KUWAIT: Kuwait Finance House (KFH), the state’s largest Islamic lender, will recommend a 20 percent capital hike to shareholders, the company said in a bourse filing yesterday, which will help boost capital ratios and fund expansion.
The company’s board of directors decided on Monday to make the recommendation when it holds its annual general meeting, with proceeds to fund the bank’s expansion both at home and internationally, KFH said.
Any capital issue also requires approval from the country’s regulator. A potential capital increase will boost KFH’s paid-up capital to KD348.5m ($1.24bn) from KD290.4m, Al Watan newspaper reported yesterday.
The price at which new shares will be sold during the capital increase, which is part of the bank’s five-year strategic plan, will be determined at a later date, it added.
Shares in KFH were up 1.2 percent at KD0.82 at 0705 GMT, trimming year-to-date losses to 1.6 percent.
Kuwaiti banks have suffered since the global financial crisis because of exposures to the local real estate and stock markets whose values have dropped significantly, as well as to investment firms which borrowed heavily in the boom years to finance activity in the two areas.
In September, Fitch Ratings said it had downgraded KFH’s viability rating because of concerns over asset quality and loan concentration at the lender, while its Tier 1 capital lagged its Kuwaiti peers.
Reuters
