A glance at KFH’s long journey of success
KUWAIT: Kuwait Finance House “KFH” has taken the lead since its inception in 1977 amongst the well-established Kuwaiti banking institutions. Today, we are concluding 2017 in synchronization with the 40th anniversary after such prideful start with its fascinating achievements realized during four decades and qualitative moves, which have translated a deep corporate insight, crystalized its shareholders’ ambitions and opened new horizons for the giving of its employees to achieve leadership in the world of banking industry and as a new innovation that paved the way for the inception of the Islamic finance industry not only locally but globally as well.
KFH has continued its previous approach in implementing its strategy to expand its business, diversify the base of its activities and play a leading role in supporting infrastructure projects and development plans with an aim to enhance the position of KFH Group within a more consistent and unified framework that is based on the Islamic sharia rules with banking services as a main support that enables the Group to achieve the highest degrees of harmony among its subsidiaries.
KFH Group (KFH) has successfully completed the ambitious strategy for the last three years through its different core activities; led by retail banking, private banking, corporate finance and treasury activities based on the strength of our business and in enhancement of its effectiveness and efficiency with an aim of increasing the competitiveness and providing all banking services to our customers worldwide.
Outstanding financial indices
Such ambitious plan has achieved extremely positive results in respect of most indices of the Group whereas the net profit distributed to the shareholders increased during three years (2014 -2017) by 46 percent. We have significantly succeeded in rationalizing the expenses by 21 percent approximately, thus increasing return on equity to reach 10.1 percent in 2017; which is one of the highest percentages among local banks for the same year. Return on Assets raised to 1.3 percent in 2017.
Retail banking and private banking
KFH continued to restructure and develop its branches network in compliance with the strategy of expansion, growth and cost optimization and to provide banking products and services to its customers. Retail banking and private banking paid a great attention to give the customer the first priority based on professional practices supported by high quality assets, solid and growing deposits base, highly developed customer service along with continuous endeavors to open new markets and innovations.
Digital retail services
KFH Group owns one of the largest branch networks at the local and global levels. Further, ATM machines cover several markets, all are supported by a huge banking services network through various electronic applications in addition to the call center, which provides round the clock direct interaction with customers and whereas its response rate reaches 90 percent of customers’ calls within 30 seconds and succeeded in reducing the waiting period to reach 5 percent of the calls.
XTM service stands as one of the main banking accomplishments achieved by KFH. A transformation from traditional to electronic status via video call facility to provide round the clock more effective service to customers. The service is the first of its kind in Kuwait and shall be expanded and it is a new addition to several smart applications achieved by KFH in support of its ebanking services. Stressing on such efforts, KFH has introduced, during the year and for the first time locally and in the Middle East and Africa, the smart wallet service (KFH Wallet) in partnership with Master Card Company whereas KFH is still occupying the first rank in issuing banking cards in the Kuwaiti market.
In a new qualitative achievement, we have provided a service for opening the gold account and carrying out electronic sale and purchase transactions using mobile applications and KFH website (KFH online) alongside the nine banking branches that provide gold account opening services in response to the great turnout from the part of customers and as it is considered to be an innovative product and a promising investment opportunity for KFH customers. On the other hand, KFH has introduced an ATM service of foreign currencies at Kuwait International Airport in cooperation with the Shared Electronic Banking Services Co. (K-Net) in addition to the available long-term banking products package including Shifaa, Jameati, Thimar, and Rifaa accounts to meet customers’ medical, educational and investment needs.
In 2017, KFH has, in cooperation with Visa International Company, marketed Visa Checkout solutions to facilitate the online purchase process in a secured and swift way, and to enhance KFH tendency towards digital solutions. To enrich its experience within its products package, KFH has launched an e-service enabling customers to open long-term investment accounts and deposits in addition to the possibility of submitting the application for finance services online. Also, it worked in the last year on developing KFH website and KFH mobile application adding new security facilities for customers using hand and face print identification codes for dealing with the the application in a more swift and secured environment. Demand has increased on digital services as customers using this service reached about 250 thousand customers in Kuwait. Further, KFH Turkey website has been developed and designed in Arabic, English in addition to the Turkish language. KFH Bahrain was also developed to include new additional e-services.
Banking services have been expanded at the Group level whereas “Bishara” Account was launched in both of Bahrain and Malaysia. This account is a promising product for KFH Bahrain and has been launched in the mid2017 and was widely accepted whereas nearly 40 thousand accounts have been opened during that short period and it has been chosen as the best investment product in Bahrain, which has been reflected in the growth of the Group deposits.
Our private banking customers were able to open accounts through the Group subsidiaries. Further, KFH has signed a bilateral cooperation agreement with KFH Germany with an aim to enhance the integration of the Group business in the field of “Vostro Account” services, which is an account for KFH with KFH Germany to communicate the international transactions related data. According to this agreement, KFH has provided Clearing and Settlement services so that the subsidiary bank in Germany can remain the main driver of Islamic banking in the Euro Zone.
The number of direct sale employees increased to reach about 100 employees. This increase is expected to contribute to activating, enhancing direct banking products sales, attracting more customers and maintaining existing customers.
Private banking
Customers trust is considered to be one of our most important objectives and it comes through distinct banking products and services introduced by the bank. KFH is always keen on providing such products and services in a manner exceeding customers’ expectations in terms of quality, diversification and spread locally, regionally and globally. KFH has succeeded in structuring two new segments of customers; i.e. “Nukhba” and “Ruwaad” to serve creditworthy customers in a more efficient and effective manner through specialized relation managers and maximize customers’ benefit from our expansion in Turkey, Germany, Bahrain and Malaysia. Private banking sector has continued to market a set of funds and investment opportunities including “KFH Real-estate Fund” in US dollar in value of 116 million dollars and “UK Real-estate Fund” in Sterling Pound in value of 62.5 million pounds sterling ($83.6 million).
Private banking’s efforts have improved performance and customers’ satisfaction levels and increased the quality of service provided through our banking services to the priority customers. Some of such services have been renewed to be a modern and distinct edifice meeting our customers’ aspirations and marketing competitive products that give them more options and increase their confidence in KFH.
In the field of retail finance, KFH finance portfolio has increased, accentuating KFH leadership in the finance market in general and the real-estate finance in particular, and reflecting the success and effectiveness of KFH strategy and introduced solutions and innovative tools for sustainable growth. Such strategy was keen, in 2017, on raising the quality of finance portfolio by reducing credit and market risks as per the rules and regulations organizing the finance market in Kuwait.
Corporate finance services
To enhance and support KFH’s leading position as one of the biggest Islamic bank providing trade finance and projects finance solutions, the Group Corporate Banking has worked with a vision of being a strategic partner with our customers via a distinct work environment and through highly specialized corporate relation managers working on forming a comprehensive understanding of customers’ financial requirements. Group Corporate Banking expanded its local business to reach global horizons through the full coordination and cooperation with its Group banking subsidiaries and managed to finance several leading global organizations based on KFH’s vast experience in the field of corporate finance.
At the level of supporting the development plan in the State of Kuwait through launching infrastructure projects for the private sector’s finance, KFH sought for establishing a specialized department for serving this kind of longterm projects in light of our available capabilities for supporting the qualitative and accurate execution of the development projects in Kuwait. Accordingly, KFH has participated in financing a contract concluded with the Ministry of Electricity and Water by providing “Cash and Non-Cash” facilities amounting to KD 120 million, and financed a transaction for the purchase of three aircrafts totaling KD 124 million in favor of ALAFCO. Further, it contributed to financing several major real-estate projects through financing certain real estate companies in value amounting to about KD 100 million. On the international level, KFH acted as the Lead Arranger and Underwriter of a transaction for financing a complex in US dollar and in value of KD 180 million in favor of a company that is wholly owned to a GCC Sovereign Fund. Furthermore, KFH concluded a consolidated finance agreement through Kuwait Turk Participation Bank in favor of Balkant Laboratories Project in Turkey and in amount of KD 288 million within the framework of the partnership between the public sector and the private sector and under the umbrella of Islamic Development Bank.
To cope with the government trend to establish new entities through supporting small and medium enterprises, KFH has taken the initiative, in cooperation with the National SME Development Fund, to provide technical and professional opinion and make use of all resources to achieve goals to make the government project a success due to its positive reflections on the society in general and youth segment in particular.
Treasury and Financial Institutions
KFH Treasury has focused on improving the liquidity management at the Group level by developing its human resources, IT systems and infrastructure with an aim to develop customer service through providing innovative financial solutions in both money market and capital market in conformity with the Islamic sharia rules.
KFH continued in maintaining a low finance cost compared to the market and supported by the high credit rating and efficiently managed liquidity in light of several products including CBK sharia compliant instruments.
KFH has occupied a distinct position as a main market maker of private and sovereign Sukuk whereas its trading volume exceeded 15 billion US Dollars. Such trading has been expanded through benefiting from the diversity of finance resources and Group geographical spread and in coordination with KFH Capital, which has performed well in Sukuk issuance and management in several major transactions.
Currency risk management and expansion of foreign currency usage scheme in finance operations, at the Group level, have represented a major concern for KFH. New hedging products against currency fluctuations have been created. In an unprecedented initiative, KFH has managed to create a treasury operations management system in coordination with Thomson Reuters so as to improve operations’ efficiency, increase productivity rates, reduce errors and, meanwhile, establish for itself a central framework for treasury operations at the Group level through a trading system that searches automatically for the best prices in order to contribute to improving the efficiency of the decision of Exchange Rate Traders in addition to the appointment and development of young Kuwaiti talents that are able to complete trading quickly and effectively.
Further, the Financial Institutions Department has successfully participated in a consolidated finance deal in value of $400 million in favor of Warba Bank for a period of three years.
Information technology
KFH has won the best Digital Bank award in Kuwait for 2017 from Global Finance, which was a result of our modern strategy in information technology. IT Department has contributed to operating several initiatives and systems during the year with an aim to continue in improving business quality and enhancing the integration among Group parties. The implementation of the best-automated systems this year has enabled us to complete several vital projects; e.g., XTM system, which provides comprehensive and direct banking services through video technology. IT has also participated in providing instant issuance of customer’s cards in banking branches, supervising and constantly updating KFH website (kfh.com), which led to creating and finding several business opportunities through meeting customers’ needs in a better way.
Awards and recognitions
Several high-ranking awards were granted to KFH in the field of Islamic finance. The Bankers magazine, a subsidiary of Financial Times, awarded KFH three awards: Islamic Bank of the Year 2017 Globally, Middle East, and Kuwait. The Global Finance Magazine also awarded KFH as the Best Islamic Project Finance Provider 2017 Globally. The same Magazine also awarded KFH Germany as the Best Up-And-Coming Financial Institution 2017 Globally.
Group Risk department
In 2017, Group Risk Department circulated all policies and procedures for assessment of Group risks. All policies and methodologies have been circulated to achieve Risk Department integrity at the Group level. Automation development process has continued in regards to Risk Department reporting system to save time and effort, enhance analytical capabilities of the Group Risk Department and improve decision making mechanism. Finishing touches have been applied for the implementation of the International Financial Reporting Standard IFRS9, in coordination with Group Financial Control Department.
Compliance department succeeded in fulfilling regulatory requirements and coping with the decisions and instructions issued by the Central Bank of Kuwait and Capital Market Authority. Such instructions include Basel III standards on capital adequacy, liquidity and corporate governance standards.
The Bank’s Capital Adequacy Ratio reached “17.76 percent”, thus exceeding regulatory requirements limit.
KFH & society
KFH achieved a successful social role relevant to its message since inception. KFH’s social responsibility and contribution was diversified and comprehensive for development of society and environment, thus nurturing the concept of “sustainable growth”. KFH has adopted certain fundamental aspects to perform its social role including education, health, youth and support of sponsorships activities and services provided by official authorities and institutions as part of the state trend to achieve comprehensive development.
Business plans and programs executed during 2017 have incarnated KFH’s keenness to contact and communicate with various society tiers. KFH has focused this year on global initiatives and international events launched by UN in regards to social and human issues by spreading awareness and enhancing the concepts of volunteering in different forms and events. KFH has patronized several awareness and educational campaigns in addition to its activities to serve all society tiers and the local and regional environment.
Finally, I would like to avail this opportunity to convey our sincere gratitude and appreciation to our shareholders and customers for their continuous and valuable support. We are confident, by the Grace of Allah, that we will continue to achieve distinction in performance, render customer as a top priority, avail all available opportunities, enhance group capabilities to encounter all challenges to develop business on the long run and achieve rewarding returns for our shareholders.
Our success is mainly attributed after the grace of Allah to our employees’ endeavor and the valuable trust that our customers and shareholders have bestowed upon us. We would like to extend our deep thanks and gratitude to our shareholders and customers for their continuous support. In addition, we would like to convey our sincere thanks and appreciation to KFH Board Members and sharia Board for their distinguished efforts to enhance KFH credibility. We shall always seek to execute our plan in a systematic and orderly fashion and achieve more success for our reputable organization.
Mazin Saad Al-Nahedh Group Chief Executive Officer
Pioneering social role relevant to its message since inception