’ network while rearranging some branches’ locations to ensure it remains close to customers across all Kuwaiti regions. Accordingly, the Bank opened a new branch in the Boulevard Complex in Salmiya to reach out to more customers during their recreational time. The Bank also moved its branch in Jahra area to a new location that accommodates a larger number of customers and has an all-women section, which allows for more privacy. Moreover, preparation has commenced for the opening of 3 new branches in Rawda, Bayan and Rumaithiya.
Online e-banking services
He added, “Seeking to attract all types of customers and based on the Central Bank of Kuwait’s instructions, the Bank equipped 7 branches to serve people with special needs, namely in Farwaniya, Oyoon, Sabah Al-Salem, Jahra, Qadsiya, Mishref, Ahmadi and a part of the headquarters, to guarantee this segment’s utmost convenience. The Bank also reduced its fees on several products and services offered to special need customers. The Bank has also fully upgraded its online e-banking services to fit the needs of blind and visually impaired customers in order to facilitate their online registration and login process, as well as their ability to track their accounts and credit cards online and perform banking transactions easily and securely.
Also, screen readers have been made available through online channels, smart phones and the Bank’s website, and the mobile phone application has been updated to include a font enlargement option to provide visually impaired customers with a better user experience. Undoubtedly, all the Bank’s achievements in 2016 were backed by a sound governance through which Ahli United Bank aims to retain the highest level of regulation, integrity and transparency standards across all procedures, in addition to abiding by the Central Bank of Kuwait’s strict regulations.
The Bank carried on with its commitment towards investing in national talent through the offering of the best job opportunities in the marketplace for promising Kuwaiti professionals. Strengthened with a 75-year-old legacy and a highly-respected record of accomplishments in Kuwait, we believe that the Bank’s commitment to positively contribute and help support and advance Kuwaiti society are equal in importance to our commitment to banking excellence. That is exactly why we invest a great deal in our Corporate Social Responsibility program, making sure we contribute actively to the support of all social segments.
Groves concluded by saying, “With such a legacy and so many recognized achievements, I am pleased to reiterate Ahli United Bank’s determination to carry on in the same successful path and strive to upkeep its leading position among Islamic Banks, which we have achieved thanks to our stakeholders and customers’ trust, and to the relentless efforts and commendable dedication of our employees”.
I also wish to express my sincere gratitude to the Board of Directors for their unstinting support and valued guidance throughout the year and similarly to our Fatwa and Sharia Supervisory Board. I wish to thank the Governor and staff of the Central Bank of Kuwait for the highly valued support and guidance given to the Bank and its management, and to the Head and staff of the Capital Markets Authority for their continued support and advice.
Finally, I would like to offer my deepest thanks to our many customers and the trust they place in us with their continued business, and to my colleagues in Ahli United Bank Kuwait for all they have done to ensure we have had both business growth and a sound financial result in 2016.