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, Turkey, 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 (Malaysia) 1983 in 2005. It commenced branch operations on August 8, 2005.

According to the latest financial filing on its website for the first nine months ended Sept 30, 2023 (9MFY2023), KFH Malaysia’s total assets stood at RM7.46 billion, having dwindled from RM10.79 billion in FY2016.

Its 9MFY2023 net profit dipped to RM42.33 million from RM45.04 million for the same period a year earlier, though operating revenue improved to RM270.88 million from RM261 million.

As at Sept 30 last year, KFH Malaysia's gross financing book stood at RM3.75 billion, with the bulk of it in residential, personal use and working capital financing.

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. 

https://www.theedgemarkets.com/node/721124