Abdulwahab Al-Roshood, acting group CEO of Kuwait Finance House, speaks to Global Finance about Covid-19 and the importance of SMEs.
Global Finance: What has Kuwait Finance House done to address the Covid crisis?
Abdulwahab Al-Roshood: Despite the negative consequences of coronavirus, Kuwait Finance House [KFH] succeeded in 2020 in strengthening its solid financial position and professionally handling the exceptional conditions, thanks to the conservative policy and the efficiency of its prudent approach to risk management. As of the third quarter—like other banks—KFH’s profits fell because of the additional precautionary provisions we took to maintain good levels of asset quality and build solid buffers against crises.
On the other hand, the Covid-19 outbreak prompted KFH to accelerate its strategy of digital transformation by providing high-quality mobile banking services without interruption and focusing on health and safety. KFH demonstrated its corporate social responsibility strategy of supporting the government in its efforts and measures to face the pandemic.
GF: How have Kuwait and its banks in general acted to address the crisis?
Al-Roshood: Covid prompted vast policy responses by the local regulators and from different sectors. The government has taken several emergency measures to contain and slow the spread of the pandemic, including closure of public gatherings, halt on travel, partial and full curfew, implementation of distant learning and closure of shopping centers, in addition to other steps. All these policies and more are the result of interactive governmental work.
On the banking industry level, the local banks allowed a moratorium period of six months on all financing installments, including waiver of profits and charges. Banks were largely able to accommodate the unprecedented situation thanks to the higher level of capital and liquidity they had accumulated compared to recent crisis episodes.
GF: What’s on KFH’s agenda in 2021?
Al-Roshood: KFH is trying to minimize manual work to near zero and moving forward in its digital strategy to keep abreast of the latest developments in the banking industry. In addition, KFH is relying more on robotics in all business operations, fully utilizing its digital tools to facilitate customer services.
KFH is also keen on fortifying its cybersecurity strategy and employing the best practices to keep ahead of any cyberattack threat. This became a priority amid the rapidly evolving digitization landscape.
GF: What are the current strengths and weaknesses of the Kuwaiti economy?
Al-Roshood: Kuwait’s economy is still facing public sector reliance on oil. This dilemma exacerbated pressure on fiscal buffers in Kuwait after oil prices slumped, leading to a decline in economic growth since 2014 and a budget deficit. Also, there is a lot of dependence on capital expenditure.
However, Kuwait enjoys many positive factors, including strong underlying fundamentals, sound financial and banking sectors, a high-income economy, vast wealth accumulated during times of high oil prices, low external obligations and a young, entrepreneurial and relatively small population. These strengths can offset low oil prices, assist the country in its diversification plans under the government’s Vision 2035 blueprint and transform its energy-resource-driven economy into a knowledge-based economy that can create sustainable growth.
GF: Where does KFH see opportunities for growth in the near future?
Al-Roshood: KFH sees opportunities in accelerating digital banking and financing platforms along with a faster internal systematic credit cycle and a shorter corporate onboarding experience. We see opportunities for growth in the health sector, supply chain (including food manufacturing and logistics), telecoms and information technology.
GF: Developing SMEs is a big part of Vision 2035. Where does the initiative stand today?
Al-Roshood: In line with Kuwait Vision 2035, which aims to transform the country into a global financial hub, Kuwait focuses on SMEs, which are critical to promoting long-term economic diversification. The latest figures reveal that this sector comprises 90% of registered companies in Kuwait.
KFH enjoys a large market share in financing SMEs, as these play a significant role in supporting youth and improving the performance of entrepreneurs. This contributes to diversifying income resources and creating new jobs while building national expertise in business. Our bank supports over a thousand SMEs, which contribute to boosting the economy for the next generations.