Kuwait Finance House Posts RM63 Million Losses

Last month I highlighted on Kuwait Finance House in the posting What Do You Think Of Kuwait Finance House (KFH) Decision To Drop RAM's Rating Services?

Seriously? I thought it was rather incredible to read that apparently KFH had dropped RAM's rating services just because KFH was NOT satisfied with how it was rated by RAM but what was more incredible was apparently S&P agreed with RAM's assessment.

Anyway on today's Business Times: KFH Malaysia posts RM63m net loss in Q1

• Kuwait Finance House Malaysia made a higher provisioning for non-performing financing of RM93.8 million during the period
  
  Kuwait Finance House (M) Bhd (KFHMB) posted a net loss of RM63.3 million for the first quarter ended March 31 2010 compared to a net profit of RM17.7 million in the same period last year due to higher non-performing financing (NPF) provisions.
  
  In a statement issued yesterday, the bank's chief executive officer Jamelah Jamaluddin said it made a higher provisioning for NPF of RM93.8 million during the period.
  
  She said for the first quarter of 2010, KFHMB achieved a total distributable income to depositors amounting RM42.2 million.
  
  Revenue for the three month period stood at RM108.9 million.
  
  "This is a challenging year for us, but we are proactie and have taken an aggressive provisioning stance, because our capital position is very strong," Jamelah said.
  
  She said KFHMB's banking business recorded strong asset inflows, underscoring the trust that clients place in the bank.
  
  On the business front, Jamelah said, whilst tapping on a different class of investors, the bank leverages on the strong product offerings of the KFH Group.
  
  "As such, we will introduce products and delivery channels that will make us different," she said.
  
  Jamelah said since her appointment last February, the bank was re-organised with a new management team.
  
  Apart from this, a holistic plan has been implemented to strengthen KFHMB.
  
  Jamelah said the business plan which is more streamlined as well as focused, and in alignment with its parent company, reinforces corporate governance in all areas.
  
  KFHMB's current core capital ratio and risk-weighted capital ratio (RWCR) is also the highest among Islamic banks and remains strong, standing at 18 per cent and 22 per cent as at March 31 2010, which is significantly above the Islamic banking industry average of 12.4 per cent and 15 per cent.
  
  The bank is also well-capitalised with a Tier 1 capital of RM1.96 billion and Tier 2 capital of RM450.1 million making a total capital of RM2.41 billion as at March 31 2010.
  
  Jamelah said KFHMB is well-positioned to master the current challenges it faces, and to consistently exploit future growth opportunities.
  
  She said the bank has accelerated the implementation of its business plan, which will bring about a further substantial reduction of its risk and cost base.
  
  "We also took steps to further strengthen our control culture," she said, noting KFHMB has positioned its business to be less susceptible to negative market trends.
  
  She said steps taken will help the bank in its next phase of growth over the course of five years and be more performance-driven.
  
  Kuwait Finance House is the second largest Islamic bank in the world, with total assets of US$39.20 billion (RM134.88 billion) as at December 31 2009.
  
  Read more: here