Kuwait Finance House K.s.c. · KSE:KFH
Kuwait Finance House K.s.c — Kuwait Finance House — Q1 2018 Earnings Presentation
37 slides from Kuwait Finance House K.s.c's earnings presentation, May 6, 2018
Slide 1: Disclosure of KFH Analysts Conference for Q1/2018
‘454-6-416Eal . ea6=I tOVOJI lJignJl Cni Group Chief Executive Officer Kuwait Finance House Date: 6 May 2018 2011.1 xrt. 6 :&6231 20 Shahan 1639 6 1429 ‘662. 20 6201,0 Reft 10/10, / 2018 2018PG 3 6110/10 :fttvg. To: Bourn Kuwait 8134.18"-.111 CalstS6 Lew,/ 881..8 Peace. Mercy and Blessings of Allah
Slide 2: First Quarter 2018 Earnings Webcast Transcript
First Quarter 2018 – Kuwait Finance House Earnings Webcast Transcript Thursday, May 3rd 2018 @ 14:00 Kuwait Local Time Transcript of Kuwait Finance House earnings conference call which took place on Thursday, May 3rd, 2018 at 14:00 Kuwait Local Time. Speakers from Kuwait Finance House executive mana
Slide 3: Transcript: Call Introduction and Economic Indicators
START Fawaz Alsirri: Hello and welcome to the Kuwait Finance House call to discuss the bank's earnings for the first quarter of 2018, which were released on April 29. My name is Fawaz Al Sirri, I'm the moderator on the call today and I'm joined with today's speakers: Mr. Mazin Al- Nahedh, the Group
Slide 4: Transcript: KFH Overview
almost 28% over 2013 numbers. On the other hand, Kuwait's sovereign wealth fund assets have been growing at a 3% range. As far as the Kuwait credit market, the two biggest sectors, we can see are personal facilities making up 42% and construction and real estate comprising 28% of the total. With the
Slide 5: Transcript: Strategy and Operational Excellence
Second, we are focusing on operational excellence. Again, increasing the technology aspect of it. Using technologies such as robotics, such as data analysis and artificial intelligence as much as possible to improve on our delivery of goods and services to our clients, and to make sure that the oper
Slide 6: Transcript: Investment Income and Expenses
income due to last year higher divestment. The divestment materialized in the first quarter and that's only timing differences. We have planned divestment for the year as well that would come in the coming quarters. In the next slide, we already talked about the entire thing, this one represents the
Slide 7: Transcript: IFRS 9 and Total Assets
We'd like to highlight something that would be maybe a concern of most of you is the IFRS 9 implementation. IFRS 9 implementation Kuwait as maybe most of you know, CBK, Central Bank of Kuwait, partially adopted IFRS 9 for 2018, for the first quarter 2018 and continued with the last year’s practice o
Slide 8: Transcript: Capital, Divestment and EPS
only. In 2017, it stood at 17.76, ‘16, 17.88. And that actually is due to the implementation of the capital optimization including the divestment of non-core assets, which will continue to enhance capitalization. Q1 2018 divestment was not much and we already reflected in the investment again when w
Slide 9: Transcript: Q&A on Cost-to-Income and IFRS 9
Thank you. There's a follow up question, also to the CFO. You've mentioned that the CI has dropped by 10% since 2014. Can you give us an outlook on the next two or three years? Shadi Zahran: Actually, what we achieved was significant as you know, and now KFH Group operates at a very efficient cost t
Slide 10: Transcript: Q&A on Employee Costs
Fawaz Alsirri: Thank you and thank you Francesca for that question. Next we have a question from Saud Al Wazzan from Wafra Investments. Saud was asking what is the reason for high employee costs, which is above the average for competitor banks? Mazin Alnahedh: I think one of the key reasons behind i
Slide 11: Transcript: Q&A on Disposals and Margins
Fawaz Alsirri: Thank you. Now, two more of Elena's questions. Firstly, could you please repeat the amount of income from disposals that you expect to reach in 2018? The first quarter was 7.7 million. Mazin Alnahedh: We expect disposals, the range of 140 to 150 million KD for an entire year. The inco
Slide 12: Transcript: Q&A on ROE Targets
Mazin Alnahedh: We absolutely hope so. We are active in the market and specifically in the infrastructure and oil and gas, and the focus there remains quite strong, as and when those projects are tendered, then we would see the growth taking place without a doubt. Fawaz Alsirri: We have a series of
Slide 13: Transcript: Fee Income and Call Close
Mazin Alnahedh: I think we will see the same run rate that we saw in Q1, as far as fee income growth is expected. Fawaz Alsirri: Thank you, Mazin. I think with that, we have answered our last question and if we don't get any questions in the next 10 seconds or so, we will be concluding today's call.
Slide 14: Disclaimer
Disclaimer IMPORTANT NOTICE This presentation has been prepared by Kuwait Finance House and is subject to the applicable laws and regulations in the State of Kuwait. It is for information purposes only and it shall not be reproduced or redistributed to any other person without obtaining Kuwait Finan
Slide 15: First Quarter 2018
First Quarter 2018 Earnings Presentation May 03, 2018 © Kuwait Finance House, 2018. !2
Slide 16: Agenda
Agenda 1. Kuwait Operating Environment (Highlights) 2. KFH Overview 3. Q1 Business Highlights 4. KFH Strategy 5. First Quarter Financial Results !3
Slide 17: Kuwait Economic Indicators
Kuwait Economic Indicators Kuwait Gross Kuwait Total Government Domestic Product Capital Expenditure (Capital Formation) 43 5% 0 KWD bn KWD bn 42 4% 8.77 9.04 8.88 0 7.54 % 7.09 41 2% 0 40 1% 0 39 -1% 0 2013 2014 2015 2016 2017F 2018F 2019F 2013 2014 2015 2016 *2017 GDP Value GDP Growth % * 2017: Es
Slide 18: KFH Overview
KFH Overview Kuwait Regional Global 1st 2nd 2nd and largest largest Shari’a- largest Islamic Shari’a-compliant compliant bank in bank by assets in bank in Kuwait the Gulf the world In Kuwait, KFH is the largest In the Gulf, KFH is the Globally, KFH is the second Shari’a-compliant bank by second larg
Slide 19: KFH Overview: Vertically and geographically diversified banking group
KFH OverviewVertically and geographically diversified * banking group Kuwait • Retail Banking • Wealth Management and Germany • Private Banking Corporate Banking 1st Islamic bank • Investment Services • Real Estate • Retail Banking • Corporate Banking • • Investment Services Real Estate Turkey • Ret
Slide 20: KFH Strengths
KFH Strengths Robust Leading Strong Senior Strategic Effective Risk Financial Islamic Financial Government Management Distribution Management Performance Institution Sponsorship Team Channels Framework A consistent track Second largest 49% ownership of Well rounded human Diversified KFH continues to
Slide 21: Q1'18 Business Highlights
Q1’18 Business Highlights Products and Services • Signed a memorandum of cooperation with KIPCO to finance customers of Key Hissa Al-Mubarak district • Released new VISA SIGNATURE credit card with sundry services Activities • Inaugurated Edailiya modern hall to serve (Ruwaad – Tammayuz and Nukhba) c
Slide 22: KFH Strategy
KFH Strategy KFH’s main focus is on core banking business activities. KFH’s 3-year strategy ending in 2020 is based on three main pillars Simplify experience Digitize operations Grow business Across all three main business sectors Retail Corporate Private !9
Slide 23: Agenda
Agenda 1. Kuwait Operating Environment (Highlights) 2. KFH Overview 3. Q1 Business Highlights 4. KFH Strategy 5. First Quarter Financial Results !10
Slide 24: Q1'18 Operating Performance
Q1’18 Operating Operating Income Profile Performance (KD mn) Investment Income Non-Financing Income Net Financing Income 6.0% Net Profit Operating Net 16.1% for Shareholders Income Financing 20.9% Income 24.5% +13.9% +12.2% +38.2% 44.0 189.1 138.4 73.2% 100.1 59.4% 38.6 168.6 Q1'17 Q1'18 Q1'17 Q1'18
Slide 25: Q1'18 Operating Performance: Non-Financing Income and Expenses
Q1’18 Operating Fees and Commissions % of Non-Financing Performance Income 45% Non Financing Total Operating Q1'18 Income (KD mn) Expenses (KD mn) Other income Depreciation and amortization 38% Net gain from foreign curruncies Other operating expenses Investment income Staff costs Q1’17 Fees and comm
Slide 26: Q1'18 Operating Performance: Net Financing Margin and Provisions
Q1’18 Operating Operating Profit – Banks / Non- Performance Banks Actual / Average Profit Earning Net Financing Non-Banks Assets (KD bn) Margin 3.46% 9% 2.81% +11.8% 2.71% Q1’17 Banks Q1'17 Q4'17 Q1'18 91% Average 13.9 Provision and Non-Banks 13.6 13.7 Impairment (KD mn) 9% Actual Financing Others T
Slide 27: Q1'18 Operating Performance: Assets, Deposits and Funding
Q1’18 Operating Performance Total Assets Depositors’ Financing Funding Mix (KD bn) Accounts Receivables Sukuk Payable (KD bn) (KD bn) Due to Banks & Financial Institutions Depositors'Accounts +5.8% +7.2% +12.2% 3% 3% 3% 17.4 17.4 11.8 9.5 16% 16% 16% 11.6 9.2 81% 81% 81% 16.4 8.5 11.0 Mar'17 Dec'17
Slide 28: Q1'18 Operating Performance: Returns, Capital Adequacy, EPS
Q1’18 Operating Performance Return on Return on Capital EPS (fils) Average Equity Average Assets Adequacy Ratios CAR Tier 1 9.77% 1.20% 18.0% 7.03 17.8% 17.5% 16.3% 16.0% 1.06% 15.7% 8.94% 6.17 Mar'17 Dec'17 Mar'18 Q1'17 Q1'18 Q1'17 Q1'18 Q1'17 Q1'18 !15
Slide 29: Q&A
Q&A !16
Slide 30: Investor.relations@kfh.com
Investor.relations@kfh.com !17
Slide 31: Appendix
Appendix !18
Slide 32: Q1'18 Consolidated Financials
Q1'18 Consolidated Financials Consolidated Statement of Income (KD million) Mar-17 Mar-18 Consolidated Statement of Financial Position (KD million) Mar-17 Mar-18 Cash and balances with banks and financial institutions 1,352 1,231 Financing income 167 209 Short-term Murabaha 2,751 3,006 Financing cos
Slide 33: Q1'18 Performance Measures
Q1’18 Performance Measures Key Performance Indicators Mar-17 Mar-18 Return on Average Assets (ROAA) 1.06% 1.20% Return on Average Equity (ROAE) 8.94% 9.77% NFM 2.71% 3.46% Cost to Income 41.45% 41.67% Earnings Per Share (fils) 6.17 7.03 Key Performance Indicators Dec-17 Mar-18 CET1 Ratio 15.38% 15.4
Slide 34: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position Consolidated Statement of Financial Position (KD million) 2014 2015 2016 2017 Cash and balances with banks 1,604 1,600 1,495 1,262 Short-term murabaha 3,222 3,194 2,877 2,925 Financing receivables 8,119 8,095 8,176 9,216 Trading properties 179 214 186 161
Slide 35: Consolidated Statement of Income
Consolidated Statement of Income Consolidated Statement of Income (KD million) 2014 2015 2016 2017 Financing income 678 695 718 741 Financing cost and distribution to depositors 278 263 283 296 Net Finance Income 400 432 435 445 Investment income 136 108 79 107 Fee and commission income 92 79 89 97
Slide 36: Performance Measures
Performance Measures Key Performance Indicators 2014 2015 2016 2017 Return on Average Assets (ROAA) 0.94% 1.10% 1.00% 1.30% Return on Average Equity (ROAE) 7.27% 8.40% 9.30% 10.20% NFM 2.56% 2.61% 2.71% 2.81% Cost to Income 51.3% 47.01% 44.71% 42.76% CET1 Ratio 13.52% 14.81% 15.61% 15.38% Tier 1 Ade
Slide 37: Investor.relations@kfh.com
Investor.relations@kfh.com !24