A breakthrough year for Kuwait’s KFH

Kuwait

Khaled Alshamlan, CEO of KFH Kuwait, talks to The Energy Year about the bank’s recent acquisition of Ahli United Bank, as well as its strategy for involvement in oil and gas and sustainable finance projects in Kuwait and internationally. KFH is an Islamic bank that provides a wide range of sharia-compliant banking services to corporate and retail customers in 12 markets.

How does the banking sector support oil and gas activities, and what have been KFH’s contributions?
KFH has historically been a leader when it comes to financing key oil and gas projects; we have been the mandated lead arranger of the Islamic tranche for most of the oil and gas mega-projects in Kuwait. The sector is paramount for the country’s economy and banks are constantly exploring such transactions by funding initiatives by KPC and its subsidiaries.
KPC’s 2040 strategy emphasises sustainability, innovation and diversification. It is very much in line with global energy transition trends. There is a growing appetite for energy-related financing in Kuwait, particularly for projects that support the country’s net-zero objectives.
Over the years, we have accumulated significant experience in landmark projects. We contributed KWD 153 million [USD 497.3 million] for the recently inaugurated OQ8 (Duqm) refinery and were the largest Islamic financier for KNPC’s Clean Fuel Project, underwriting the entire Islamic tranche of KWD 490 million [USD 1.6 billion], which was partially syndicated to local banks.
We also participated in the financing of the LNG import facilities undertaken by Kuwait Integrated Petroleum Industries Company as the largest Islamic financier, underwriting the entire Islamic tranche of KWD 156 million [USD 507 million], also partially syndicated to local banks.
We envisage further opportunities and developments in the oil and gas sector, and KFH’s balance sheet, especially after the acquisition of Ahli United Bank (AUB), demonstrates financial strength to support such activities.

Can you walk us through KFH’s latest performance and key achievements?
In 2022, KFH acquired Bahrain’s AUB, becoming the largest bank In Kuwait and the second-largest Islamic bank in the world. The deal represents a unique cross-border deal within the GCC, cementing KFH in a group of regional mega banks formed through M&As.
The acquisition brought several benefits and positively impacted our bank’s position, as our 2023 performance reflected. KFH achieved KWD 584 million [USD 1.9 billion] in net profit, a remarkable 63% more than in 2022 and the highest-ever profit in the history of Kuwait’s banking sector. Total assets reached KWD 38 billion [USD 123.5 billion], an increase of KWD 1 billion [USD 3.3 billion] over 2022.
KFH is the number-one bank in the country by consolidated assets and by profitability, and the second-largest Islamic bank in the world. In 2023, KFH became the most valuable company on Boursa Kuwait, with a market capitalisation of more than KWD 12 billion [USD 39 billion].

How does KFH plan to reinforce its position internationally?
As far as the regional market is concerned, we want to expand into new countries, and the AUB operation moves us exactly along this line. It reinforces our position as a global bank, supporting the country in its vision to transform itself into a financial and commercial hub for the region, and it helps us diversify.
Today, KFH has activities in 12 countries including the UK, Egypt, Bahrain, Malaysia, Turkey, and Germany. There is great synergy among the different branches, and we are always on the lookout for any opportunity that can add value to our shareholders and customers.

What is the bank’s approach to ESG practices and the promotion of sustainable financing?
KFH operates under sharia principles, which are aligned with goals to develop more sustainable banking practices. We have participated in several UNDP initiatives that have helped us align our strategy and our investments across business lines with UN Sustainable Development Goals (SDGs).
We are financing initiatives that take carbon emissions mitigation into consideration, increasingly linking our investment plans with SDGs, and promoting initiatives to build awareness around environmental products, such as green sukuk [Islamic bonds] and financing for building sustainable homes.

Can you provide some examples of the bank’s ESG commitment and results?
We achieved an important milestone in 2021 with our issuance in Turkey of green sukuk worth USD 350 million. It was the first of its kind by an Islamic institution worldwide. We also launched the Keep it Green campaign, which aims to support projects related to sustainability and the environment.
KFH Auto is the largest green showroom in the Middle East, located in Shuwaikh Industrial Area and inaugurated in 2019. It was awarded gold certification by the Global Sustainability Assessment System, which was a first in the Kuwaiti banking sector.
KFH has released the third edition of its sustainability report to enhance transparency and accountability. The report covers KFH’s ESG performance and initiatives towards creating positive social and environmental impacts, our approach to responsible financing and our efforts to support UN SDGs, as well as promoting sustainable growth and adherence to Islamic financing principles.

How is KFH positioned to embrace digitalisation trends and what are its latest initiatives?
We have multiple initiatives to create better digital channels, such as Tam Digital Bank, which we launched in October 2023. It is the first sharia-compliant digital banking platform in Kuwait. We are targeting a younger customer segment with a mix of banking services and social media experiences within the same application.
We believe that by innovating our products and services we will be able to do more cross-selling and expand our customer base. For example, there are services that only KFH provides, such as kiosks where customers can have bank cards printed in under three minutes, with instant activation.

What is KFH’s strategy for future growth?
To maintain growth, KFH will focus on human capital development, digitisation, customer-centric innovations and offering unique financial products and services.
Human capital is very important to us. KFH is investing heavily in education and training through its digital academy. We push boundaries for our talents to unleash their potential in their effort to obtain further growth for KFH.
In addition, investments in digital solutions will continue to grow at a fast pace at KFH, as we are poised for significant advancements driven by the integration of robust data analytics and AI applications. We will keep moving forward with our partnerships with fintech companies to drive future growth.
Improving customer experiences and offering a wide range of banking products and services will be a key focus. It will allow us to foster a more efficient and user-friendly banking landscape that meets our customers’ expectations. Our sharia-compliant digital bank aims to complement KFH’s mission of delivering superior innovation and customer excellence.
Moreover, following the acquisition of AUB, KFH reaffirms its robust capitalisation and strong financial position. The transaction enhances our presence as a banking group able to lead the financing of mega-projects and gain greater cross-border competitive capabilities that support our growth strategy.

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