How has 2017 been thus far from a financial point of view?
It has been great for the banking system in Kuwait, and excellent for ABK as a bank. We see high single-digit growth overall and double-digit growth in those segments and products that matter to us. We have outperformed the market for the last few years on an operating basis and are generally satisfied.
Why did you decide to set up operations in the Dubai International Financial Center (DIFC)?
This is a good question, as we already have two onshore branches in the UAE. However, an offshore DIFC presence has other complementary benefits for ABK. DIFC has a strong, independent legal framework, and if a bank books an international syndicated loan, or if it finances a complex corporate finance structure, DIFC is the perfect place to house it. It also becomes much easier to buy, sell, and trade assets with other professional, DIFC-based lenders. In Kuwait, a bank only has Kuwaiti participants to sell to. In DIFC, most of the large international banks are present and can trade. Being in DIFC gives banks more international breadth, visibility, and legal comfort. It also allows us to become much more relevant in the regional corporate finance space and in structuring and distribution as well.
What is your long-term strategy?
Three years ago we developed a strategy that was based on transparency and simplicity to achieve faster top-line growth. We want to make life simpler for our clients, and we want to serve them better and faster than any other bank. It is easier to say than to effectively implement because we need to redesign all our processes and reinvent how we do business. This will have to be a continuous, never-ending process that must be embedded in the bank's DNA. In our case, we also needed to go beyond process re-engineering because our entire IT system needed to be upgraded and modernized to make it easier to use and more efficient. For instance, we always had a great and friendly mobile banking app for smartphones. However, that app did not speak to the system directly; it wasn't “straight-through,” and we needed to have our back office team re-entering practically every transaction offline. Our migration to the new system took less than two years and was extremely successful; it will give us a significant competitive advantage in terms of anything that has to do with electronic banking or straight-through processing. In terms of efficiency and cost savings, it will significantly simplify our lives internally—and also make future upgrades seamless since we have only allowed minimum customization. A second aspect of our long-term strategy has been to focus on long-term top line growth rather than short-term bottom line results. Our expansion to Egypt is a perfect example of this. Another example, this one organic, is the launch of our wealth management business, which complements our debt capital market and syndication business. We have also become active in leading and structuring project finance transactions within the developmental plan that Kuwait is undertaking. We are currently finalizing our new three-year strategic plan. It will naturally be a continuation of our current “simplicity” strategy, though we will add some great twists as well.
What challenges do you expect to face in the future?
The challenge will be to continue to grow faster than the market in operating terms, while at the same time protecting the bank. A bank can reduce risks by simply limiting its exposure to clients, though it will then not deliver growth. We need to come up with a different solution. Global Finance has ranked us among the top-10 safest banks in the Middle East and within the top-30 in Emerging Markets. We want to remain in that elite group, while delivering superior performance, and that will be our challenge.