KUALA LUMPUR (July 31): Kuwait Finance House (Malaysia) Bhd (KFH Malaysia) announced on Wednesday that it has decided to voluntarily withdraw from the Malaysian market.
This confirms The Edge’s earlier report that the country’s first foreign Islamic lender is planning an exit from the country after 19 years of operation.
“KFH Malaysia is profitable and remains solvent as we approach this transition with a strong financial foundation, ensuring that all our commitments are met with the highest level of responsibility. Our primary focus is to facilitate a smooth transition, reflecting our deep appreciation for the business partnerships we have developed in Malaysia. We do not foresee any service disruptions to clients, employees, and partners,” said acting chief executive officer Ida Aizun Husin in a statement.
KFH Malaysia said the decision came following the group's international business strategic review to focus and expand in the Middle East.
To facilitate the transition, KFH Malaysia said it is exploring the potential sale of certain portfolio segments to prospective buyers.
"KFH Malaysia extends its gratitude to the Malaysian government and various regulatory bodies whose support has been unwavering. We look forward to maintaining strong ties as we navigate through this transition," Ida added.
KFH Malaysia is wholly owned by Kuwait Finance House, the first and largest bank in Kuwait and the second-largest Islamic bank in the world. The bank's major shareholder is the state of Kuwait.
While the group has business operations in Bahrain, Türkiye, Jordan, Saudi Arabia as well as affiliates in the United Arab Emirates, Malaysia was the only Asian country it had presence in, making Kuala Lumpur the regional headquarters of Kuwait Finance House in the Asia-Pacific region.
KFH Malaysia was the first foreign Islamic bank that was granted a licence under the Islamic Banking Act 1983 in 2005. It commenced branch operations on Aug 8, 2005.
With KFH Malaysia's exit, the country is left with only one remaining stand-alone foreign Islamic bank, namely Al Rajhi Banking & Investment Corp (Malaysia) Bhd from Saudi Arabia.
Separately, KFH Malaysia reported that its profit before tax rose 22.7% year-on-year (y-o-y) to RM88.1 million for the financial year ended Dec 31, 2023 (FY2023), on the back of a higher revenue of RM371.6 million against RM364.9 million a year ago.
The group's total assets grew 7% y-o-y to RM7.6 billion, while its Tier 1 capital ratio improved to 47.45%, from 41.09% in FY2022.
"Our liquidity position remains exceptionally strong, with liquid assets of RM3.9 billion as of the end of 2023, reflecting our prudent financial management and strategic focus on maintaining a strong cash reserve," Ida said in a separate statement.
"This robust liquidity not only supports our operational requirements, but also positions us well to meet our commitments to customers and stakeholders efficiently," she added.
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