KFH Malaysia announces first quarter profit after continued losses in 2011 (By IFN)

MALAYSIA: Kuwait Finance House (Malaysia) has announced a loss after tax of RM596 million (US$190.04 million) for 2011, as it continued its provisioning exercise on legacy accounts, but limited media fallout by simultaneously reporting a return to profit for the first quarter of this year.

It reported a net loss of RM75.64 million (US$24.12 million) in 2010.

“This was a necessary approach for the bank to adopt in order to remain on track to write-off the last traces of legacy matters while maintaining prudent quality management,” said Dr Nabeel Al-Mannae, its chairman, of the bank’s provisions.

The bulk of KFH Malaysia’s loss for the year is a result of RM796 million (US$253.81 million) in impairment allowances on financing, advances and other receivables.

For the quarter ended the 31st March 2012, it reported a net profit of RM16.54 million (US$5.27 million) against a net loss of RM30.48 million (US$9.72 million) a year earlier.

Commenting on the results, local rating agency MARC said that its ‘AA+/MARC-1’ ratings on KFH Malaysia are not affected following the bank’s first quarter earnings announcement, further noting that while the bank’s balance strength has been impacted by the huge losses, its capitalization remains strong, with a risk-weighted capital ratio of 18.4%.

“KFH Malaysia’s long-standing non-performing financing facilities have been a drag on the bank’s performance in recent years. MARC believes that the bank’s improved operating performance in the first quarter of 2012 and the reduced potential for unexpected material impairments that could weaken profitability or capitalization levels, suggest reduced downside risks to the bank’s creditworthiness,” it said.

The rating agency also expects further recovery in the bank’s profitability in the subsequent quarters, factoring in the potential for additional impairment to decline from its peak in 2011.

See: http://redmoney.newsweaver.co.uk/bjnlskvs0boh38rwoni3wx?email=true&a=6&p=24301445&t=21288445