Kuwait International Bank helps to spread Islamic banking across Kuwait

By focusing on more than just profits, Kuwait International Bank has done a great deal to spread CSR and the culture of Islamic banking in Kuwait

A view of Kuwait City. Kuwait International Bank has focused on spreading the concept and culture of Islamic banking across Kuwait and the surrounding region 

The Kuwait economy has overcome a series of economic and political obstacles in recent times, and a collapse in global oil prices marks the beginning of an important new chapter in the country’s growth story. However, while this new low-price environment presents something of a challenge, it has also shone a light on the need for fiscal reform.

The high oil prices of recent years have aided the government in continuing with its high spending level (see Fig. 1); spending that has become one of the core engines of the fast-emerging Kuwaiti economy. High oil prices also helped support non-oil sectors by creating a robust consumer sector boasting growth in employment and wage bills, particularly in the public sector.

KIB sees the drop in oil prices as an opportunity to expedite the implementation of fiscal reform, in order to mitigate pressures on government budget and diversify the sources of income

In addition, persistently high capital spending has supported the corporate sector, which has yielded a robust and well-organised banking sector capable of realising impressive gains and maintaining steady growth in line with the best international practices.

For Kuwait International Bank (KIB), the climate could hardly be more fitting, as the bank’s influence in the Islamic banking community spreads throughout the country and beyond. With roots stretching back to 1973, KIB’s stature in the fast evolving Kuwaiti banking sector is growing by the day, and the Islamic bank has afforded considerable benefits to the economy and society as policymakers look to it in maintaining a greater measure of sustainability.

Fig. 1

Starting out as a specialised bank in real estate under the name of Kuwait Real Estate Bank, KIB later helped with the constructional evolution of the country and has since expanded to other areas of the economy. As one of the first banks in Kuwait to realise the importance and untapped potential of Islamic banking, KIB converted into a fully-fledged bank operating under Islamic sharia provisions when, in 2007, it changed its name.

“We have a very long record of achievements”, said a source at the bank. “With our diversified experience, we have managed to adapt alongside the latest economic developments; a matter that has urged us to provide the latest products and services in compliance with the provisions of Islamic sharia. This commitment was significant in achieving a number of awards, most notable of which being named the Best Islamic Bank in Kuwait in 2014 and 2015, respectively. We always seek to improve our services and products, and have recently adopted a new transformation strategy to place us as one of the pioneering banks in the country and in the region.”

KIB key information

The Kuwait Real Estate Bank was established in


KIB began operating under sharia law in


Net financing income, EOY 2015


Total assets, EOY 2015


Working with Kuwait’s economy
Owing to high government spending and a dramatic fall in oil prices (see Fig. 2), fiscal reforms have become all the more important in controlling and optimising the spending and minimising the government’s subsidies to maintain a sustainable economy.

The Kuwait Government, therefore, has recently started work on serious fiscal reforms. The last two years have seen a string of serious efforts on the right track, including: the study of a corporate and value added tax (expected to increase revenues by 1.3 percent – 2.1 percent of GDP); subsidy reform (for example lifting subsidies on diesel and aviation fuel, reconsideration of treatment abroad, travel and other allowances of government employees, cash transfer to lower income households and the reconsideration of gasoline and electricity subsidies); the discussion in parliament of a promising wage bill reform initiative to enhance government control and standardise the public sector’s wage structure; side-by-side with initiatives to enhance public private sector partnership and SME support initiatives.

For Kuwait, while higher oil prices have resulted in a hike in government spending for the long term, historical evidence shows that in the short term (24 months or less) spending is not necessarily affected by oil prices. For example, in the fiscal year of 1998 to 1999, prices reached 85 percent of the fiscal break-even price, yet the government ran a deficit equivalent to 15 percent of GDP, all while expenditure remained unchanged.

In general, a short-term deficit can be easily funded, and the Kuwaiti Government has more than KWD 5bn ($16.5bn) on deposit with local banks and one of the largest financial reserves in the region, at nearly 300 percent of GDP ($550bn). The government also has a low debt ratio, at less than seven percent of GDP, and a stable credit rating, which offers scope for borrowing both locally and internationally.

Sources at the bank do not foresee that the current low oil price will have a negative impact on the state’s economy in the long run, as Kuwait’s sizeable reserves help overcome the crisis in the short run.

KIB sees the drop in oil prices as an opportunity to expedite the implementation of fiscal reform, in order to mitigate pressures on government budget and diversify the sources of income. Doing so will push forward the wheel of economic development and maintain a sustainable economy in the long run.

Looking at the country’s biggest challenges to date, one can’t help but consider the issue of diversification, the realisation of growth at sustainable levels and the optimisation of government spending. Answers to these challenges could emerge as a result of the oil price slide; that is the necessity of a prompt fiscal reform and the improvement of the development plan’s implementation.

Sheikh Mohammed Al Jarrah Al Sabah, Chairman of KIB

In other words, these challenges, together with falling oil prices, have created an accommodating environment for fiscal reform, leaving the Kuwaiti economy to improve in the medium and long term, particularly when considering the giant financial buffers capable of shielding the country from crisis in the short run.

Changes at the bank
According to KIB, the repercussions of falling oil prices have not thrown great pressure on the local economy up until now. Though the real estate sector and KSE indicators were down slightly in 2015, the corporate sector is still realising broad-based gains and the deposits and credit levels continue to exhibit healthy growth, all supported by stable and continuous government spending, a robust consumer sector, and the relentless efforts of the Central Bank of Kuwait in adopting macro prudential policies.

These parameters have helped KIB to achieve growth in profits and greater stability across the board. In 2015, KIB adopted a new and comprehensive transformation strategy, which it has been implementing. This strategy is aimed at improving the bank’s performance indicators, not to mention the quality of the products and services on offer to customers.


This shakeup represents a comprehensive outlook change and asks that the bank adopt the best international practices while taking into account local and international economic developments, not to mention a more holistic strategic outlook.

On course to become the fastest growing Islamic bank in Kuwait and the employer of choice for Kuwaiti youth, KIB has embarked on a promising transformation strategy to build on its leading position in the surrounding region.

Sheikh Mohammed Al Jarrah Al Sabah, the bank’s chairman, recently unveiled the most important features of KIB’s transformation strategy: to place the bank at the forefront of Kuwaiti banking and become the Islamic bank of choice, in light of its solid performance and healthy results in 2015.

The plan, according to Al Jarrah, represents “a promising strategy to improve performance excellence, asset quality, product innovation and service offerings… according to this integrated new strategy KIB aims to accomplish various promising objectives to deliver solid performance, growth in asset quality, new and innovative products and advanced services to become the fastest growing Islamic bank in Kuwait and the most attractive employer of choice for the Kuwaiti youth looking forward to a promising banking career.”

Al Jarrah added later that in order to deliver on this strategy and realise the objectives contained within, KIB must improve and focus on asset quality, maximise shareholders returns and enhance retail banking services. The bank will also draw on its status as an integrated competitive real estate powerhouse in Kuwait and vast experience in turning into a fully-fledged Islamic bank.

Speaking on KIB’s promising transformation strategy, Al Jarrah told World Finance: “With our course clearly set, we have defined a timetable for our transformation journey to be run in three phases, from reinforcing KIB’s foundation in 2015, driving the transformation in 2016, to achieving positive results and competitive edge in 2017.”

The chairman later emphasised that as part of KIB’s transformation strategy, several initiatives will be undertaken in order to propel KIB to the forefront of the Kuwaiti banking sector and cement its status as the bank of choice for customers and employees alike.

Closely in keeping with this ambition is the bank’s status as a responsible corporate citizen and a steward of the country’s economic and social wellbeing. And KIB’s commitment to corporate social responsibility is all the more important considering its position as a leading sharia compliant bank in the region.

All-inclusive practices
“Kuwait International Bank has always been a key player in the field of social responsibility. It adopted various initiatives and activities that play an important role in ensuring people’s welfare in the society and the country’s advancement, as part of its leading CSR programme that aspires to further its social and humanitarian contributions to many sectors”, according to the bank’s CSR report.

“KIB’s main mission and vision is not limited to releasing and developing banking products and services according to the principles of the Islamic sharia, but also to encompass its pioneering social responsibility strategy that aims at supporting every member of the society by embracing many initiatives and activities; be it religious, cultural, educational, sports, national, health and all the way to the humanitarian, charity, economic and social contributions.”

KIB’s main mission and vision is not limited to releasing and developing banking products and services according to the principles of Islamic sharia

KIB’s pioneering CSR initiatives are in keeping with its steadfast commitments in keeping to the highest international banking practices in all of Kuwait. Where the financial services sector has been criticised in years past for failing to recognise factors aside from profitability, KIB’s ambitious CSR programme is proof enough that its contributions to society are as important as financial performance when it comes to determining the bank’s success.

Intent on building on the bank’s sustainability credentials, KIB’s core values include a commitment to the highest level of ethical standards, professional integrity when interacting with customers, compliance with the provisions of the Islamic sharia and adherence to regulatory compliance.

The values practiced by the bank are important not just for boosting KIB’s reputation but also for the sector’s – and indeed the economy’s – ongoing development. As Kuwait looks to lead the transition from emerging market to financial powerhouse, an inclusive and responsible culture among some of its leading names is essential.

Looking at KIB’s CSR programme in more detail only goes to show that the bank has gone above and beyond the call of duty to set itself apart from the pack and pioneer a more sustainable approach to growth in its native Kuwait. As an Islamic bank, KIB recently organised a series of programmes and activities over Ramadan for its customers and staff.

Among the most impressive initiatives was one where the bank organised a number of educational and religious seminars for its staff. The bank’s Sharia Committee Chairman, Khalid Mazkour Al-Mazkour and Sharia Committee Member, Sheikh Mustafa Sayed Al-Zalzalah, were among the leading scholars in attendance at the event.

If there is one theme that unites KIB’s social contributions then it is surely the bank’s focus on the children and youth segments; built on the premise that these individuals will become the leaders of tomorrow. In keeping with this theme, the bank has visited schools, institutes, universities and civil society institutions to cultivate the nation’s financial literacy and teach the youth of Kuwait about the importance of saving for their futures.

Encouraging youth involvement
KIB has also participated in events targeted at the youth segment to communicate more clearly what opportunities await them in financial services. The Economy Makers and Job Opportunities 20th Exhibition, hosted by the College of Business Administration at Kuwait University, was one such event where students were made to feel more familiar with Islamic banking and the job openings that might match their majors. Exhibitions like this mean the bank and students enjoy a much stronger relationship when it comes to finding a job.

Again focusing on people as opposed to profits, KIB has put together a series of training courses for its employees, founded on the idea that they form a key pillar of the bank’s accomplishments to date. For example, strategic project management, together with a dedicated training unit, keeps employees up to date with the latest developments in the field and cultivates their talents.

This, in addition to a training course for 22 employees in the legitimate fundamentals of Islamic banking, ensures KIB is home to some of the brightest experts in the field.

An oil worker at the northern Al-Raudhatain oil field near Kuwait City. Kuwait is known for its strong oil production
An oil worker at the northern Al-Raudhatain oil field near Kuwait City, known for its strong oil production

Last year the bank completed a 12-stage training course, to be incorporated in the comprehensive series of Islamic banking training programmes; six of them under the name of ‘the legitimate fundamentals of working in the Islamic banking field and its services’, four of them under ‘the innovative products in the Islamic banks’ programme and two courses in the ‘Islamic investment funds’ programme. The number of participants has already surpassed 250.

As part of KIB’s continuing attempt to achieve a greater sense of development in the region, namely by taking a stand against poverty and creating a harmonious atmosphere between society’s segments, members of the bank participated in the strategic planning for non-profit organisations and the Arab Organisation of Supreme Audit Institutions. Here, members attended a workshop designed to reinforce a system that should ultimately contribute towards the creation of a strong and lasting government.

In recognition of its work, KIB was honoured recently by civil societies as a leading banking institution that incorporates the society in its mission by supporting the majority of the social activities. For this reason the Arab Organisation for Social Responsibility awarded KIB with the CSR Excellence Award for Social Responsibility in appreciation of its role in the field and the diversified initiatives launched throughout the year.

On top of that, the bank has been awarded the My Ambition for Social Responsibility Award by the organising committee of the My Ambition Defeats My Disability Exhibition for its active role in providing financial and moral support for initiatives targeting those with disabilities.

The Banker Middle East Magazine also awarded KIB with the Social Responsibility Award, in light of its pioneering role in the field and its integrated programmes, which have together cemented its status as a role model of social responsibility locally and globally.

Converting to an Islamic bank
While KIB is recognised on the one hand for its contributions to society, its importance in the spread of Islamic banking in the region is another point that sets it apart from its rivals. The conversion of KIB into an Islamic bank has greatly helped to enrich the Islamic banking business in general, as KIB was one the first conventional specialised bank to convert into a fully-fledged bank in Kuwait and then the region at large.

This decision spurred other financial institutions – willing to operate according to Islamic principles – to take such a step, with KIB standing as a shining example of a successful conversion.

Since its establishment, KIB has developed and innovated a number of Islamic compliant products. It has helped spread the concept and culture of Islamic banking in Kuwait and the region. The bank’s strategic outlook for the future – according to its sources – is supported by a willingness to develop outputs and extend innovative banking products and services to satisfy the ever-changing requirements of customers.

All these have urged the bank to approve a new transformation strategy for 2015 to 2020, which, if successful, will enhance the quality of KIB assets and services by applying innovative methodologies, and go some way to becoming the fastest growing bank in Kuwait. More than that, however, the strategy will make KIB the most attractive employer for skilful and qualified workers in the region and contribute to Kuwait’s development as a banking hub.