Kuwait Finance House K.s.c. · KSE:KFH
Kuwait Finance House K.s.c — Kuwait Finance House — Merger or Acquisition (July 2022)
29 slides from Kuwait Finance House K.s.c's merger presentation, July 2022
Slide 1: Recommended All-share Combination of Kuwait Finance House and Ahli United Bank
Recommended All-share Combination of Kuwait Finance House and Ahli United Bank Leader in Islamic Banking July 2022
Slide 2: Contents
CONTENTS 1 Key Transaction Highlights 2 Strategic Rationale 3 Integration 4 Vision and Mission 5 Transaction Structure 6 Financial Highlights 2
Slide 3: Key Transaction Highlights
1. Key Transaction Highlights
Slide 4: Key Transaction Highlights
KEY TRANSACTION HIGHLIGHTS All Share Acquisition Pro Forma Ownership Implied Price and Premium Conditions Revised exchange ratio of 2.695 Prior to the acquisition: Implied price per share of $1.040 The following is an indicative list of shares of AUB for each share of KFH • KFH had c. 9,207m shares
Slide 5: Transaction combines complementary businesses and delivers scale to become a regional powerhouse
THIS TRANSACTION COMBINES COMPLEMENTARY BUSINESSES AND DELIVERS SCALE TO BECOME A REGIONAL POWERHOUSE Leading Retail Bank in Kuwait #1 $121bn ✓ Currently 2nd largest bank and largest Islamic bank in Kuwait Bank in Kuwait Combined Entity ✓ Offers retail banking, corporate banking, financing, and Bahr
Slide 6: Shareholder Value Creation
SHAREHOLDER VALUE CREATION • Broader customer base and stronger market position in Kuwait and Compelling Shareholder Bahrain Value Creation Potential Creating a • Diverse geographic footprint and product offering accessible to Stronger and customers More Diversified Banking • Complementary businesse
Slide 7: Best Positioned to Support the New Kuwait Vision 2035
BEST POSITIONED TO SUPPORT THE NEW KUWAIT VISION 2035 Vision 2035 Relevant Themes Globally Expanded regional and international banking footprint to support trade and Connected Bank investment ✓ Enhance foreign direct investment across all sectors ✓ Develop and modernize national infrastructure Robus
Slide 8: Strategic Rationale
2. Strategic Rationale
Slide 9: Compelling Strategic Rationale
COMPELLING STRATEGIC RATIONALE A transformational transaction that brings significant benefits to all stakeholders ✓ #1 bank in terms of total assets and deposits in Kuwait and Bahrain 1 Strengthen KFH’s position as the leader in its home markets with over 27% of total market share in Kuwait by asse
Slide 10: Strengthens Our Position as the Leader in Our Home Markets
1 STRENGTHENS OUR POSITION AS THE LEADER IN OUR HOME MARKETS ▪ Following the completion of the acquisition, KFH will become the undisputed leading banking institution in Kuwait and Bahrain ▪ #1 bank in terms of Total Assets and Deposits (with over 27% of total assets market share1 in Kuwait) Top Kuw
Slide 11: Strengthen Islamic Banking Leadership
2 STRENGTHEN ISLAMIC BANKING LEADERSHIP • KFH will become the world’s second largest Islamic bank by total assets and customer deposits • As one of the world’s leading Islamic banks, KFH will drive the growth of Islamic Banking Ranking of Top Global Islamic Banks1 by Total Assets ($bn) Islamic Finan
Slide 12: Propel KFH's Regional Footprint
3 PROPEL KFH’S REGIONAL FOOTPRINT International Presence (As At 31-Dec-2021) Net Financing Receivables by Geography (As At 31-Dec-2021) UK Turkey Germany Entry Into New Market KFH Existing Presence KFH Existing Presence Net Loans: $2bn1 Net Loans: $9bn Malaysia Other Bahrain 2% 13% 8% UK Iraq 8% Ent
Slide 13: Enhanced Scale and Deep Relationships Across Corporate and Retail Customers
4 ENHANCED SCALE AND DEEP RELATIONSHIPS ACROSS CORPORATE AND RETAIL CUSTOMERS AUB’s mainly corporate business mix complements KFH’s orientation towards retail Pro Forma Other 4% Other 1% Retail & Retail & Private Private Retail & Banking Banking Segment Assets1 Private 14% 26% Treasury & Banking Tre
Slide 14: Significant Operational Efficiencies
5 SIGNIFICANT OPERATIONAL EFFICIENCIES Substantial Cost Saving Opportunities Branch footprint and ATM optimisation based on geographic overlap IT systems integration Branch, HQ and central functions consolidation Cost benefits to be realised over 3 years Focused on overlapping geographies in Kuwait
Slide 15: Well Capitalised and Funded, Ideally Positioning Us to Better Pursue Growth
6 WELL CAPITALISED AND FUNDED, IDEALLY POSITIONING US TO BETTER PURSUE GROWTH Significant Pro Forma Capital Position Strong And Diverse Funding Base (As At 31-Dec-2021) (As At 31-Dec-2021) CET1 13.3% 15.2% 13.7% Ratio $10.7bn Other Liabilities $6.7bn $4.5bn 5% Equity 17% CAR 17.0% 18.7% 17.3% Deposi
Slide 16: Earnings Accretive to KFH Shareholders
7 EARNINGS ACCRETIVE TO KFH SHAREHOLDERS ILLUSTRATIVE EPS & DPS ACCRETION BASED ON 2021 PRO FORMA FINANCIALS Illustrative EPS and DPS Accretion Based on 2021 Pro Forma Pre and Post Acquisition Calculations3 Metric USD4 KWD EPS (cents) DPS (cents)5 2021 Net Income (m) 793 239 Pre-Acquisition 35.2% 35
Slide 17: Integration
3. Integration Wig SII gail a Bary
Slide 18: KFH Strategic Plan Post Acquisition
KFH STRATEGIC PLAN POST ACQUISITION ▪ Maintain current structure, save for any Bahrainization requirements or any personnel changes that may be required for the purposes of achieving the anticipated synergies, converting AUB’s business Sharia’a compliant or as part of AUB’s existing strategy ▪ Conve
Slide 19: High-Level Integration Plan and Timeline
HIGH-LEVEL INTEGRATION PLAN AND TIMELINE 3 - 6 Months 12 - 18 Months 12 – 24 Months Post-Closing Phase 1: Post-Closing Phase 2: Pre-Closing Phase Customer readiness Operational readiness • Appoint broader leadership and • Develop combined business strategy • Roll out revenue generation initiatives f
Slide 20: Vision and Mission
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Slide 21: Matching Visions, Strategies and Missions
MATCHING VISIONS, STRATEGIES AND MISSIONS Vision and ▪ To lead the international development of Islamic financial services and become the most trusted Strategy and most consistently profitable Sharia’a-compliant bank in the world ▪ To deliver superior innovation and customer service excellence whils
Slide 22: Transaction Structure
5. Transaction Structure
Slide 23: Envisaged Transaction Structure
ENVISAGED TRANSACTION STRUCTURE September 2022 September 2022 – September 2023 2024 Phase 1 Phase 2 Phase 3 Islamic Banks Conventional Banks KFH AUB KFH KFH KFH and AUB Shareholders Shareholders Shareholders Shareholders Shareholders KFH MTO to KFH KFH remaining shareholders in 100% AUB Kuwait 100%
Slide 24: KFH Group Structure Post-Acquisition
KFH GROUP STRUCTURE POST-ACQUISITION Kuwait Finance House K.S.C.P 100% Ahli United Bank B.S.C 100% 100% KFH Capital Investment Bahrain Kuwait Finance House Company (Malaysia) Berhad K.S.C.C Ahli United Bank 100% 95.7% Ahli United Bank Malaysia Kuwait (UK) PLC1 (Egypt) S.A.E1 UK Egypt 62% 100% Kuwait
Slide 25: Post-Acquisition Shareholding
POST-ACQUISITION SHAREHOLDING Post-Acquisition Shareholding Structure Shareholders Shareholders c. 69% c. 31% Combined Entity Note: Pro forma shareholding is based on current shares outstanding subject to 100% acquisition of AUB by KFH and is subject to change due to movement in Treasury shares. 25
Slide 26: Financial Highlights
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Slide 27: Evident Financial Rationale
EVIDENT FINANCIAL RATIONALE A transformational transaction that brings significant benefits to all stakeholders Peers' Total Assets, $bn 300 272 244 187 166 121 120 110 1 Scale position where assets >$120bn ✓ Combined assets of $121bn Peers' Net Financing Receivables / Deposits 108 % ✓ 77% Net Finan
Slide 28: Financial and Operational Metrics
FINANCIAL AND OPERATIONAL METRICS Metrics Pro Forma6 (USD and FY2021) Net Income, $m 793 5881 1,3811 Total Assets, $m 72,027 41,913 121,066 Net Financing, $m 37,538 22,075 59,614 Total Deposits, $m 52,453 25,204 77,657 Net Income2 / Total Assets 1.1% 1.4% 1.1% Net Financing / Deposits 72% 88% 77% CE
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