Kuwait Finance House, the biggest Sharia-compliant lender in the Gulf state, reported a 77.5 per cent decline in its second quarter net profit, as impairment charges for potential loan losses increased due to an economic slowdown spurred by Covid-19.
Net profit for the second quarter ending June 30 slipped to 12.6 million Kuwaiti dinars (Dh151.5m) from the year earlier period, the lender said in a statement to Boursa Kuwait, where its shares trade. The quarterly income fell short of analysts’ expectations. Arqaam Capital had projected a net profit of 29.1m dinars while EFG Hermes had forecast a 44m dinar net income for the period.
Precautionary provisions for expected loan losses climbed to 11.26m dinars at the end of June from 59.94m dinars in the second quarter of 2019. The bank, however, reported a rise in its quarterly operating profit to 128.56m compared to 122.58m dinars a year earlier.
KFH's first-half net profit also declined to 56.92m dinars from 107.6m dinars reported at the end of the first six months of 2019, it said in the bourse filing.
Lenders across the world are facing tough operating conditions, taking on provisions for expected bad loans and an increase in defaults as the global economy slides into a deepest recession. JPMorgan, America's largest bank set aside $10.47bn (Dh38.4bn) to cover bad loans, which halved its second-quarter profit.
HSBC, Europe's largest lender, reported a 57 per cent decline in its second quarter profit this week and warned loan losses may climb to as much as $13bn.
The International Monetary Fund projects the world economy will shrink 4.9 per cent this year followed by a sluggish recovery in 2021.
Economies in the Gulf are slowly picking up pace as governments ease movement restrictions. However, much like thier global peers, profitability of regional lenders is expected to remain under pressure, as loan growth slows and interest rates remain low.
Earlier in the year, KFH, which holds a significant share of the Kuwaiti banking market, postponed its merger deal with Bahrain’s Ahli United Bank due to “the prevailing unprecedented circumstances relating to the Covid-19 pandemic".
Last year, the boards of KFH and Ahli United Bank agreed on a share swap ratio to create a combined Islamic banking entity with $96.7 billion (Dh355bn) in assets. The merger, once completed, would create the world's largest Islamic bank, surpassing Saudi Arabia-based Al Rajhi Bank, according to Moody’s Investors Service.
Tuesday's fixtures
Kyrgyzstan v Qatar, 5.45pm
UK's plans to cut net migration
Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.
Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.
But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.
Language requirements will be increased for all immigration routes to ensure a higher level of English.
Rules will also be laid out for adult dependants, meaning they will have to demonstrate a basic understanding of the language.
The plans also call for stricter tests for colleges and universities offering places to foreign students and a reduction in the time graduates can remain in the UK after their studies from two years to 18 months.
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
The specs: 2018 Jaguar E-Pace First Edition
Price, base / as tested: Dh186,480 / Dh252,735
Engine: 2.0-litre four-cylinder
Power: 246hp @ 5,500rpm
Torque: 365Nm @ 1,200rpm
Transmission: Nine-speed automatic
Fuel consumption, combined: 7.7L / 100km
more from Janine di Giovanni
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
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What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Killing of Qassem Suleimani
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
