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Abu Dhabi, UAESaturday 17 November 2018

Kuwait Finance House third quarter net profit rises 31.4%, beating estimates

Sharia-compliant lender is in merger talks with Bahrain's Ahli United Bank

The preliminary agreement in July was signed even after merger talks between KFH and Ahli United had stalled six months earlier. Andrew Henderson / The National
The preliminary agreement in July was signed even after merger talks between KFH and Ahli United had stalled six months earlier. Andrew Henderson / The National

Kuwait Finance House, the country’s biggest Sharia-compliant lender, said on Wednesday its third quarter net profit rose 31.4 per cent to 73.9 million Kuwaiti dinars (Dh893.4m) from a year-earlier period, beating analysts’ estimates.

The results were mainly due to “the increase in net operating income by 17.9 per cent, which resulted mainly from the increase in net financing income by 25.4 per cent,” it said in a statement to Boursa Kuwait, where its shares are traded.

The results beat the 57m dinars median estimate of two analysts polled by Bloomberg.

Total operating revenue increased 18 per cent to 131.7m dinars.

KFH is currently in talks to merge with Bahrain’s Ahli United Bank, a tie-up that could create a lender with $92 billion in combined assets. Arabian Gulf banks are on a deal spree as they seek to build scale, cut costs and increase profitability.

Nine-month profit rose 22.7 per cent to 169m dinars, the bank added.

KFH reported a 19 per cent rise in the second quarter net profit as income from financing and investments climbed.

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Read more:

Kuwait Finance House reports 19% rise in second quarter profit

Kuwait Finance House seeks merger with Bahrain's Ahli United Bank

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The lender, which owns 62.2 per cent of Turkey's Kuveyt Turk Participation Bank, said results from the country were affected by the financial crisis it is experiencing.

“Despite a real growth in the business, the decline in the Turkish currency rate against Kuwaiti Dinar during the third quarter of the current year has a negative impact on the consolidated balances as at the date of the interim condensed consolidated financial information,” it said in separate emailed statement.

Total assets fell 0.5 per cent to 17.4bn dinars at the end of the first nine months of this year compared with the same period a year earlier, partly because of the troubles in Turkey.

“Despite the sharp fluctuations in the Turkish lira, the position of KFH-Turkey is strong,” said chairman Hamad Al Marzouq in the statement.

“This is attributable to the credit facilities granted in Turkish lira, the credit facilities granted in hard currency as well as the good credit growth and the increased credit margin of financing which enabled the bank to overcome the impact of these fluctuations and mitigate risk."