KFH Malaysia to grow retail banking biz

by Habhajan Singh
Kuwait Finance House (Malaysia) Bhd, the Islamic banking outfit which had created a niche in the area of corporate and investment banking since it began operations more than four years ago, is now giving retail banking a serious look.
The bank announced the move to grow its retail banking business at a recent meeting attended by branch and sales teams from all over Malaysia.
"Retail banking will be a key engine of growth for KFH Malaysia moving forward. We will steadily increase our retail banking product and services range to include others that will be sure to excite the market," said KFH Malaysia deputy chief executive officer Ab Jabar Ab Rahman.
This would mark a departure from the huge concentration in the area of investment banking, an area that is still expected to be a forte for the Kuwaiti-based bank in the near future, as it grows beyond its seven branches presently.
KFH Malaysia’s business model was almost similar to Asian Finance Bank Bhd, another Kuala Lumpur-based Islamic finance outfit controlled by parties from the Middle East. It, too, had gone strong into investment banking, with retail banking playing second fiddle.
However, another foreign Islamic banking player, Al Rajhi Banking & Investment Corporation (Malaysia) Bhd, had a totally different strategy. The Saudi Arabia banking unit had straight gone big into retail banking, making a splash onto the local scene with its aggressive branch opening campaign a few years ago.
KFH Malaysia commenced operations on Aug 8, 2005 and is a wholly-owned subsidiary of Kuwait Finance House KSC (KFH). The parent is billed as one of the world’s largest Islamic banking institutions with a diverse range of products and services, including full-scale corporate and investment banking, commercial banking, retail and consumer banking and asset management.

On the latest move, Ab Jabar (picture) said that retail and consumer banking will be playing a key role in 2010 and beyond.
"There is a growing demand for a ‘back to basics’ approach to bank products and services - our current range of retail deposit and financing products has always been simple and straightforward and that is appreciated by many," he said.
At the moment, KFH Malaysia offers a range of Islamic banking products and services which include deposits and investment accounts, home and personal financing as well as priority banking services to address the needs of mass affluent and high net-worth individuals who seek steady rate of returns on their investments.
For the first nine months for 2009, KFH Malaysia posted a net profit of RM4.62 million on the back of RM364.92 million in operating revenue, at the group level.
In a note for the financial results, KFH Malaysia had noted that notwithstanding the ‘more difficult operating environment, the Group and the Bank will continue to focus on its business growth strategies through new and competitive product offerings, products cross selling as well as exploring new business opportunities within the region and the Middle East, while remaining vigilant on the impact of the global economic crisis to its businesses and profitability’.

(This story appeared in The Malaysian Reserve on 4 Feb 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)