Winner: Kuwait Finance House
Kuwait Finance House is not the biggest Islamic bank in the Middle East or the most profitable – those distinctions belong to Al Rajhi – but it is fast catching up with its Saudi rival and has greater momentum.
During 2007 KFH’s assets grew by 46% and its net income jumped by 76.7% to $1.2 billion, according to data provider Ifis. In contrast, Al Rajhi’s assets grew by 19% and its net income fell by 13% to $1.7 billion.
KFH, which was established in 1977 and was the first bank to operate in accordance with Shariah law, is strong across a range of businesses and products, most notably in real estate. Last year it announced that it had sold most of its investments in its first KFH Fund for Asian Real Estate, which had initial capital of $101 million, and has generated a net profit of $39.6 million. The bank achieved a return on investment of 34.6%. The fund was launched in 2006 and focused on prime investment opportunities. “Liquidizing some investment opportunities achieves not only high returns but also a great deal of safety for the clients’ investments, which is at the top of KFH’s priorities,” says Ali Al-Ghannam, international real estate manager at the bank.
One of the fund’s key investments was the Pavilion project, one of the biggest real estate developments in Malaysia. The project involved the building of two residential tower blocks in Kuala Lumpur containing 368 units.
The deal also highlights the benefits of KFH’s international expansion.
It has established independent banks in Turkey, Bahrain and Malaysia, using these countries as a base to focus on investment banking services in eastern Europe, the Middle East and Asia including Australia. The bank has also received approval for its Saudi subsidiary to begin investing in the Kingdom.
Other areas the bank is focusing on include projects such as power and gas, transportation, health, education, technology and industry, as well as real estate.
