Kuwait Finance House (KFH) has sold its entire 18.18% stake in Sharjah Islamic Bank for $351 million (AED 1.29 billion).
KFH said in a bourse filing that it sold 588 million shares at a price of AED 2.20 apiece. The Kuwaiti lender sold the shares to the Endowment of Sheikh Sultan bin Mohammed bin Saqer Al Qasimi, the Sharjah Social Security Fund and Sharjah Islamic Bank.
KFH said its Q3 2024 financial statements would reflect the financial impact of the deal, which is expected to have an immaterial effect on the group’s income statement.
Sharjah Islamic Bank reported a 25.8% increase in net profit for the first half of 2024, reaching AED622.4 million from AED494.6 million for the same period in 2023. The banking group’s total assets rose by 12.7% to AED 74.2 billion in the January-June period from AED 65.9 billion at the end of 2023.
Fitch Ratings said the recent increase in Kuwaiti bank mergers and acquisitions (M&A) is credit-positive for the sector as the market is overbanked.
Banks in the Gulf state have been increasingly turning to M&A as a strategic response to the limited organic growth opportunities so as to diversify their business models and strengthen their financial profiles.
Kuwait’s Burgan Bank received the approval of the Central Bank of Bahrain to acquire the United Gulf Bank (UGB). The Central Bank of Kuwait approved Burgan’s potential acquisition of the Bahraini lender in June.
Boubyan Bank and Gulf Bank, the country’s third and fifth largest, announced that they were considering a merger in July. The potential merger is set to create an Islamic bank with assets of about $53 billion (KWD16 billion) and about a 15% market share.
