KUWAIT, 24 July 2004 — Net profit for Kuwait Finance House (KFH), the 2nd largest bank in Kuwait providing the Islamic banking services, increased by 25 percent compared to the same period last year, according to un-audited results for the first half of 2004 provided by Kuwait’s Global Investment House. The increase in the operating income was due to substantial improvement in the Murabaha, Istisna’a & leasing income that increased by 26.7 percent and the fee and commission income, up 46.9 percent on the previous year.
Fitch Ratings, in its annual review of Kuwaiti banks (April 2004) stated that the Kuwaiti banking sector will continue to benefit from the current surge in oil prices, continuing low interest rates and a buoyant local economy following the change of regime in neighboring Iraq. Fitch said earnings growth in 2004 will be supported by increased loan demand, although higher loan loss charges related to speculative property and margin lending could partly offset this.
The Islamic banking sector, though increasing at a rapid pace, will see increased competition in Kuwait with the establishment of new banks and increased pressure on the conventional banks to offer Islamic products through their separate divisions.
