Kuwait Finance House (KFH) Financial Results – First Half 2019

The announced operation results of Kuwait Finance House for the first half of 2019 show that it achieved net profit (after tax deductions) by KD 111.34 million, a decrease by KD 3.18 million or by 2.8% compared with KD 114.52 million for the same period of 2018. The decline in the net profit was due to the rise in taxation by 50.6% or by KD 9.89 million. Indicating that   it   was  the  main  factor  of  the  net profit’s decline, despite the increase in total operating income and the decrease in total operating expenses. 

And by looking at the net profit attributed to the bank’s shareholders, we notice a KD 12.45 million or 13.1% increase, reaching KD 107.67 versus KD 95.22 million in the same period of last, due to the decrease on non-controlling interests by KD 15.62 million.

In details, total operating income rose by KD 2.51 million or by 0.6%, to KD 392.38 million versus KD 389.87 million in the same period of last year. This resulted from the rise in the item of investment income by KD 30.69 million or by 103.2%, to KD 60.44 million compared with KD 29.75 million. While item of net financing income dropped by KD 27.23 million or by 9.8%, reaching KD 250.62 million compared to KD 277.84 million. 

On the other hand, total operating expenses decreased by KD 2.41 million or by 1.6%, scoring KD 151.66 million compared with KD 154.07 million, due to decrease in the item of staff costs and general & administrative expenses by a total of KD 6.24 million, against a rise in the item of depreciation & amortization by KD 3.83 million. Percentage of total operating expenses to total operating income was at 38.7% versus 39.5% in the same period of 2018. Total provisions increased by KD 1.95 million or by 2%, reaching KD 99.97 million compared with KD 98.03 million. This explains the decline in the net profit margin to 28.4% versus 29.4% in the same period of 2018. KFH’s total assets rose by KD 976.8 million or by 5.5%, reaching KD 18.747 billion compared with KD 17.770 billion at the end of 2018. When comparing total assets with their value in the same period of 2018, we’ll notice a rise by KD 1.125 billion or by 6.4% over its value at KD 17.622 billion. Item of finance receivables rose by KD 48.6 million or by 0.5%, and scored KD 9.237 billion (49.3% of total assets) compared with KD 9.189 billion (51.7% of total assets) in the end of 2018. While it declined by KD 246.6 million or by 2.6%, compared with the same period of last year when it was at KD 9.484 billion (53.8% of total assets). Percentage of total finance receivables to total depositors’ accounts reached 72% versus 79.4%.  Item of investment in Sukuk rose by KD 581.8 million or by 37.2%, and scored KD 2.145 billion (11.4% of total assets) versus KD 1.563 billion (8.8% of total assets) in the end of 2018. It rose by KD 775.1 million or by 56.6% scoring KD 1.370 billion (7.8% of total assets) compared with the same period in 2018.

Figures indicate that the bank’s liabilities (excluding total equity) rose by KD 991 million or by 6.3%, and scored KD 16.687 billion versus KD 15.696 billion in the end of 2018.  If we compare the liabilities with their value in the same period of last year, total liabilities rose by KD 1.037 billion or by 6.6% when they were at KD 15.651 billion. Percentage of total liabilities to total assets scored 89% versus 88.8%.

Analysis of financial figures calculated on annual basis indicate that profitability ratios relevant to the bank shareholders showed mixed performances compared with the same period of 2018. The average return on the bank capital (ROC) decreased to 33.4% versus 37.8%. The average return on assets (ROA) declined to 1.2% versus 1.3%. While the average return on equities (ROE) increased up to 11.4% versus 10.4%. Earnings per share (EPS) specific to the bank shareholders rose to 15.46 Fils against 13.84 Fils. (P/E) scored 22.8 times versus 19.5 times, due to the rise in EPS by 13% versus a greater rise in the market price by 32.5% compared with June 30, 2018.  (P/B) scored 2.4 times versus 1.7 times.