Al-Jarrah: AGM decided to distribute 11% cash dividends and 4% free bonus shares

KUWAIT: The Shareholders Annual General Meetings (AGM/EGM) of KIB which was held on Thursday, 28 March 2019 and attended by 81.145 percent of shareholders, approved the Board of Directors' recommendation to distribute cash dividends of 11 percent of the nominal value of the share (11 fils per share), and bonus shares of 4 per cent of the authorized, issued and fully paid up capital (4 shares for every 100 shares) to shareholders registered in the Bank's register of shareholders at the end of the entitlement date set as Monday, 22 April 2019. Such cash dividends and bonus shares shall be distributed to the entitled shareholders on Sunday, 28 April 2019.

Within this context, Chairman of KIB, Sheikh Mohammed Jarrah Al-Sabah, lauded KIB's outstanding performance during 2018, saying: "In the face of intense competition witnessed this year in the local banking sector, KIB was able to achieve great results by enhancing its financial position, shareholders' equity, as well as achieving significant improvement in its key performance indicators (KPIs) including asset quality, improving its internal operations and its digital banking solutions while enhancing its customer focus."

Al-Jarrah stated that, as per the audited consolidated financial statements for the year ended 31 December 2018, KIB achieved a net profit of approximately KD 21 million, registering a growth of 18 percent compared to 2017. EPS also increased by 18 percent reaching 22.4 fils compared to 19 fils approximately for the last year. The Bank's improved performance reflected positively on its core operating income for 2018, reaching KD 66.6 million compared to KD 64.2 million in last year. This was a result of 20 percent growth in financing income, (approximately KD 15 million), to reach approximately KD 89.5 million compared to approximately KD 74.6 million recorded in 2017.

Strategic Plan Developments
Al-Jarrah also stated that KIB is moving ahead with the implementation of its comprehensive strategic plan through a bank-wide transformation launched in 2015. The five year strategy aims to fulfill the vision to become the 'Islamic Bank of Choice in Kuwait' with five key objectives: become the fastest growing Islamic bank in Kuwait; improve asset quality with below market average NPL; enhance shareholders' returns; be recognized as the most innovative bank in Kuwait and become an employer of choice for the Kuwaiti youth.

Al-Jarrah added: KIB's ambitious new approach to customer service has been transforming the entire customer experience to include a mix of live and digital channels during 2018. KIB also launched an innovative VIVR service in addition to its 'Live Chat' service, which provides customers access to most of its services via a visual interface, rather than just a voice-activated self-service interface, thereby enabling the Bank to offer a better self-service call experience. KIB continued the strategy implementation with a myriad of changes, trickling down to its banking vision. KIB's new strategy focuses on becoming more customer-centric by offering an integrated customer banking experience. In this context, a key component of this latest transformation is a comprehensive digital strategy, which is set to deploy services across all of its digital channels, both online and mobile, to enhance and streamline KIB's virtual customer banking experience. By embracing technology and innovation as the core component of its customer-centric business strategy, the Bank aims at providing the latest digital solutions that are user friendly and easily accessible at all times. KIB is focused on becoming a truly customer-centric business, delivering greater value to customers, and remaining as an essential extension to their everyday lives. Establishing itself as a partner in every aspect of its customers' lives; a true "Bank for Life"

Growth and Continued Success
Furthermore, Vice Chairman and Chief Executive Officer of KIB, Raed Jawad Bukhamseen, shed light on KIB's performance during 2018 and noted that total assets increased by 13 percent, reaching approximately KD 2.2 billion. This increase is attributable to a growth in the financing portfolio by KD 301 million to reach KD 1.6 billion compared to KD 1.3 billion last year, registering a 23 percent growth. Additionally, the investment portfolio increased by KD 20 million, or 14 percent reaching KD 166 million compared to KD 146 million approximately in 2017. Depositors' accounts rose to KD 1.3 billion compared to KD 1.2 billion recorded at the end of the previous year, an increase of KD 115 million representing a growth of 10 percent. This came as a result of KIB's successful development of its customer-base through the launch of a number of innovative deposit products and promotional campaigns supported by distributing competitive and distinctive profit rates on deposits. Additionally, the Bank increased its customer confidence through its new brand identity.

Bukhamseen also stated that KIB's asset quality matrices have improved significantly in 2018 mainly due to continuous efforts in monitoring its existing and new portfolio. NPL ratio stood below 1 percent, which is one of the lowest among peers while total coverage ratio at 343 percent in 2018, one of the highest in the region.

Competitive Profits
In a continuation of this positive financial performance, Bukhamseen noted that KIB achieved competitive distribution rates for its depositor accounts in 2018 for a fourth consecutive year, whereby the annualized return on Arzaaq (KD) Deposit progressively increased to 2.73 percent in Q1 2018, 2.75 percent in Q2 2018, 2.81 percent in Q3 2018, and 3.25 percent in Q4 2018. Average annualized rate for 2018 stood at 2.886 percent. Arzaaq Deposit enjoys a high return on investment and flexibility in deposit periods, ranging from one month to a year. The deposit account is also available in all major foreign currencies, where profits are distributed quarterly from one to six months and distributed annually for annual deposits. Meanwhile, Al-Boushra (three-year) KD deposits were offered an annualized return of 3.65 percent in Q4 2018 with an average rate of 3.55 percent for second half 2018. Al-Boushra (three-year) Deposit enjoys the highest profit rates among all KIB's deposit accounts, with semi-annual distribution. Profits will be credited to eligible depositors' accounts upon announcement of financial results.

Distinguished Collaboration between Functions
Mohamed Said El Saka, KIB's Deputy Chief Executive Officer, noted that the remarkable collaboration between KIB functions, namely: Operations, Financial Control & Planning, Audit, IT, Risk Management and Human Resources, has successfully contributed to the management plan which aims at cutting costs. In 2018, KIB continued to invest in its new branding and Information Technology infrastructure, introducing improvements to enhance the digital banking experience while controlling its other costs.

El Saka mentioned that the net financing income comprised of 81 percent of the operating income during the year compared to 76 percent recorded last year. This improvement reflects the strength of KIB's core business activities, as it does not operate an active investment trading book as per its conservative risk appetite. Alternatively, KIB's investment portfolio raised by 14 percent to reach KD 166 million primarily as a result of increased exposure towards high quality sukuks. Investment income is lower compared to 2017 on account of certain one offloads of non-core investments during the previous year. Focused efforts on financing portfolio resulted in its distinguished growth. KIB has effectively participated in high-quality syndications at the local and regional level specifically in oil & gas, telecom, and hospitality sectors and expect a similar trend to continue.

El Saka added that growth of customers' deposits resulted from better profits offered by the Bank. Investment Savings Account has, particularly achieved noticeable success in 2018 with the highest returns in the marketplace, whereby the net annualized return on Investment Savings Account (KD) progressively increased to 1.64 percent in Q1 2018, 1.65 percent in Q2 2018, 1.69 percent in Q3 2018, and 1.95 percent in Q4 2018, with an average net annual return of 1.732 by end of 2018. This account is designed specifically for individuals and offers the benefits of savings and investment combined into one single account. It can be opened in Kuwaiti Dinar or in any other major foreign currency. Moreover, there is no minimum amount required to open the account and profit distribution takes place on a quarterly basis.

Al-Ithmaar Call Account, offered to corporate customers, combines the benefits of both current and savings accounts. Additionally, this unique account offers corporate customers instant access to funds through unlimited deposits and withdrawals, and provides a chance for companies to earn a profit on the account balance. Businesses are able to enjoy greater flexibility, better returns and unrestricted access to funds at the same time, as well as a cheque book option. Al-Ithmaar Call Account offered an average annual net return of 1.443 percent at the end of 2018.

With regard to the impact of the adoption of IFRS 9 on KIB, El Saka stated, "The current regulation requires that we implement CBK provisions or IFRS 9 ECL, whichever is higher, which resulted in comfortable buffers for KIB."

Local, Regional and International Awards
In recognition of its remarkable achievements across various areas during 2018, KIB has garnered many prestigious local, regional and international awards that stood as a testament to the Bank's robust performance and stellar reputation within the banking industry.

Some of KIB's most notable achievements throughout 2018 was receiving the Best Islamic Bank - Kuwait" award from World Finance; the "Excellence in Islamic Banking Products and Services" award from the World Union of Arab Bankers (WUAB); the "Best Customer Acquisition - Kuwait"; "Best Branding - Kuwait" 2018 awards from CPI Financial; as well as the "Best Shari'a-Compliant Bank - MENA" award for the fourth consecutive year and the "Fastest Growing Islamic Bank - MENA" award in 2018 from Capital Finance International for the third consecutive year.

KIB also earned the ISO 27001:2013 certificate for information security management systems from GMS Intercert Services and the ISO 22301:2012 certification for Business Continuity Management (BCM) Systems for British Standards Institution (BSI). KIB was also recognized with many information security and cybersecurity awards during 2018.

In addition to these achievements and recognitions, World Finance also recognized KIB's leadership team for its outstanding efforts, as the Bank's Chairman, Sheikh Mohammed Jarrah Al-Sabah was named "Islamic Banking Chairman of the Year" for 2018 from World Finance; he was also awarded the Red Purple Sash adorned with the Golden Medal Award of Merit and a patent certificate in the category of Wise Leadership in the Arab region in 2018 from Tatweej Academy for Excellence Awards in the Arab Region.

A Remarkable Role in the Community
As part of its strategy, KIB aims at becoming a national financial institution that positively impacts every aspect of the local community, particularly its customers. This strategy has been embedded into the Bank's social responsibility program during the year 2018, covering a range of social concerns and issues, underscoring its integral role as a national financial institution. Accordingly, the Bank has committed itself to investing in various social responsibility initiatives, which fall under four main pillars of its social responsibility program, namely: financial and banking literacy, social impact, community development and youth empowerment.

Credit Rating
KIB has been always internationally recognized for its high credit rating and robust financial position. During the annual credit review carried out by Fitch Ratings, KIB managed to get positive results. Fitch Ratings in its report for 2018, affirmed KIB's Long-Term Issuer Default Rating (LT-IDR) at 'A+' with a Stable Outlook. Fitch has also affirmed the Bank's Viability Rating (VR) at 'bb-'. Fitch also indicated an upside for KIB's VR could come from further improvements in the Bank's profile, franchise and risk appetite, in spite of the challenges and severe competition between local banks.

New Board of Directors
KIB's Shareholders' General Assembly elected a new Board of Directors, consisting of 9 board members, namely: Sheikh Mohammed Jarrah Al-Sabah, Dr. Haider Hassan Al-Jummaa, Anwar Jawad Bukhamseen, Raed Jawad Bukhamseen, Jassem Hassan Zainal, Dr. Abdullah Abdul Samad Marafie, Saleh Sulaiman Al-Trad, Anwar Fozan Al-Sabej and Marzouq Khalid Al-Marzouq.

Shareholders' Opinion
Shareholders lauded KIB's Board of Directors' directives, as well as the relentless efforts exerted by the executive management during last year. Their efforts heavily contributed in achieving such a distinguished performance and an increase in the Bank's returns, in addition to an improvement of most of its key performance indicators (KPIs).

11% Cash Dividend and 4% Bonus Shares
The Shareholders General Meetings (AGM/EGM) approved all the items listed in the meetings' agendas, including the Board of Directors' recommendation to distribute cash dividends of 11 percent of the nominal value of the share (11 fils per share), and bonus shares of 4 percent of the authorized, issued and fully paid up capital. It has been decided to distribute the cash dividends and bonus shares effective from Sunday, 28 April 2019 to shareholders registered in the Bank's register of shareholders at the end of the entitlement date set as Monday, 22 April 2019.

Thanks and Appreciation
Al-Jarrah expressed his sincere gratitude to HH the Amir of Kuwait, Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, and H.H. the Crown Prince, Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah, for their constant support of the nation's economic stability and growth.
He also thanked the Central Bank of Kuwait (CBK), and all other regulatory authorities, for their continuous support of the banking sector in Kuwait.

Al-Jarrah also extended his thanks and appreciation of all shareholders and customers for their ongoing support and trust in KIB's performance, as well as its product and service offerings. He also noted that this trust and loyalty propels the Bank to achieve more returns for both its shareholders and customers. Al-Jarrah also thanked KIB staff across all levels and departments for their unwavering commitment, continuous efforts and for achieving positive results.