Kuwait’s KFH reports 9.4% rise in Q2 net profit as operating income climbs

The largest Sharia-compliant lender in the country says profit rose to Dh675.2m in the period

Board of KFH and AUB have approved final share exchange ratio. Andrew Henderson / The National

Kuwait Finance House, the Arabian Gulf state's largest Sharia-compliant lender, reported a 9.4 per cent rise in its second quarter net profit, beating analysts’ estimates, as operating income climbed and expenses dropped.

Net profit for the second quarter ending June 30 rose to 56 million Kuwaiti dinars (Dh675.2m) from the year earlier period, the lender said in a statement to Boursa Kuwait, where its shares are traded.

Total operating revenue, however, slipped by 2.6 per cent to 195.5m dinars in the second quarter of 2019 from the same period last year.

The increase in net profit is “mainly due to increase in the total operating income and decrease in the operating expenses”, the bank said.

The bank also reported second quarter operating profit of 122.6m dinars compared to 125.5m dinars last year.

KFH's first half net profit also rose by 13 per cent year-on-year to a net profit of 107m dinars. The lender, which holds a significant share of the Kuwaiti banking market, is currently in the process of taking over its Bahraini competitor, Ahli United Bank (AUB), which once approved would create the sixth largest lender in the GCC.

In January KFH received “tentative” approval from AUB on the share swap ratio to complete the deal. KFH’s board of directors at the same time approved the exchange ratio of 2.326 shares of AUB for each share of KFH, it said at the time.

HSBC and Credit Suisse are acting as advisers for the two lenders.

Gulf banks are increasingly eyeing mergers and acquisitions to boost growth and gain scale. Earlier this year, shareholders of Abu Dhabi Commercial Bank and Union National Bank merged and the combined entity then acquired Al Hilal Bank as its Sharia-compliant subsidiary. The combined ADCB Group, with Dh423 billion in assets, is now the third-largest financial institution in the country serving more than 1 million customers.