Kuwait City, March 18: Kuwait Finance House (KFH) held its annual general Assembly meeting (AGM) with a nearly 80% quorum and approved the Board of Directors’ recommendation of cash dividend distribution of 20% (including 10% distributed in H1 2023) and bonus share of 9% to shareholders.

Chairman's Message

Hamad Abdulmohsen Al-Marzouq 

In the name of Allah, Most Gracious, Most Merciful,

Praise be to Allah the Almighty, and Peace and Blessings be upon our Prophet, his family, and companions.

Dear Esteemed Shareholders,

Assalamu Alaikum Warahmatu Allah Wabarakatu

On behalf of myself and my fellow members of the Board of Directors of Kuwait Finance House (KFH), I would like to present to you the 2023 KFH Group Annual Report including major achievements, consolidated financial statements, and other reports.

During the past year, KFH continued its strategy of previous years, resulting in achieving remarkable financial performance and launching numerous products, services and initiatives that contributed to maintaining KFH’s leadership and meeting customers’ needs and satisfaction as one of our ultimate objectives. I can honestly say that, during 2023, we succeeded in attaining the key objectives of our strategy, overcoming the various difficulties of the operational environment, and various challenges.

In 2023, our strategic plans proved successful, bolstering our leading position. This success notably facilitated KFH Group's transition to a new pivotal phase. A significant milestone was the regional expansion through the acquisition of Ahli United Bank - Bahrain achieved within its first year of launch. This accomplishment stands as a source of pride, aligning with our sustainable goals and yielding positive outcomes, such as an increased market capitalization of the Group. KFH ascended to become Kuwait's largest bank and the world's second-largest Islamic bank, attaining the highest local market capitalization. Our services expanded into new strategic markets such as the UK, UAE, and Egypt, among others.

We successfully completed the conversion of all conventional banking services at Ahli United Bank (AUB) – Bahrain to be compliant with Shari’a principles. On December 10, 2023, the bank officially received the approval from the Central Bank of Bahrain (CBB) as a licensed Islamic Bank. We take great pride in completing the conversion of AUB – Bahrain from a conventional to an Islamic bank in a timely manner. AUB will offer an integrated range of products and services that are compliant with the provisions and principles of Shari’a, including retail and corporate services, saving and investment products, in addition to trade finance and wealth management solutions.

Despite rapid environmental changes, we remain optimistic about directing our financial resources to promising investment opportunities. This approach aims to sustainably enhance the wealth of our customers and shareholders and contribute to economic and social development.

Amidst the worldwide economic deceleration, KFH recognizes the importance of maintaining the robustness of its balance sheet to enhance its flexibility and capacity for the long run. KFH also maintains a solid capital reserve, capitalizing on the abundant liquidity ratios and an ongoing diversification in financing. Consequently, the primary emphasis persists on bolstering and strengthening the Group’s financial position.

KFH achieved top-tier levels and profit rates within the banking sector. Furthermore, it has secured the highest returns across all key indicators. Our commitment to enhance the capital base and the capital adequacy ratio, asset quality, rationalize expenses, develop operating profits, as well as boost and diversify revenues, resulted in robust financial strength, efficiency, and a well-balanced sustainable growth across all balance sheet items.

Following the successful completion of the acquisition project of AUB – Bahrain, KFH proceeded with a proposal of merger by amalgamation with Ahli United Bank – Kuwait. The Extraordinary General Assembly of both parties approved the merger decision, thus finalizing the steps as per the approved plans and procedures.

On the other hand, KFH excelled in introducing various innovative banking services, products, and solutions, marking an unprecedented success in its digital transformation strategy. This success was capped off by the launch of Tam Digital Bank; first Shari’a-compliant digital bank in Kuwait. The innovation journey continued around creating financial solutions that are geared towards customers’ aspirations and needs. The Information Technology department (IT) executed over 100 projects for banking and financing services, products, and practices encompassing various business aspects. The projects also involved developing the technological infrastructure, cybersecurity measures, in addition to boosting the adoption of Artificial Intelligence (AI) and the collaboration with Fintech providers.

KFH was also at the forefront in launching several digital services in Kuwait. These services included the detecting biometric facial features in branches, instant printing for all types of cards, Zaheb digital platform and KFHonline for corporates, in addition to the transfer service from a prepaid card to the account, five digital portfolios to facilitate e-payment, and D-POS device for instant opening of bank accounts.

KFH has also collaborated with Western Union to offer co-branded international money transfer services. It also enabled their customers to view their account balances in KFH – Türkiye. Additionally, the formation of “high- performance teams” had a positive impact on expediting the completion of KFH’s projects in technology and digital transformation.

In recognition of its digital transformation excellence, Euromoney Magazine ranked KFH as a Market Leader in digital solutions.

In addition to KFH’s solid pillars, we continued our precautionary approach in managing risks, prioritizing this approach in 2023 as a response to the geopolitical developments in the region and the world which would impact the operational environment in the markets where we operate. As a result of this approach, KFH maintained a consistent growth in its financing and deposits portfolio accompanied by good progress in various performance indicators. This aligns with our medium and long-term expectations, reflecting a stable policy and signifying customers’ trust in KFH’s product and brand quality, which we work on solidifying to maintain its growth momentum comprehensively and across all aspects.

KFH succeeded in launching a new generation of digital banking services as part of the Bank’s approach towards digitizing all its businesses, services, and products and facilitating the ways in which these services and products are accessed. This was achieved through KFHonline (mobile application and website), XTM and ATM devices as well as KFH Go branches, shifting customers’ experience from the traditional channels for transactions and basic services into KFH’s digital channels.

Regarding the financial results, KFH, by the grace of Allah, reported a net profit for its shareholders of KD 584.5 million up to the end of 2023, an increase of 63.4% compared to last year. Earnings per share reached 38.49 Fils; an increase

of 29.6% compared to last year.

Net financing income increased to 965.9 million; an increase of 20.7% compared to last year.

Net operating income increased to 945.4 million; an increase rate of 30.7% compared to last year.

Total assets reached 38.01 billion; an increase of 1.04 billion and by 2.8% compared to last year.

Depositors’ accounts reached 21.8 billion, while the capital adequacy ratio recorded a rate of 18.18%.

BoD has recommended to the General Assembly the distribution of 20% in cash dividends (including 10% in H1 2023) and 9% bonus shares to shareholders, considering the distributed returns on investment deposits and saving accounts as shown in the following table:

KFH maintained its standing as the leading Islamic financial institution in Kuwait’s banking sector. Since its inception, KFH has played a significant role in supporting and financing companies, SMEs, and micro-enterprises.

KFH is recognized as a strategic partner for society. It has achieved growth in its corporates and SMEs financing portfolio, establishing itself as the leader in this market segment.

KFH expanded its financing contributions at the regional level by participating in financing deals for electricity, petrochemical and aviation projects, amounting to approximately USD 10.5 billion across three GCC countries. Additionally, KFH participated in a syndicated financing deal for Egypt in cooperation with the International Islamic Trade Finance Cooperation (ITFC).

KFH Group continued its pioneering presence in the international Sukuk issuance arena. Through the Group’s investment arm, KFH Capital, had successfully led and arranged Sukuk issuances exceeding USD 7.5 billion for diversified issuers, covering sovereign and corporate issuances across various sectors and geographies. KFH Capital demonstrated its key role by acting as Joint Lead Manager & Bookrunner for many other Sukuk deals.

KFH Group Treasury investment transactions exceeded USD 13 billion in the Primary and Secondary markets. It maintained its leadership as a Primary Dealer for the IILM Sukuk for the 7th time, and a Secondary Dealer for the 3rd consecutive year, thus affirming KFH position as a Main Market Leader in the short-term IILM Sukuk market.

The KFH capital market retail client activity amounted to USD 45 million in 2023 compared to USD 20 million in 2022; an increase of 125%.  As a part of the Bank’s sustainability initiative, the Group Treasury expanded further its ESG Sukuk exposure by further increasing the ESG compliant Sukuk investments. The total ESG Sukuk investments increased reaching USD 294 million in 2023, an increase of 362% from the previous year, exhibiting the Group Treasury commitment to responsible and sustainable investment. The Group Treasury also achieved USD 38 billion in volume of FX transactions during the year.

The Group Operations sector has once again showcased the robust operational capabilities of KFH. It has been a cornerstone for the Group, in the light of the numerous milestones achieved, all of which underscore our commitment to excellence, efficiency, and customer-centricity. Operations leveraged also Robotic Process Automation (RPA), where our bank has revolutionized major back-office operations, driving unparalleled efficiency, reducing costs, and enabling our talented workforce to focus on strategic initiatives that would enhance our overall competitiveness and value proposition.

To name but few, Card Operations Department took several remarkable steps towards enhancing the customer experience, with the launch of Google Pay for KFH debit cards, the introduction of the Turkish Lira Foreign Currency Prepaid card, and significant enhancement in ATM deposit related claims processing time. Central Operations continued its trend of innovation with the successful transition to ISO 20022 for inward fund transfers. The Financing Operations Department excelled in CRM Workflow Automation for Corporate CAD and direct product centralization at Retail CAD, thereby improving customers services.

In the first year of its creation, Procurement and Contracts Department has established a bank-wide policy that paved the way for a seamless process for Procure-to-Pay (P2P) generating savings, enduring payment accuracy, and enhancing Inventory & Supply Chain while having prime focus for on-time deliveries and vendor onboarding.

To expand its market share and face competition, KFH continued to provide a comprehensive range of products and services in Retail and Private Banking. KFH launched and participated in several customer-focused campaigns in collaboration with major companies. To achieve its vision as the leading bank in the market and the most preferred by customers, KFH launched many distinctive services and products to attract specific segments of customers. These included the Emergency Cash service, KFH-Kuwait Staff rotation with its subsidiary in Türkiye to serve customers in both countries, the launch of new payment channels and benefits as well as cash gifts to attract customers and enhance their loyalty.

Group Human Resources continued to focus on its Kuwaitization agenda where we exceeded 81% Kuwaitization ratio, development of national talents, and demonstration of our role and contribution to the Kuwaiti economy, highlighting KFH as the employer of choice in Kuwait. We are keen on implementing succession planning and working on having Kuwaiti nationals in Middle and Executive Management, which would achieve labor nationalization goals at KFH. This has been demonstrated this year in the assumption of leadership positions by Kuwaiti nationals as an embodiment of this principle. Moreover, it fills us with pride that KFH has the largest number of Kuwaiti employees among Kuwaiti banks and the private sector.

We believe that the sustainability of our business and success are consolidated when the bank strengthens its social ties, through many contributions to the development of society and environmental sustainability. In this regard, KFH offered various environmental initiatives in partnership with government and private entities to preserve the environment. KFH also launched the "Green Finance" initiative, embracing the global shift towards sustainability. It also introduced a landmark Green Products Financing campaign, highlighting KFH’s commitment to advancing eco-conscious housing solutions by providing tailored financing for environmentally sustainable and smart infrastructures.

Along with its high creditworthiness that has been confirmed by international credit rating agencies, KFH Group received during the year 25 prestigious awards from global organizations specialized in monitoring and evaluation of top banks performance.

Meanwhile, we will continue to focus our efforts on enhancing our business model, focusing on customers, supporting innovation initiatives, digital banking, governance, and social responsibility.  KFH proved its leadership in social responsibility through contributions of millions of Kuwaiti Dinars to many strategic community initiatives.

Finally, I’d like to convey our sincere thanks, gratitude, and appreciation to His Highness the Amir of Kuwait Sheikh Meshal Al-Ahmad Al-Jaber Al-Sabah, may Allah safeguard him, and His Highness, the Prime Minister Sheikh Dr. Mohammed Sabah Al-Salem Al-Sabah. Our thanks and appreciation are also extended to the Central Bank of Kuwait and regulatory authorities for their continuous support to the banking sector in the State of Kuwait.

BoD would also like to extend its sincere thanks to the esteemed shareholders, customers, KFH Executive Management and all employees for their efforts and cooperation during the year.

Acting Group Chief Executive Officer's Message

Abdulwahab Iesa Al-Rushood

In the name of Allah, Most Gracious, Most Merciful,

Praise be to Allah the Almighty, and Peace and Blessings be upon our Prophet, his family, and companions.

Dear Esteemed Shareholders,

Assalamu Alaikum Warahmatu Allah Wabarakatuh.

Kuwait Finance House (KFH) Group demonstrated exceptional performance and attained unprecedented results across all business indicators. This has further enhanced the value, quality, and reputation of both KFH and its services, while providing significant benefits to its customers. Additionally, the Group’s growth across various sectors was synergistically achieved through a network of banking services and groundbreaking digital financial products, thereby enhancing the overall customer experience. As a result, KFH Group has emerged as a leading financial and banking brand in the global markets where it operates.

One of the highlights from last year might have been the positive harmonious performance and cooperation across all departments and units within the Group. This was achieved through a unified and comprehensive vision, aiming to strengthen KFH’s leadership and continue its success in various fields and markets. This success is substantiated by tangible indicators and promising growth prospects in the present and future.

Strategy

During 2023, the Strategic Planning adopted flexible strategies dealing with the principal pillars of KFH strategy to achieve the set objectives. In addition, it monitored with high efficiency the implementation of these strategies against clear, measurable, and realistic standard which enabled it to accomplish the previously determined strategic projects and proactively formed different targets which the KFH Group aims to fulfil in the next years.

The Strategy function developed the 2023 strategy by collaborating with the Group’s subsidiaries located in key markets around the world. This was accomplished through conducting local, regional, and global market research, identifying the latest banking trends in addition to conducting a SWOT analysis on KFH’s various departments to identify strengths, weaknesses, opportunities, and challenges. This analysis also aimed to overcome obstacles and achieve the plan’s strategic objectives. As a result, several strategic initiatives were launched with the main pillars of the KFH Group. These included customer centricity, digital transformation, innovation, security, and regulatory compliance. These initiatives are under three elements of KFH’s strategic map: customers, internal environment, and employees. 

In addition to considering customers’ perceptions and expectations of their banking experience with KFH, the Strategy function also strives to enrich their experience and strengthen their loyalty by staying updated and responsive to developments and changes through planning and analysis tools. During the first year of the strategic acquisition of Ahli United Bank – Bahrain, KFH Group successfully maximized its indicators, reflecting positively on the Group’s market value as the highest in the Kuwaiti market.

Human Resources

As part of the continued efforts to care for employees, Group Human Resources and Transformation has demonstrated unprecedented achievements on the local and global stage, securing two gold and one bronze awards from The Brandon Hall Group in 2023. This exceptional recognition establishes KFH as the sole bank in the Middle East to attain such prestigious accolades in one year. While we are proud to have succeeded in building a culture of management that fosters empowerment, talent development and creative thinking at work, Group Human Resources and Transformation demonstrated the Bank's dedication to promoting nationalization through its massive recruitment efforts. KFH hired around 400 employees with a noteworthy 22% representation of women and an impressive nationalization rate of 100% among these new hires. In an effort to promote diversity and inclusion within its workforce, KFH championed opportunities for individuals with special needs to be hired and successfully integrated into KFH’s workforce.

Moreover, the bank has actively embraced social responsibility, exemplified by its commitment to the Women's Empowerment Principles through agreements with UN Women and UN Global Compact.

KFH's commitment to employee well-being and development has fortified its standing in the banking sector. A remuneration survey conducted in 2022 by a global company positions KFH among the top 3 paying banks in the overall banking sector market.

The Bank's proactive approach extends to the enhancement of medical insurance benefits for the employees and their dependents in the 2023-2024 plan, ensuring comprehensive coverage. Additionally, KFH has invested significantly in the professional growth of its workforce, organizing an impressive array of training courses, workshops, and e-learning courses.

This direction has resulted in the collective logging of over 83,000 hours of training by 3,116 employees. Furthermore, KFH launched the "Excellence in Leadership" program, which entails "Building Leadership Excellence" and "Enterprise Leadership" programs in collaboration with prestigious universities and esteemed training institutions, with the aim of fostering the leadership capabilities of 50 executives and managers within KFH group, further solidifying the Bank's commitment to excellence and innovation. This is in accordance with the continuous drive to develop the staff by acquiring the best expertise and competencies at various administrative levels, especially from the national talent.  Strengthening the position and developing the performance of these talents are at the forefront of our priorities. Therefore, we attracted a large number of employees and provided them with intensive training courses to acquire experience and skills to prepare them as future leaders.

Treasury and Financial Institutions

Due to the significant growth in the Group’s assets, the Group Treasury took significant steps by foreseeing a higher yield environment, thus arranged cost effective liquidity and stable funding for Group businesses. 

With its expertise in the market, KFH positioned itself as the largest bank in Kuwait, benefitting customer service by optimizing financing costs, increasing returns, and diversifying financing options. This allowed KFH to continuously serve customers in Kuwait and across the Group.

Thanks to our approach of improving financing and securing the lowest cost in 2023, KFH established a strong presence in the money markets and had the capability to offer advanced products to its customers, making it a competitive and active market maker in Dinar, Dollar, international and GCC currencies trades.

The Group Treasury continued its investment and trading activities in primary and secondary capital markets. While being one of the most active market makers, Group Treasury executed Sukuk transactions worth more than USD 13 billion during the year and persistently expanded its short term Sukuk trading in International Islamic Liquidity Management Corporation’s (IILM) short term issuances. KFH Group Treasury maintained its leadership position in IILM market making and won the top rank Primary Dealer for the 7th time and 3rd consecutive year in a row for Secondary Dealer, affirming KFH position as a core player in the short-term IILM Sukuk market.

The Group Treasury increased its network of capital market counterparties to further improve access to competitive rates, enhanced trade opportunities and expanded connections to serve our Sukuk market trades. The KFH capital market Retail client activity amounted to USD 45 million in 2023 compared to USD 20 million in 2022; an increase of 125%.  As a part of the Bank’s ESG initiative, the Group Treasury expanded further its ESG Sukuk exposure by further increasing the ESG compliant Sukuk investments during the year. The total ESG Sukuk investments increased to reach USD 294 million in 2023 and increase of 362% from the previous year, exhibiting the Group Treasury commitment to responsible and sustainable investment growth practices.

The Group Treasury achieved USD 38 billion volume in FX transactions during the year and onboarded several new and current reputable corporate clients who has shown keen interest in FX Spot and Islamic derivatives hedging instruments and solutions. To further enhance the FX activities, the Group Treasury established a partnership with a leading global bank to become their exclusive Market Maker for GCC currencies. In addition, the Group Treasury went the extra mile by providing retail customers with live FX prices through its E-channels. This allowed customers to easily transact and obtain competitive and real-time FX market prices. Furthermore, the introduction of "KFH Global," an FX platform for Corporate FX, optimized transaction speed with real-time pricing. This expansion attracted even more customers seeking these services. Overall, the Group Treasury's achievements and added value initiatives in the FX arena were highly commendable and contributed to its continued success.

The Group Financial Institutions (FI) department under Group Treasury continued to grow its portfolio of interbank facilities with further participation in financing facilities with large regional banks in the GCC region. The FI department was also successful in raising competitive funding from several Asian banks with medium and long-term tenors which helped diversify KFH’s funding base. This also demonstrates KFH’s commitment to expand its cooperation framework with Regional and Global banking partners.

Sukuk

KFH Group continued its pioneering presence in the international Sukuk space. Through its sole investment arm, KFH Capital, the Group had successfully led and arranged Sukuk issuances exceeding USD 7.5 billion through diversified issuances covering sovereigns and institutions across various sectors and geographies. Additionally, KFH Capital demonstrated its key role by acting as Joint Lead Manager & Bookrunner for USD 2.5 billion sovereign Sukuk issuance for the Republic of Turkiye,  USD 1 billion AlRajhi’s Sukuk, USD 1 billion Dubai Islamic Bank’s Sukuk, USD 600 million debut Sukuk for Air Lease’s Corporation, USD 500 million First Abu Dhabi Bank’s Sukuk , USD 500 million Qatar Islamic Bank’s Sukuk and an additional issuance of USD 250 million, USD 1 billion EDO's - Government of Oman owned entity debut Sukuk, and the first sukuk issuance in Kuwaiti Dinars for Kuwait Projects Company Holding - KIPCO with an amount of KD 103.1 million, KFH Capital also acting as the sole structuring agent for the issuance.

In recognition for its various deals, KFH Capital won about 10 prestigious awards from different institutions in 2023. It successfully increased the capital of the REIT fund with a coverage of 149% and an amount of KD 46.1 million out of the required capital of KD 31 million. It also successfully marketed a UK Fund with a capital of KD 26 million consisting of six office assets located in major cities around the United Kingdom.

Through the advanced features and tools of “KFH Trade” service, we now offer greater flexibility and support, while the mobile app has made trading more convenient on-the-go, making it more accessible and efficient for KFH clients of all levels. As a result, the number of users exceeded 25,000.

Additionally, KFH Capital received the “Market Leader - Kuwait” rating in the investment banking category from the international Euromoney magazine.

Corporate Finance

KFH continued its role in financing major companies and projects at the local and regional levels. On the regional level, KFH participated in a club financing deal amongst several banks in favor of Saudi Electricity Company, where the total financing transaction amounted to USD 3.0 billion. It also participated in a financing deal for Ras Laffan Petrochemicals Company, where the total financing transaction amounted to 4.4 billion for the purpose of financing the construction, development, and operations of Ras Laffan Petrochemicals Project in the State of Qatar. In addition to participating in a deal with Dubai Aerospace Enterprise Funding Ltd, where the total financing transaction amounted to USD 1.6 billion, and a deal with the Government of Sharjah, where the total financing transaction amounted to USD 600 million. KFH also participated in a syndicated transaction with a certain cover from the Islamic Corporation for the Insurance of Investment and Export Credit, where the transaction was arranged by the International Trade Finance Corporation in favor of the Arab Republic of Egypt represented by the General Authority for Supply Commodities, which is part of a total financing transaction amounting to USD 882 million.

Since inception, KFH has played a vital role for the micro and SME community and further extended its support in relation to this segment as strategic partner while successfully growing its SME portfolio. Many SMEs have started their early journey with KFH, and they have grown to become  market leaders in their industries.

KFH's achievements in the field of corporate service were recognized by being awarded the "Market Leader – Kuwait" rating in the Corporate Banking category by Euromoney magazine.

Group Operations

Throughout 2023, the Group Operations Sector showed the utmost resilience, dedication, and innovative spirit. As a leading bank, the commitment from Group Operations to enhancing customer experience, streamlining processes, and adopting cutting-edge technology has never been stronger.

The Financing Operations Department made significant strides, including the transformative achievements in CRM Workflow Automation for Corporate CAD and the centralization of direct products at Retail CAD, greatly enhancing the services we offer to our clients. The digital transformation by launching a state-of-the-art “Business Facility Origination System” tailored for corporate and individual financing clients has streamlined credit facility processing, enhancing efficiency, transparency, and customer experience. Our focus on data accuracy and reliability was manifested in the meticulous task of reviewing and cleansing our data repositories for having a centralized legal report.

Card Operations Department has been exceptionally active. The extension of credit card and prepaid card validity from 3 years to 5 years exemplifies our forward-thinking approach, aligning with the digital shift and wallet payments trend. The introduction of the Turkish Lira Foreign Currency Prepaid card reflects our dedication to meeting customer needs. The launch of Google Pay for KFH debit cards and the expedited processing time for ATM deposit claims further elevate the banking experience for our customers. Furthermore, Card Operations achieved an annual USD 42 million boost in Visa & MasterCard usage owing to enhanced approval rates by 11%, leading to over USD 1 million in revenue through strategic model adjustments, expanded card acceptance, and vigilant fraud rule oversight.

The Central Operations team showcased their adaptability with the successful transition to ISO 20022 for inward fund transfers and have orchestrated several efficient CRM based workflows for seamless processing of banking transactions. We have also witnessed an innovative approach in handling SWIFT message cases in Kuwaiti Dinar and optimizing processes for various charity standing orders, signaling our commitment to both technological adoption and community service.

As part of our strategy of expanding operational excellence and digitizing back-office processes, several Automation and Robotic Process Automation (RPA) initiatives were implemented during 2023 such as issuance of Clearance Certificate and Balance Certificate. As a result, a remarkable optimization has been realized by reducing the turnaround time of producing such certificates from several days to several minutes. In addition, such significant optimization has positively transformed the customer experience completely and reduced the operational costs/efforts substantially.

The CSC under Operations have rolled out the usage of E-forms across multiple hubs in branches and balance confirmation certificate for corporate customers is fully automated and can now be printed on the spot, a process that used to take three business days earlier.

The Central Procurement Department has generated value at multiple opportunities. For example, the successful negotiation for the ongoing Oracle Fusion Procurement System Implementation resulted in significant cost savings of over USD 1.6 million. The emphasis on upskilling our procurement function, and centralizing contracts database exemplifies our focus on operational excellence. It is worth mentioning that Central Procurement Department has achieved a major milestone by enhancing the budgeting capabilities by incorporating the fixed assets and General Services as part of the internal process. Another aspect of improvement was GL reconciliations, accuracy and on-time payment to our service provider and suppliers.

A special mention must be made of our Real Estate Operations Department, which took the bold step of launching the first-of-its-kind Certified Real Estate Appraiser Program in Kuwait, setting a benchmark in the industry.

Our journey this year has been nothing short of transformational. As we move forward, we will continue to prioritize customer experience, innovate relentlessly, and stay committed to operational excellence.

Information Technology

KFH continued its efforts towards digital transformation and the development of all services, products, activities, and businesses based on modern technology. The Information Technology department has completed many advanced projects. Most notably, introducing an innovative customer recognition experience at KFH branches using facial recognition technology, where visitors to KFH branches are recognized using biometric facial ID. During this experience, a new meeting, greeting, and welcome message is displayed with a dynamic menu of various banking services, from which the visitor chooses the desired service, and this unique experience ends with obtaining a waiting number ticket within few seconds.

Through implementing RPA solution, a number of manual processes and functions for Operation & Risk departments were selected for robotizing, thus minimizing human intervention. The plan has been successfully applied to a number of operations and is now being shifted to other different processes.

In addition to upgrading Puffin system and integrating it with TAM App to enable push notifications, the department also enabled KFH POS terminals to support Refund/Partial Refund for Debit Cards (Contact & Contactless) and launched the first portable device on the market “D-POS” to onboard customers instantly. This will allow KFH to approach customers in several areas like ministries, universities, and shopping malls. This device aligns with KFH initiative “Keep it Green” as it will be digitalizing the customer onboarding process without the need for paperwork. 

Furthermore, the availability of the civil ID card reader and NFC has the capability of adding extra functionalities in future phases such as the settlement of invoices.

We also succeeded in replacing the MasterCard (Credit / Prepaid) in a 3-minutes time through KFH Kiosk machines without the need to visit the branch during working hours.

KFH successfully launched the first corporate mobile banking application to the public with the following services:

• Visibility, access, and process pending requests under Requests Pool.
• Overview of accounts, holds, fixed deposits and margin accounts.
• Check account statement.
• View and share account IBAN.
• Report/stop corporate debit and credit cards.

The IT department upgraded and developed KFH's various systems to support integration with the GCC Cross-Border Payment System (AFAQ), that connects the Real Time Gross Settlement Systems (RTGSs) of GCC member states.

Additionally, KFH's customer can now open a saving account in FC from KFH Online as this used to be available in branches only. The department completed the Clearance SMS Disablement project, which originated from Digital Wallets payment services in the App payments as well as from international in-store POS transactions. A single SMS of both authorization and clearing is being sent to customers, resulting in saving of around a million SMS monthly.

The IT department successfully developed the call-back systems in the call center. The business teams are now able to input external agencies’ (Moody's, Standard & Poor's, and Fitch) risk ratings of our customers into the Credit Lens platform, the central risks platform for the Risks team.

It also completed the Pre-Fact Automation Project, developed the Hunting Process for Commercial Collection, launched Merchant Management Automation System, and completed the VAT Accounting System project.

The department’s achievements also included the going live of Kiosk Credit Cards re-issuance for VISA cards including renewal, damaged, lost, or stolen cards, in addition to automating a remarkable number of corporate reports, developing Cards Campaign Draw System, and enabling new enhancements on Gold product.

Furthermore, Baiti and Hesabi customers are now automatically classified based on their age. Once they have reached the maximum age limit, they will be automatically transferred to the next segment. KFH introduced three new Debit card products with wide features to be used by corporate customers. Most notably, K-Net cards that are issued with limited acceptance only on government KNET POS/PG terminals.

The IT department also upgraded KFH payment systems to support the new version of SWIFT ISO 20022. This would support benefiting from the new XML Payment format message and is expected to boost interoperability between banks.

In addition to launching new services related to Financing Origination System on Ezway, reporting systems inside and outside KFH, and integrated systems with Cinet.

Banking Services

With our extensive banking expertise and dedication to our customers, we strive to offer the best banking experience in the Kuwaiti market. Building on our reputation for exceptional banking services, KFH aimed to provide convenient and secure channels, products, and services that cater to the needs of our retail and corporate customers. Additionally, in the financial and private banking sectors, KFH initiated various customer-centric campaigns in collaboration with renowned companies and institutions for delivering exclusive offers. Recognizing the significance of investing in the younger generation, who embody the future, we introduced a significant milestone by launching Tam Digital Bank, Kuwait’s first Shari’a Compliant digital bank focused on the youth segment.

Innovative Products

As a step in KFH’s commitment to digital transformation and delivering top-notch services to the youth segment, KFH launched the first Islamic Digital Bank in Kuwait, Tam Digital Bank. The launch also included assigning a WhatsApp number exclusively for Tam customers, as well as the enhancement of Tam customer account services, to ensure the smooth activation of SMS services, e-cards, and prepaid services. Additionally, K-Net Claims System and ATMs are upgraded to cater to the needs of Tam customers.

We continued to provide innovative products and services in the market including:

• Expanding the scope of digital signature by linking with the Public Authority for Civil Information (PACI)
• Emergency Cash offering salaried customers the ability to get part of their salary in advance.
• Cash Gift granting up to KD 400 once the customer transfers his salary to KFH.
• "Zaheb" New digital payment platform launched, enabling merchants to accept cards payments through links and QR code without the need for a POS machine.
• Google Pay offering cardholders with a new channel for making payments.
• Kuveyt Turk – KFH Kuwait Staff rotation with our subsidiary in Turkiye which improved customer relations, satisfaction levels and bridged language barriers.
• Kuveyt Turk Service Center launched through the successful initiative of the staff rotation where customers can perform selected services without having to travel to Turkiye.

In recognition of its remarkable success, Euromoney magazine awarded KFH with the “Market Leader – Kuwait” rating in the digital solutions category.

As a result of KFH’s collaboration with companies operating in the market, we initiated various campaigns that encompassed benefits for all products categories. These include a competitive selection of personal finance options at favorable rates, the option to delay payment for a certain installment, and credit card benefits tailored to customer’s lifestyle requirements.

In an effort to prioritize environmentally friendly housing solutions, KFH introduced the Green Finance service, the first of its kind at the market level. This initiative affirms our dedication to developing environmentally friendly housing solutions by financing sustainable infrastructure and offering customized eco-friendly financing options. By taking the lead in this initiative, we not only meet the rising demand for eco-friendly housing choices, but also enhance KFH’s involvement in environmental consciousness.

Shari’a Control

During 2023, KFH's Shari’a Control diligently fulfilled its responsibilities covering all areas, initiatives, and strategies. This included the notable endeavor of merging with Ahli United Bank, for which KFH’s Internal Shari’a Audit Department conducted meticulous audits of the Bank’s sectors and departments, as per the 2023 approved plan. Additionally, the Shari’a Research and Advisory Department conducted shari’a revision on contracts, products, agreements, and policies submitted by KFH sectors and departments, addressed Shari’a-related queries and concerns, and submitted them, whenever required, to the Fatwa and Shari’a Supervisory Board to obtain Shari’a opinion. In terms of spreading awareness and Shari’a culture among customers and employees, the department answered Shari’a inquiries received from customers via phone. It also published economic jurisprudential bulletins through the e-channels available at KFH. 

Legal

The Group’s Legal Department played a significant role in offering legal assistance to every division and branch of KFH and its subsidiaries, defending the organization’s right in courts and other relevant bodies. It also examined the responsibilities outlined in contracts and agreements pertaining to KFH’s diverse range of activities.

Social Responsibility

KFH persistently maintained its leading position in sustainable community development by actively engaging in social responsibility and implementing value-added community initiatives that catered to various segments of society. These initiatives encompassed supporting community capabilities, caring for individuals with special needs, launching awareness campaigns, safeguarding the environment, and promoting sustainable practices.

Moreover, KFH demonstrated continuous commitment to community welfare by supporting strategic and relief social initiatives both within Kuwait and abroad. KFH contributed with an amount of USD 20 million to aid in relief efforts following the earthquake that affected regions in Turkiye and Syria. This collaboration was carried out in collaboration with the Kuwait Red Crescent Society to provide immediate assistance to those affected and fulfill their urgent needs.

Euromoney's recognition of KFH as the "CSR Market Leader" in Kuwait for the second consecutive year is an affirmative gesture that underlines KFH’s diverse and inclusive social role. It also highlights KFH's efforts in promoting sustainable development and establishing new foundations for the private sector’s role in development, reinforcing KFH as an exemplary and a benchmark in the market.

26 Prestigious Awards

KFH's winning of 26 awards at the local, regional, and international levels is a testimony to its commitment to innovation and advanced banking services and products. These accolades also solidify KFH's leading position in digital transformation, enhancing the banking experience and meeting customer expectations. Furthermore, KFH's strong financial performance and leadership in the Islamic finance industry are further recognized through these awards. Notably, in 2023, KFH received prestigious awards such as the "World’s Best Islamic Financial Institution" from Global Finance, the "Bank of the Year 2023 – Kuwait" from The Banker, and the "Best Islamic Bank for ESG- global category 2023" award from Euromoney International Magazine.

I would like to note that in light of the increasing role of technology, intense competition, and rapid regulatory developments, KFH remains fully committed to its customers, shareholders, employees, and the community, striving to achieve the highest levels of profitability while maintaining security, privacy, transparency, and governance standards.

We take pride in the qualitative achievements we made this year, marking a significant shift in our business. These achievements were accomplished as we confidently navigate a challenging business environment, placing strong emphasis on prioritizing the customer experience, fostering innovation, and maintaining operational excellence. I have full confidence that, with our dedicated team and strategic vision, the future holds even greater accomplishments.

Finally, I would like to express my sincere gratitude and appreciation to His Highness the Amir of Kuwait Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah, may Allah safeguard him, and His Highness, the Prime Minister Sheikh Dr. Mohammed Sabah Al-Salem Al-Sabah.

Our thanks and appreciation are also extended to the Central Bank of Kuwait and all the regulatory authorities for their constant support to the banking sector in the State of Kuwait.

May Allah grant us success.