Kuwait Finance House eyes Indonesia

Kuwait Finance House (Malaysia) would prefer to go in on a fresh licence, but the group is also looking at some potential acquisitions.

Read more: Kuwait Finance House eyes Indonesia http://www.btimes.com.my/articles/kfhj/Article/#ixzz1Z0tODln8

Kuala Lumpur: Kuwait Finance House (Malaysia) Bhd (KFH) is keen on expanding in Indonesia to tap Islamic banking opportunities in the world's most populous Muslim nation. "We're looking at Indonesia, but we don't want to rush into anything," chief executive officer Jamelah Jamaluddin told Business Times in an interview. She said KFH would prefer to go in on a fresh licence, but the group is also actively looking at some potential acquisitions. The group has been eyeing "some conventional and some Islamic banks". "We're currently in very preliminary talks .... some (targets) talk to our parent. Maybe next year, the end of next year, (you'll see something) because we really have to do due diligence. It's a long-drawn process as our syariah governance is quite different (from other jurisdictions) ... that's the dificult part," she said. Jamelah said potential changes in rules pertaining to foreign shareholding in Indonesian banks has not deterred KFH's interest. Indonesia is considering capping foreign shareholding in banks to less than 50 per cent. "Not necessarily, as there are various ways to explore a tie-up in Indonesia. The Indonesian market holds much potential, especially for Islamic financing and we are certainly considering exploring opportunities there," she said. As it stands, the group is already active in Indonesia, focusing mainly on investment and corporate banking. KFH has long wanted to use Malaysia as a hub to grow in the region. It is also keen on Australia. "If there's an opportunity for a new Islamic banking licence there, we'd be interested," Jamelah said, adding that KFH is also "taking a look" at Thailand and the Philippines. KFH, which ventured into Malaysia in 2005, is fast turning around after a turbulent two years, which saw it making losses amid concerns about its asset quality. It returned to the black in the final quarter of last year, turning in a profit of RM13 million after six consecutive quarters of losses. It reported a full year net loss of RM75.6 million, which was more than double its net loss in 2009. Jamelah is hopeful KFH will be in the black for the full year this year as it is still clearing up its books and declassifying loans. She is confident the bank will be completely in the black next year. To date, KFH has managed to recover or restructure close to RM200 million out of almost RM800 million of debt. Jamelah expects net financing to grow by between 8 per cent and 10 per cent this year after negative growth of 14.1 per cent last year. KFH, under its five-year transformation plan that ends in 2014, is putting bigger focus on retail and wholesale banking, which it sees as more sustainable businesses. It used to focus mainly on corporate and investment banking.