PETALING JAYA: After years of speculation, Kuwait Finance House (M) Bhd (KFH Malaysia) has officially announced its exit from the Malaysian market.
In a statement, the Islamic bank cited a strategic decision by parent company Kuwait Finance House K.S.C.P to concentrate on expanding in the Gulf Cooperation Council (GCC) and Middle Eastern regions as the reason behind its exit.
“Based on the group’s international business strategic review to focus and expand in regional markets (GCC and Middle East), the group has decided to voluntarily withdraw from the Malaysian market and wind down KFH Malaysia,” it said.
KFH Malaysia is the country’s first foreign Islamic lender and was granted a licence to operate in 2005 under the liberalisation of the Islamic banking industry.
But it has seen the going get tough due to fierce competition and was reportedly considering exiting the Malaysian market since at least 2015.
Analysts said despite its efforts to establish a foothold, KFH Malaysia struggled with a shrinking market share.
About a month ago, the bank saw the departure of chief executive officer (CEO) Mohd Hazran Abd Hadi, who had led the bank to profitability in 2021 after two years of losses.
Mohd Hazran, who had been with KFH Malaysia since 2010, stepped down to pursue “personal endeavours”.
Following this, Ida Aizun Husin, the senior vice-president of corporate banking was appointed as acting CEO. In the statement, Ida assured that KFH Malaysia remained profitable and solvent as it approaches this transition.
“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,” she added.
KFH Malaysia said as part of ensuring a smooth transition, it is “exploring the potential sale of certain portfolio segments to prospective buyers, all subject to regulatory approvals”.
It said the entire process would adhere strictly to Malaysia’s regulatory frameworks and syariah principles.
In a separate statement yesterday announcing its financial results for the financial year ended Dec 31, 2023 (FY23), Ida said the bank’s liquidity position remains strong with liquid assets standing at RM3.9bil as of end-2023, “reflecting its prudent financial management and strategic focus on maintaining a strong cash reserve”.
She added that the robust liquidity not only supported the bank’s operational requirements but also positioned it well to meet commitments to customers and stakeholders efficiently.
The bank posted a pre-tax profit of RM88.1mil for FY23, an improvement of about 22.7% from the year before. Revenue came in at RM371.6mil, an increase from RM364.9mil in FY22.
As of the end of 2023, the bank’s total assets stood at RM7.6bil, slightly up from RM7.1bil in 2022.
However, this is still down from the total assets of RM10.79bil in 2016.
KFH Malaysia is one of the two remaining standalone Middle Eastern banks in the country. The other is Al Rajhi Banking & Investment Corp (M) Bhd, which will be the only standalone foreign Islamic bank in the country after the exit of KFH Malaysia.
In 2018, Asian Finance Bank (AFB) was successfully acquired by Malaysia Building Society Bhd
(MBSB) in a deal valued at RM644.95mil, giving the latter an Islamic banking licence.
On the conventional banking side, the local market saw the exit of Australia and New Zealand Banking Group (ANZ) from AMMB Holdings Bhd earlier this year to focus on its core businesses in the Asia-Pacific region.
In 2021, Citigroup decided to withdraw from 13 markets, including Malaysia, to double down on its wealth management operations in key financial hubs like Singapore, Hong Kong, UAE, and London.
