Corporate Sustainability Report - kfhonline.com.my · Corporate Sustainability Report Kuwait Finance House (KFH) Group of Companies 2010. In an ever-changing world, we at KFH wish

CorporateSustainabilityReport Kuwait Finance House (KFH) Group of Companies

2010

CorporateSustainabilityReport Kuwait Finance House (KFH) Group of Companies

2010

In an ever-changing world, we at KFH wish to continue to strengthen our commitment in displaying a leading role working under Shariah principles on the global stage. Striking the balance between the sound traditions of Shariah with the elastic conditions of modern markets, makes us unique, and indeed resilient, to the turbulence seen in the financial industry.

The overall strategy is clear and our corporate values are the same as when we first started: uphold Islamic Shariah principles, support ongoing initiatives in the global Islamic financing industry and participate in assisting the socio-economic endeavors of local communities. I am proud that we are the first Islamic Bank to release a Corporate Sustainability Report that is based on international standards, and wish to continue to see KFH break the boundaries for Islamic Banks on the global stage, going above and beyond stakeholder expectations.

Sustainability is not a new concept in the Islamic World. Throughout the corridors of our KFH offices, you will hear the phrase “E’mar Al Ardh” (“meaning developing the Land”)

repeatedly. This is taken from the Holy Quran (2:30), when it is told to Adam for the reason of building the land ((Behold, thy Lord said to the angel: I will create a vicegerent on Earth)). We use the term “E’mar Al Ardh” to relate to the establishment of all our projects which contribute to humanity. Examples of these include our work in Durrat Al Bahrain, Al Zour Chalets for people with disabilities; Muthanna Complex, our Addiction Treatment Hospital, and in our support of the Ministry of Health and Ministry of Education, to name a few.

We have more than an economic role to fulfill in society and we fully realize that how we do business has a direct effect on the world around us. We also believe that by promoting the sustainability of our society we are ensuring sustainability of KFH itself. It is this belief that leads us to take into account a range of social, ethical and environmental considerations. We look towards a better and brighter future in Kuwait and beyond, where we wish to play a fundamental role in achieving just that. Today we are championing the sustainable higher values of Shariah

principles, which are integrated at the core of the KFH business model.

With offices spanning three continents, we seek to put in motion economic, social and environmental change to people’s lives. Through this report, we will provide the reader with examples of actions we have taken in 2010 from our head office in Kuwait, in addition to our subsidiaries in Bahrain, Malaysia and Turkey. We also will report on the achievements of our local subsidiaries, Al Salam International Hospital, International Turnkey Systems and Aviation Lease and Finance Company (ALAFCO).

Sincerely,

Mohammed Sulaiman Al-Omar

CEOMessage

4 I KFH Corporate Sustainability Report KFH Corporate Sustainability Report I 5

for the State of KuwaitFor 50 years, an Independent State of Kuwait has boomed from its humble beginnings, demonstrating national resilience and strength. Considerable effort has been made to fulfill various stipulations of the Millennium Development Goals over the last decade, where the State of Kuwait has made significant strides in achieving goals such as universal primary education, promoting gender equality and a global partnership for development. Today, the State of Kuwait is heralded for its high standard of living, healthcare, and education and job opportunities. Kuwait currently has a relatively low unemployment rate of 1.6%, coupled with a high literacy rate at 94%. All births since 1993 have been attended by skilled medical professionals. The continued sustainability of our nation’s progression is a priority for us, as a prosperous Kuwait is a prosperous KFH.

In line with Kuwait’s Vision 2035 reform agenda, KFH strives to go beyond economic initiatives, strengthening skills of the Kuwaiti people and improving quality of life. As outlined in the 2035 Vision, we wish to have a deeply humane and tolerant society on the path to making Kuwait a centre of modern thought and dialogue. We also wish to look forward in our implementation of Vision 2035, and its comprehensive range of reforms. This includes:

1. Reviving Entrepreneurship in Kuwait’s Economy, where KFH can help in reducing the red tape and making Kuwait a country where

opening, operating and terminating a business is simple. We also can improve access to land developing a transparent and fair land market. We can join in creating fair and equal opportunities in markets.

2. Leveraging Kuwait’s natural resources and privileged geographic position by continuously growing financial and business services in Kuwait, on the road to becoming a specialized financial hub.

3. Developing human capital and creating sustainable professional opportunities in being part of the reform of the labor market making the private sector employment welcoming to Kuwaitis. We wish to change the dynamics of the labor market, by motivating young Kuwaitis in the professional world. Through our subsidiaries like Al Salaam

International Hospital and beyond, we can play a part in achieving a world class healthcare system keeping our population healthy and stimulating behavioral change. We also consider ourselves stewards in Kuwait’s environment is protected for all the people living in Kuwait and thus foster green development in the region.

Kuwait Finance House is taking a key step in exploring its alignment with sustainability principles, and it is our ambitious task that the sustainability of our country is part of our daily agenda of each day we work. Back in 1977, we were the pioneer bank operating in accordance with Islamic Shariah. Today, we are proud to be the First Islamic Bank to embark upon globally-recognized corporate sustainability reporting.

A Sustainable Vision The Spirit of

Sustainability

What sets us apart: Islamic

Banking

"Murabaha"

trade with markup or

cost plus sale

"Musharakah" profit and loss

sharing

Other Shariah contracts

"Salaam/Parallel Salaam"deferred sales

contracts"Istisna'a/

Parallel Istisna'a"

project finance

"Sukuk"

islamic bonds

"Mudharaba" profit sharing

agreement

"Ijara"

renting for beneficial use

Kuwait Finance House is a Bank which operates under Shariah principles. Islamic banking refers to a system of banking consistent with religious law or “Shariah”, which is guided by Islamic Principles on Economics. We believe that the over-arching principles of Islam ring closely to ethical, social and environmental values found in sustainability, making Islamic Banking intrinsically aligned to Corporate Sustainability Principles. We have accomplished a critical review of our functions and initiatives in accordance with with Global Reporting Initiative guidelines to ensure our current initiatives are in line with globally accepted principles, and have identified

improvement opportunities so that long-term sustainability of the land is promoted within the KFH Group.

Islamic Finance and Economy is based on specific features.

• It is transparent: Islamic Shariah allows all economic activities in the framework of protecting public interest and safeguarding it.

• It is realistic: Islamic Finance fulfills all the needs of real life. This is why we find that Islamic Shariah does not prohibit transactions except those involving injustice.

• It is ethics based: Man may make profit from doing business. However, when this runs against

Islamic ethics and morality, it is outlawed.

The cornerstone of Islamic banking and finance is fairness and mutually beneficial relationships. We at KFH provide services that exemplify those values. Islamic banking by default has the ability to position itself with ethical values based on the framework of Shariah. A number of services have been modernized and standardized to meet the various needs of customers, while maintaining the ethical boundaries embodied in the tenets of the Islamic faith.


So exactly how are weDoing What’s Right

different?

Many factors of Shariah compliant finance contribute to our success. It is safe to say that Islamic finance is in a relatively safer position compared with conventional finance, by virtue of being asset-backed. Therefore, the concept of sustainability is not new to Sharia compliant banking as scholars have long promoted the importance of environmental conservation. Islamic banks can already tap into key sustainability values through their ethical orientation, where Islamic banks are not only responsible to their immediate shareholders, but owe a fiduciary duty to society as a whole.

Based on the principle that funds do not generate funds, unless they are coupled with an activity or work.

Murabaha is used, whereby a Murabaha-based credit is opened with the bank. The bank owns the commodity and then sells it to the customer by way of Murabaha.

Actively encourage entrepreneurs by funding small enterprises by way of partnerships that end with ownership. Islamic bank loans are extended to other banks without taking or giving interest.

Qur’anic rule: “If the debtor is in difficulty, grant him time till it is easy for him to repay.” However if he is procrastinating, the bank applies Shariah rules to guarantee its right, but without resorting to interest.

Funds must be invested in lawful areas that achieve social and economic development. Areas outlawed by Shariah must be avoided. The capital is invested on a partnership basis between the bank or entrepreneur and the capital provider.

Financing

Credit

Financing

Property

Investment of funds

requires us to look at five sustainability pillars to give us a focused view of our 2010 achievements and will allow us to measure future progress in meeting KFH’s goals and aspirations.

Our DeedsOutside the scope of business, community development has long been a priority in KFH’s activities, where we want to make a positive contribution to our society. These activities humble KFH, and touches upon our inherent principles.

Our PeopleWe foster a safe, inclusive and stimulating working environment for our employees and remain committed to ensuring that our system of labor relations accompanies the bank’s organizational developments and contributes to building a mutual identity and culture.

Our CustomersWe continue to strive the bank’s role in innovation and service excellence by focusing on the quality of our products and services to our clients, enabling maintained and long term relationships with customers based on profit sharing, mutual trust and understanding. By providing Shariah products to our clients, we believe that we are also adding sustainability value to our business.

Our PrinciplesKuwait Finance House (KFH) is a pioneer of the banking phenomenon known as Islamic Finance or Shariah compliant banking. We were the first Islamic bank established in the State of Kuwait and today we are one of the foremost Islamic Financial Institutions in the world. In this report we discuss how our principles help us to become a more sustainable bank.

Our EnvironmentWe believe that mankind is the steward of his environment. We aim to conduct our business so that negative impact to the nature surrounding us is minimized as much as possible by looking for ways to stimulate sustainable innovation and promote the use of our natural resources efficiently.

Indicates reporting on our KFH subsidiary performance

Indicates Sector/Industry focus sections, with deeper analysis of our subsidiary’s performance

Indicates an employee interview

Using this report:

Our sustainability pillars are denoted by their subscribed markers, which are used throughout the pages of this Corporate Sustainability Report, showing exactly where they are applicable in our activities. To assist in navigating through the report, you will also find the following symbols:


Talking Business 19

Communication Channels 26

The Workplace 31

Community 39

Global Stewardship 46

Contents


2004

2005

2007

2008

2009

KFH becomes the major stakeholder of Al Salam Hospital

Establishment of KFH Malaysia

Establishment of KFH Research, the world’s first Islamic investment research arm

Expansion of KFH to Australia through KFH Malaysia Office

2002

Kuwait Finance House is established in the State of Kuwait, being the first bank operating in accordance with the Islamic Shariah Principles

New head office construction begins to accommodate ambitious growth plans

Participate in establishment of new banks and companies in GCC countries, particularly Dubai Islamic Bank and Bahrain Islamic Bank

Project to provide more residences in State of Kuwait begins

KFH new headquarters complete and ready for business

A total number of 10 ATMs begin operation in State of Kuwait

1977

1987

1997

2000

1989

1992

1994

1995

1980

1981

1982

1986

KFH Turkey (Kuveyt Türk) is founded

KFH car showroom opens

KFH Turkey becomes among the first private financial institutions to introduce telephone banking

KFH Turkey completed its first mass housing project, Huzur Sitesi, and delivered the units to the homeowners

In recognition of its contributions to exports, the Istanbul Textile & Apparel Exporters Association awarded KFH Turkey a gold medal

KFH Group Celebrate 20th Anniversary and Offices open in USA and Germany to import used cars

KFH Turkey becomes the first interest-free financial institution to obtain the ISO 9001-2001 Quality Certification in Europe

KFH through

the years

Establishment of KFH Bahrain

KFH Pioneers a deal combining Islamic banks and conventional banks in financing of Airbus for Emirates Airlines

KFH Turkey establishes a financial services branch in Mannheim, Germany a subsidiary in Dubai and a Kazakhistan Legation.

• Award for Best Islamic Bank in Kuwait by Asiamoney

• KFH Turkey wins Most Innovative Product from Islamic Finance News

• KFH Bahrain wins Best Investment Product for Menatelecom

• Award for Best Islamic Real Estate Finance Provider by Global Finance

• Award for Best Islamic Finance bank in the GCC by Global Finance

• Award for Best Islamic Finance Bank in Kuwait by Global Finance

• KFH Kuwait wins Citbank award for leadership and excellence in electronic payments

• First of its kind, the Gold Investment Fund is launched which provides a Sukuk transaction of US$100 million

• KFH Kuwait develops Al-Ousra card, displaying first of its kind creativity and flexibility targeted towards families

• Kuwait Finance House (Malaysia) Berhad (KFHMB) appointed as the Mandated Lead Arranger for the proposed issuance of a two-year Ijarah Sukuk of USD100 million by the Nomura Group

• Award for Best Islamic covered card from Banker Middle East

• Award for Best Consumer Internet Bank in Kuwait by Global Finance

• KFH selected among Safest Banks in the Middle East, awarded by Global Finance

• Best Islamic Bank Website in the Middle East

• Best Investment Bank 2010 from Banker Middle East

• Best Islamic Bank in the Middle East from EMEA Finance

• Award for Outstanding Contribution to Islamic Finance by Failaka-Amanie Symposium

• Award for Best Islamic Research Company by Islamic Finance News Awards Poll

• Award for Contribution to Islamic Finance Research by International Islamic Finance Forum

Awards & Milestones 2010


KFH Board

Industry Sectors

Banking Business Units

KFH Board Committees

Fatawa and Shariah Board

KFH Kuwait

KFH Bahrain

KFH Turkey

KFH Malaysia

Financial Sector

Healthcare

IT

Aviation

Real Estate

Human ResourcesTraining

Al Nakheel United Real Estate Company Baitak Real Estate

Investment Company

Liquidity Management House

Muthanna Investment Company

Saudi Kuwait Finance House

International TurnkeySystems

Al Enma’a Real Estate Company

ALAFCO Aviation Lease and Finance Company

AREF Investment Group

Al Salam International Hospital

Al Raya Global Real Estate Company

First Takaful Insurance Company

Sharjah Islamic Bank

Energy Development Enterprises co.

Islamic Research KFH Research

Sokouk Real Estate Development Company

Human InvestmentCompany

Our Global

Presence

Total Branches: 230Total ATMs: 397

KFH TurkeyBranches 161ATMs 170

KFH BahrainBranches 8ATMs 19

KFH KuwaitBranches 52ATMs 186 KFH Malaysia

Branches 9ATMs 22


KFH Bahrain

KFH Malaysia

Al SalamITS

KFH Turkey

KFH Kuwait

Australia

Bahrain

Bangladesh

Canada

Cayman Islands

China

Europe,GCC

Germany

Kuwait

Malaysia

Qatar

Saudi Arabia

Turkey

UAEUK

USA

Aviation

Banking

Commodities/Trade Finance

Commercial

Diversified

Energy/Oil/GasEquity Portfolios

Health Care/ TransportInsurance

Industry

Investment

IT

Leasing

Private Equity

Real Estate

ResidentialServices

Training

Operating Costs

Employee wages and benefits

Payments to Governments Community Investments

51%

42%

5% 2%

Our Global Investments

KFH prioritizes predominantly local investment, with a total of 36% of our investments focused in Kuwait. We also primarily concentrate our investments in the Gulf States, with 18.9% of our total investment in Saudi Arabia and 10.6% in the Kingdom of Bahrain. In support of the potential of emerging markets, we have invested in countries such as Turkey (8.7%) and China (2.1%). In distributing our investment as far as Canada and Europe, we find strength in diversity, giving us a sustainable model for our assets.

Industry breakdown

KFH is not just a bank. Though we are known as a financial institution, with 28% dedicated to the sector, we broaden our scope of industry wisely. Real Estate and residential investment total 20% of our share of industries we invest in, where we focus a lot of our projects in the Middle East. Our interest in aviation has led us to numerous accolades, in addition to our interest in energy, private equity and health care.

Gross income by area Value Contribution

Getting to know KFH

and our subsidiaries2010 ($ '000)

Economic Value Generated 2,624,016 Since the opening of our doors for business, we remain committed to Sharia principles and values, continuously supporting the ongoing initiatives of the global financing industry. In the banking sector our activities include:

• Retail banking• Private banking • Commercial banking• Real estate• Credit and investment services

Revenue 2,624,016

Economic Value Distributed 774,849

Operating Costs 325,396

Employee wages & benefits 406,739

Payments to Governments 15,560

Community Investments 26,660

Economic Value Retained 1,849,167

KFH Bahrain

Economic Value Generated 200,756 Since its opening in 2002, KFH Bahrain is 93% owned by KFH Kuwait. Its main activities are:

• Banking services in compliance with Islamic Shariah• Management of investment accounts on profit sharing basis• Islamic finance contracts including retail services• Services and Communication Sectors• Real estate investment

Revenue 200,756



Community Investments 575

Economic Value Retained 23,868

KFH Malaysia

Economic Value Generated 145,360

100% owned since its opening in 2006. Its Main activities are:

• Islamic finance products• Investment in real estate• Corporate finance

Revenue 145,360







KFH Turkey


Opened in 1989, and known as Kuveyt-Turk, we currently have 62% ownership. Its main activities include:

• Islamic banking and financial services• Investment of funds on a profit/loss sharing basis• Real estate development

Revenue 360,733








Economic Value Generated 97,199 Owned by KFH, the vision of Al Salam is to expand its leadership in the healthcare sector in the region, as a benchmark in healthcare industry. Al Salam has received the Accreditation Canada Certificate, meeting demands of Kuwait's Vision 2035 of achieving a world class healthcare system. Al Salam provides specialized medical care in:

• Surgical, critical care, dental• Diabetes, hypertension and obesity • Obstetric Gynecology• Maternal-child and pediatric healthcare

Revenue 97,199







International Turnkey Systems


97% owned by KFH, ITS is a specialized technical consultancy. Its main activities are:

• Marketing and Development of hardware and software

Revenue 86,865







Our dedication to Doing What’s Right is the start of a continuous journey for Kuwait Finance House and our subsidiaries. Our mission is “To be the Leading Islamic Financial Institution in the World by Providing Competitive and Shariah Compliant Banking, Financing and Investment Products to Exceed the Expectations of Our Customers, to Motivate Our Employees and to Meet the Objectives of Our Shareholders” Our Corporate Values state that we:

1) Uphold Islamic principles and values among all activities of the organization

2) Support ongoing initiatives of the global Islamic financing industry

3) Participate in and assisting the socio-economic endeavors of local communities as a responsible corporate citizen

In the writing of this sustainability report, we engaged with our stakeholders to identify the most material topics we can report on today. In doing so, we have also set ambitious goals for the future. We are excited to embark on this path towards economic, social and environmental change, using our Shariah principles to guide us there.

Our Shariah Principles are what we stand for. They express what we value, what we believe in and what we aim for. Living through our Shariah Principles helps us to make decisions that stand the test of time.

Shariah inspired products & services

Al Kheir Charity Card is a unique card to control expenses and help the poor. Every spend using the Al Kheir card adds a little to help a noble cause, as each time you make a purchase, KFH donates 0.5% towards those in need to go to Haj and Ummra. This helps those fulfil their religious duty of visiting the Holy City of Mecca at least once in their lifetime. With no pre-conditions, this card is available to anyone over 21 years of age. The card is fully flexible, where there is no need for credit history nor are there any salary restrictions.

Charity donations have never been easier. With the click of a button, our clients can give back to society by giving those in need online on kfh.com. From the banking services menu, customers can select a standing order of the amount desired to a list of government approved charity accounts provided.

Our Shariah Commitment

ALAFCO Aviation Lease and Finance Company (K.S.C.C) is an emergent provider of innovative Sharia-based commercial aircraft leasing products, which means that all our financings are Islamic, involve ethical investing and are equity related, that is, solely using the genuine asset or the cash-flow it generates. ALAFCO has pursued a strategy of organic growth to

Ahmad A. Alzabin Chairman, Alafco

KFH Malaysia (KFHMB) introduced an innovative new product for 2011 for Personal Financing-i Hajj and Umrah, which was designed for Muslim customers to facilitate their pilgrimage. It makes it more convenient for Muslims to realize their dream of visiting the House of Allah, and fulfilling the fifth pillar of Islam. The KFH Personal Financing-i Hajj and Umrah package offers attractive rates and financing options to cater to different needs. A high maximum financing limit of USD$ 33,000 will enable customers and their immediate family members to perform the pilgrimage with options to include Takaful premium and personal expenditure in the financing amount.

End-to-end Shariah-based Takaful products and services are provided at competitive rates by our reputable Takaful partners. KFHMB also collaborates with reputable partners to enable customers and their immediate family members to perform their pilgrimages at reasonable prices. KFHMB has a full range of Shariah-based products and services provided to the business sector as well as retail customers. These include KFH Gold Account-i, KFH Automobile Ijarah-i and KFH Home Financing-i, among others. This is in line with their parent company’s aspiration to be innovative in providing quality and tailor-made Shariah-based products and services.

Talking Business

become a leading leasing company globally. Shariah and Islamic Finance principles set the definitive rules of conduct in the Company’s dealings, and as such, ALAFCO is committed to high standards of corporate governance, business integrity and professionalism in all its activities. ALAFCO has risen rapidly into the niche of a reputable lessor of commercial aircraft whose focus on value has earned the trust of 18 airlines to date in Asia, Africa the Middle East and Europe.


Investing differently Supporting our national economies

We are confident that investing our assets in line with Shariah principles will keep financial woes at bay, as the recent credit crisis brought increased socially responsible investing. Our compliance with Shariah principles is a key and integral feature of our activities and is intended to provide “peace-of-mind” investment for the investors in order to promote wholesome Islamic intent.

Negative screening is the practice where an investor seeks to avoid investing in companies that are involved in sectors or practices deemed unethical and irresponsible. In negatively screening against practices, say for example gambling, we are able to directly ensure that the sustainability of our society and family wellbeing are upheld.

The Shariah Way: Our Policy on Investments. Any investment activities in KFH is guided by the “Fatwa” (ruling) and advice is issued by the Shariah Board when evaluating investment decisions. The Shariah Board is an independent body overseeing all Shariah matters and provides views and ruling in relation to the fund’s investment activities based on the rules and principles of Shariah. This division also periodically inspects the investment activities of KFH to ensure that the actual implementation of the investments is in compliance with Shariah rules and principles.

As a rule of thumb, the following activities are classified as non Shariah compliant and thus we are not involved in companies that are linked to the following:

• Financial services based on “riba” (interest)

• Conventional insurance

• Stock broking or share trading in Shariah non-approved securities

• Gambling

• Manufacture or sale of non-halal products

• Entertainment activities non-permissible by Shariah

• Other products or services deemed non-permissible and/or ambiguous

All equity investments, with this in mind, must thus adhere to the following criterion:

1. If the intention is to control and to convert the invested company, the companies must clean up all interest bearing debt or borrowing within a three year grace period.

2. Companies we are invested in, must not deal in interest, neither earned interest, nor expense interest.

3. Common stock and Islamic finance tools must be the only source of fund or finance to the invested companies.

It is important to us that countries of our operations benefit and prosper from our activities. We maintain a healthy and mutually-beneficial relationship between us and the countries we work in. This starts at home, in Kuwait, and beyond.

Supporting Kuwait In 2010, the Kuwaiti economy witnessed a number of developments: the most distinctive being an economic recovery, regaining its growth pace in 2010-2011 after witnessing a decline in 2009. KFH supported the Kuwaiti national economy by financing over USD $ 1.8 billion in a variety of markets.

Diyar Al-Muharraq KFH Bahrain are underway in creating affordable housing

in the Kingdom of Bahrain. The project is planned to provide 5,000 units of

housing for residents in Bahrain and is expected to be completed in 4 years.

This facilitates the Bahraini Government’s Economic Vision 2030 which

targets providing 50,000 social/affordable housing units over the next five

years. The Prime location of Diyar boasts a 10 minute ride from the airport

and 20 minutes from the capital. The project, targeted at Bahraini citizens

with a combined household income of BD900, also includes those eligible for

housing aid by Bahrain’s Ministry of Housing, and even provides an increased

housing space of 237 m2 compared to the national average of 170m2.

The vision of the project is to:

• Create a fully integrated mixed-use community for the future of Bahrain,

where residents live, work and entertain in a sustainable environment.

• To become a leading investment zone on an individual and a corporate

level.

• Provide the opportunity for Bahraini citizens to own and live in affordable

housing units that meet their demand.

• Become a symbol of progress and pride for the residents and people of

Bahrain.

Supporting local fisherman. Diyar Al Muharraq, being a community for all the

people of Bahrain has fully funded the construction of the Ras Raya Harbor in

Samaheej, a million dollar project which was carried out for the benefit of the

local fishermen. The Ras Raya Harbor is now a modern and fully-equipped

fishing harbor the serves the local fishermen of Muharraq, Galali and Al Deir

areas covering an area of 100,000 square meters and houses nearly 200

fishing boats and 60 dhows. Empowering the local community and mixing

tradition with the contemporary, the harbor functions under the Bahrain

Fisherman Society.

Abdulhakeem Yaqoob Al-Khayyat

Managing Director/CEOKFH Bahrain


Pavilion Project financed by KFH has resulted in a six-star lifestyle mixed-used real estate development. Located centrally in the Golden Triangle of Kuala Lampur, the Pavilion is the largest retail mall in the country, attracting tourists and the local community. It houses the Pavilion Crystal Fountain, a new national landmark, which is the Tallest Liuli Crystal Fountain in Malaysia endorsed by The Malaysia Book of Records.

In the Kingdom of Saudi Arabia, KFH is responsible for two big real estate projects through Baitek Real Estate Company and Saudi Kuwait Finance House. Projects located in Dammam and Jeddah provide middle and upper income housing solution. With a land bank in excess of 2,200 km2 thus ensuring the optimum use of green spaces for local community.


Diverse views from

KFH

ZakariaAl AnsariPosition: Dealer | Department: Treasury Department, KFH Kuwait

An Interview with

What made you choose to work at KFH?

I got five job offers after graduating and I selected KFH because I felt that I got the perfect role fit in treasury which is my preferred career ambition. The Graduate ‘Forsa’ training program is very systematic and world class and gave me the right capability to perform and sustain my role in the banking domain. Moreover, the exposure to other countries and leading banks as part of the international placement scheme in place at KFH are a boon to my career and the diverse ideas thrown around in KFH contribute to its sustainability and longevity.

Do you feel you can take your career as far as you want in KFH?

I am really excited on the opportunities given to me and I am looking forward to a great career here with KFH. I view the KFH human capital development process gives me and my peers multiple opportunities to innovate and contribute to the growth of the bank. The transparent and open culture gives us free access to the top management giving the right amount of exposure and builds me confidence during early years of my career.

What do you think is the key factor in KFH’s sustainability?

The key factor contributing to KFH sustainability is the close family like environment and the business model based on Islamic Principles. Globally, Islamic financial products are of high demand and has withstood the economic volatility, which I see in my highly intensive treasury experience.

What sustainability initiatives would you like to see in KFH in the future?

I expect KFH to contribute to the Kuwait Development Plan through the right kind of investments for developing real estate, public utility and health care. I hope KFH will contribute to the sustainability and prosperity of Kuwait as a nation as well. In the coming years, KFH is facing increased competition and should get ahead in through innovative products, improved efficiency and developing human capital.


We continuously strive to meet their needs outside the scope of banking, finding innovative and sound sustainable methods in their implementation.

Customer Satisfaction. Our Trust and Satisfaction variables are routinely checked every two months using the methodology presented by an internationally recognized

Putting our customers first

ComunicationChannels

research company. KFH Kuwait can state that we are progressively improving our leading position in customer satisfaction.

Connecting to customers @ International Turnkey Systems

The methods used by ITS are two-fold:

Annually, face-to-face interviews and questionnaires are conducted. In 2008/2009, this yielded a “Satisfactory” result from their customers. The results for 2010/2011 are ongoing…

Daily, customers can click onto the Online Questionnaire to provide up to the minute insight on what they think. It was a “Satisfactory” result for 2010 overall.

Feedback mechanisms at

KFH KuwaitInitiated by the customer:

1) Comments Box 2) Call Centre

3) Dedicated Fax Number 4) KFH Online

5) Interactive Voice Response (IVR)

All customer complaints are directed to respective business units for resolution. Customer care keeps a track of these complaints which are directed to the respective business units for resolution, where they must keep up to speed with the service-level timelines. In ensuring the optimal customer service quality KFH undergoes a Process redesign to review every customer facing process and implement recommendations to reduce effort, improve process speed/cost and remove any redundancies. Once the complaint is resolved, KFH asks for reported feedback on their level of satisfaction on the complaint resolution.

Initiated by us:

1) Customer Care Questionnaire

A traditional way of doing things, our customer satisfaction surveys are done periodically using both external and internal resources using a carefully thought out customer care questionnaire. Using a sample, the customer care form is distributed and captured in our in-house database and subsequently analyzed for follow-up action.

2) Mystery Shopper

Mystery shopper visits are conducted annually, covering all branches, show-rooms and other service locations hired by us to use our retail and commercial banking facilities. These mystery shoppers are carefully selected to represent KFH’s targeted customer segments. After the interaction with KFH, our mystery shoppers are given a tailored questionnaire to answer the level of service quality based on a variety of aspects, capturing the actual interaction directly at the point of KFH Customer contact. The answers are logged and audited and are finally sent to the appropriate management for further action, bringing a unique angle to improving our services to our customers.

Addressing Customer

Satisfaction at KFH Kuwait

Comments Box

Call Centre "Alo Baitek"

Dedicated Fax Number

KFH OnlineInteractive

Voice Response

Customer Care

Questionnaire

Mystery Shopper


Sector Focus


Al Salam International’s Quality Improvement Program aims to provide a coordinated, objective and systematic approach to organization-wide performance improvement activities and coordinate the accreditation projects. The quality improvement program provides a mechanism to plan and measure the processes and outcomes of patient care and organizational operations. Data is systematically collected for monitoring and improvement priorities. Findings are utilized in evaluating processes that may benefit patient outcomes, identify opportunities for providing professional/personal growth and to evaluate operations.

Dimensions:

• Client-Centered Services: putting clients and families first.

• Appropriateness: The degree to which the care provided is relevant to the patient’s clinical needs, given the current state of knowledge.

• Availability: The degree to which appropriate care is available to meet the patient’s needs.

• Accessibility : Providing timely and equitable services.

• Timeliness: The degree to which the care is provided to the patient at the most beneficial or necessary time.

• Safety: The degree to which the risk of an intervention and the risk in the care environment are reduced for the patient and others, including the health care provider - keeping people safe.

• Work life: Supporting wellness in the work environment.

• Continuity of services: Experienced coordinated and seamless services provided over time.

• Effectiveness: Doing the right thing to achieve the best possible results, given the current state of knowledge.

• Efficiency: Making the best use of resources to achieve the projected outcomes.

• Efficacy: The degree to which the care of the patient has been shown to accomplish the desired or projected outcome(s).

• Respect and Caring: The degree to which a patient, or designee, is involved in his or her own care decisions, and to which those providing services do so with sensitivity and respect for the patient’s needs, expectations, and individual differences.

• Prevention/Early Detection: The degree to which the risk of an intervention and the risk in the care environment are reduced for the patient and others, including the health care provider.

Customer satisfaction surveys are used to provide maximum patient satisfaction through different methods such as arranging focus groups with regular rounds and direct interview surveys for patient satisfaction and opinion; written survey forms which are available all over the hospital; suggestion boxes fixed in all hospital premises; online surveys through the website, direct mails for inpatients, direct phone line for suggestion and complaints and a committee for survey analysis.

Reaching out to talkWe search to go above and beyond the call of duty and want to bridge the gap between business and customer. In doing so we hope to foster a sustainable relationship that will put us on the right path in being the most preferred provider for Shariah banking and services.

Just call us for Shari’a advice. We’re more than just a bank. Through this initiative spread through general word-of-mouth by our skilled Shari’a Compliance team, KFH customers are able to call our Shariah Compliance department seeking islamically-sound advice on questions that go beyond the scope of banking.

Sign language training. In order improve our services to people with speaking and hearing disabilities, we launched a training course where our employees from branches, direct sales, commercial finance and automobile services were invited for training on sign language. The course consisted of two levels, which totaled 75 hours of training time.

Coaching our communicators. Being the face of KFH, every customer interaction point is visited by a team of coaching communication experts on a periodic basis to provide coaching and monitoring on behavior.

Harnessing the web by using variety of inventive modes of communication has proven successful:

Twitter: @KFHGroup Our twitter account has thousands of followers, surpassing any other bank in the region to date. This regular feedback with the customer stimulates our ability to meet their needs and answer their queries interacting on an instantaneous and effective platform.

www.facebook.com/KuwaitFinanceHouse has members, where they can create discussion boards, post photographs and write on our wall. In 2010, KFH hosted the Facebook Ramadan competition, being the first Bank to implement such an event that attracted more than 16,000 people. Draws were set by Ministry of Commerce, with iPhone prizes given out.

The App Store already has a family of KFH applications, available free of cost. KFH “Your Home” was introduced and was a pioneering iPhone application, the first of its kind in the region. The app provides our customers with detailed branch information, the ability to check their balance and latest transactions, a currency converter, the Kuwait Stock Exchange Ticker and access to the latest promotions.

KFH Qur’an App was launched in Ramadhan gaining 350,000 downloads in four months since its launch. The App serves Muslim users with the ability to read and listen to the Holy Quran in a simple and interactive way, keeping the beauty of the Othmani font with an easy-to-use directory of Soura & Ayah.

Mr. Ufuk UyanCEO, CSR KFH Turkey


We are continuing to level the playing field as the private sector becomes more professionalized and service oriented. Hiring the younger generation locally, as well as empowering women tops our agenda of achieving a sustainable and healthy workforce.

Our Graduate Scheme in Kuwait only recruits young Kuwaitis, which goes hand in hand with Kuwait’s Vision 2035 to increase the youth in the workforce. In 2010, of all employees in our Kuwait office, we had 62% Kuwaiti nationals. In our other offices KFH Bahrain had 92% Bahraini nationals employed, KFH Malaysia had 99% Malaysian nationals in the workforce, and KFH Turkey had a total of 99% Turkish nationals.

Leveling the playing field

Age distribution across KFH

0% 20% 40% 60% 80% 100%

KFH Kuwait

KFH Bahrain

KFH Malaysia

KFH Turkey

Al

Salam

ITS

Less than 30

30 – 50

50+

Meet Mrs Eiman Al-

Humaidan, our female

board member at KFH

Kuwait. The only female

board member of an

Islamic Bank in Kuwait.

Mother of three, Eman

holds a Bachelor’s degree

in Computer Science and

Statistics from Kuwait

University. She is currently

an acting Secretary-

The Workplace

General at the Ministerial decree and has work experience in

the fields of journals and information technology. She holds

chairmanship and memberships in a variety of Kuwait’s

committees and is a member of several boards for public benefit,

such as the Autism Society of Kuwait and was a founding

member of the Kuwaiti Association for Quality and Excellence.

She has been honored with several awards, including recently

when she was honored by Sheikh Nawaf Al-Ahmad Al-Jabar Al-

Sabah as the “First Female Leader in the Arab and Islamic World”

Salary Grade Ratio

Assistant Director- Chief Officer 3.4 : 1

Assistant/Senior Manager 1.5 : 1

Associate/Senior Executive 0.6 : 1

Non-Executive 0.9 : 1

Average 1.5 : 1

Male : Female salary ratio for KFH

Malaysia

Women in KFH Malaysia

Our first female Chief Executive was appointed in 2010 by KFH Malaysia. Puan Jamelah Jamaluddin is responsible for the bank’s operations in Malaysia and the Asia Pacific.

This marks her second tenure at KFH, where she served as the bank’s deputy chief executive officer since 2005, steering the corporate investment banking division. An experienced Islamic banker, having been in the financial industry for 25 years, Puan Jamelah will play a pivotal role as the new CEO of the Bank, in delivering the strategy for the Bank’s operations in Malaysia and in the Asia-Pacific region.

In hiring our staff, we continuously seek to empower women and provide them with competitive benefits. We have an Equality in salary, where in KFH Kuwait, our men and women have absolutely no difference in their salary for their respective grades. We value all our employees equally and appreciate their efforts throughout all employee categories. This is why we make sure that all our treated equally, regardless of their gender.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

KFH Kuwait

KFH Bahrain

KFH Malaysia

KFH Turkey

Al Salam

ITS

Male:Female ratio across KFH

Male

Female

KFH employees participate in traditional pearl diving trip, Kuwait City


Keeping track of our progress: performance data

We keep our books in order, and keep the status of our people in the workplace constantly updated and checked throughout our operations worldwide and sector-wide.

KFH Kuwait KFH

Bahrain

KFH

Malaysia

KFH

Turkey

Al Salam ITS Total

Full-time 2204 267 588 2837 880 2419 9195

Part-time 0 1 0 0 5 0 6

Total 2204 268 588 2837 885 2419 9201

Breakdown of workforce by age

Breakdown of workforce by contract

KFH Kuwait KFH

Bahrain

KFH

Malaysia

KFH

Turkey

Al Salam ITS Total

Less than 30 758 141 139 1509 223 928 3698

30 – 50 1220 119 393 1309 566 1402 5009

50+ 226 7 26 19 91 89 458

Gender breakdown in workforce

KFH Kuwait KFH

Bahrain

KFH Malaysia KFH

Turkey

Al Salam ITS Total

Male 1801 183 276 2436 282 2107 7085

Female 403 84 282 401 598 312 2080


Diverse views from

KFH

AdelAl Were

An Interview with

Position: Deputy Manager General Services | Department: Human Resource & Services, KFH Kuwait

How is KFH different from other organizations you have worked with?

Being a small country which is a close community of families, Kuwait values Trust, Loyalty and Truthfulness as the key characteristics that are important to the sustainability. Kuwait Finance House upholds these virtues and the entire KFH Family feeling is the bonding factor that will ensure KFH sustainability in the long run.

Name a key memory from your time at KFH

During the period of emergency at the start of 1990’s, KFH demonstrated commitment to its employees by distributing gas masks and was the first bank in the world to do so. I played a key role in finding these gas masks, and was happy to use my military background to attain them. It displayed how KFH cares for its employees as members of a family.

Do you think KFH gives employees the right recognition for their work?

I do. KFH recognizes the efforts of the employees through an appraisal system and reward scheme with different kinds of rewards including appreciation letters, gifts and bonus awards. I myself started my career here as Security Manager, but a patient attitude I quickly gained recognition of my leadership skills, where I now lead many functions including Security Systems, Procurement, Maintenance, Cleaning and Communication.

What advice do you have for those starting their career?

Be patient, and be open, as you never know where your career will take you. For me, I started my career with the Armed Forces, in the elite Amiri Brigade, where I rose to rank of Amiri Brigade Commander after graduating from General and Staff College, Levenworth, Kansas. After my different roles in the Military Attaché in Paris, I continued to acquire skills and can speak German, English and French apart from Arabic. Now at KFH, I am able to apply the skills in leadership and communication in my job day in and day out.

What sustainability initiatives would you like to see in KFH in the future?

KFH philosophy is based on Islamic principles is of one sustainable family built on the pillars of Trust, Loyalty and Truthfulness. I wish to see this continue and for our unity in the workplace to grow.


Sector Focus

International Turnkey Systems

B r e a k d o w n o f e m p l o y e e s b y c a t e g o r y

0% 20% 40% 60% 80% 100%

Senior Management

Middle Management

Executive

Consultants

E m p l o y e e b e n e f i t s g i v e n i n 2 0 1 0

0% 20% 40% 60% 80% 100%

Annual Leave

Health Insurance

Social Security for Nationals

Maternity Leave

Mohammed Al Fouzan Chairman, International Turnkey Systems

Mr Khaled AlSaeidCEO International Turnkey Systems

Up to

25% of workforce is represented in formal joint management worker health and safety committees.

A total of

45% of all goods and

supplies were

obtained from

local sources, a

43% increase

since 2006.

97%

of employees

were given

career &

performance

reviews in 2010,

compared with

79% in 2008.

In 2010,

more than half of the senior management are local nationals, an increase of 34% in 2007.

Total number of training hours per employee broken down by category

Senior Management 4

Middle Management 11

Lower Management 13

Consultants 20

Contract Labor/Junior Staff 16

Investing withinMaking sure that our employees are getting the most out of their job is a fundamental part of strengthening KFH’s commitment to its people. We wish to inspire, promote and motivate our staff so they reach their full potential

Employee benefits. Our full-time employees enjoy a 15% bonus every year. We also cover 100% of their healthcare insurance and dental, and 50% of the healthcare insurance of their family (wife and up to 3 children). We provide transport allowance to Grade 3 and above, and housing allowance for Grade 13 and above. For our Kuwaitis, we cover their pensions.

Career appraisals. All KFH Kuwait’s employees who have worked over 6 months with us are given an annual performance appraisal review using a 7 Tier Grading System, as well as a training needs analysis for the upcoming year. The approach to determine the need for training is done using an Oracle System where Managers provide their inputs. The rate of participation from managers was above 90%, which is higher than the previous three years. Such processes support our staff throughout their career, tailoring to their specific needs and gives us a great picture of their progress.

Training. At KFH Kuwait our training programs include self-study, in-house training, external learning, coaching and e-learning. Our employees have access to a wide range of tools and skill sets, ranging from complex financial modelling to soft skills such as “thinking on your feet”. In total, KFH Kuwait invested in excess of $1m on staff training alone in 2010, excluding eLearning initiatives and on the job training.

KFH Kuwait KFH Bahrain KFH Malaysia KFH Turkey Al Salam ITS

Average hours of training

per employee

10 - 30 10 - 30 10 - 30 30+ 10 - 30 10 - 30

Employees receiving

annuals performance

reviews

100% 100% 100% 100% 100% 97%

2010 Survey Staff Satisfaction at Al Salam International Hospital

• 53% of staff plan to continue employment for more than five years

• 86% of staff agreed and strongly agreed Hospital Accreditation is an added value

• 87% agreed and strongly agreed that they maintain a good working relationship with other staff

• 67% agreed that policies are clearly communicated to staff

In 2010, there were

2.8 number of sick days on average per employee in both KFH Kuwait and KFH Malaysia


Making sure that our employees are getting the most out of their job is a fundamental part of strengthening KFH’s commitment to its people. We wish to inspire, promote and motivate our staff so they reach their full potential.

On the right path Giving back

Our Shariah training given to new joiners ensures our employees at all levels are exposed and aware of subjects at the heart of KFH’s business model. In our Kuwait office, we also give our people the chance to achieve “Certified Islamic Banker” status.

The Shariah curriculum offered by KFH in 2010, where at least once a year each employee must attend one Basic Understanding course.

We have our own KFH Shariah-specific materials, “Fatwa” in the form of textbooks, which are available anytime for our employees, our customers and any of our stakeholders with detailed explanations on topics such as transactions, currency exchange, Zakat, insurance and a range of financial instruments.

Our monthly Shariah newsletter is distributed to our employees, featuring the bank’s latest news and Shariah achievements.

Human Rights. In KFH we adhere to the laws that protect our people. We are completely compliant with national labor laws. In Kuwait, the Kuwait Labor Law in the Private Sector (Law no.38/1964), includes special interest in the Human Rights Committee (HRC) at the National Assembly. The same applies to all our subsidiaries who ensure full compliance with local labor laws.

Course Name Mandatory for

Basic Shariah All employees

Basic Shariah II All employees

Shariah Advance Retail, Commercial, Corporate, Investment, Credit Management & Finance

Giving to charity is preached by every religion of the world, and is an essential component in KFH’s beliefs and thinking process. This spirit of kindness and well wishing resonates in our company culture, where we truly understand the meaning of Zakat: growth and purification.

Zakat House works closely, hand in hand with KFH, through KFH donations. Giving a donation of KD3.4 million (more than $12 million USD), Zakat house is able to continue to provide help for the disadvantaged as it has been doing so since 1982. Zakat House activities includes giving monthly financial aid, soft loans, health security and insurance, social assistance and cash donations, all to the underprivileged in Kuwait. Zakat House also hosts numerous activities in the Holy Month of Ramadan, and has projects outside of Kuwait such as sponsoring scholars, orphans and building mosques, schools, water wells and development centers.

Supporting Pakistan Flood Relief with KFH Kuwait donating a total of $2 million USD. This helped impacted families in Pakistan whose homes and lives were devastated by one of the worst floods in modern history. KFH Turkey provided on the ground support by sending staff members to areas in need in Pakistan.

Community


Country Focus

KFH Malaysia

Ramadhan, the month of giving at KFH Malaysia

• Contributed ihram garments to Malaysian male pilgrims who are performing Hajj was given by KFH Malaysia in 2010. Representing KFH Malaysia at the event was Chief Executive Officer, Puan Jamelah Jamaluddin, who presented the Bank’s contribution of 15,000 pairs of ihram garments worth over $130,000.

• Contributed to the Ziarah Ramadan Programme with over US$ 36,000 in conjunction with His Royal Highness Tengku Muhammad Faris Petra, the Regent of Kelantan. Handover ceremonies were held at 10 selected mosques in 10 districts in Kelantan, where His Royal Highness Tengku Muhammad Faris presented a cash donation of approximately $65 to each of the 500 eligible recipients. Identified as severely disadvantaged, these include wheelchair-bound and chronically-ill patients.

• Hosted ‘Breaking of Fast’ for 220 youths from poor families of Baitul Hasanah Klang, Kuala Selangor and Hulu Selangor. Puan Jamelah Jamaluddin, the Chief Executive Officer, was present to hand over gifts and packets of money for Hari Raya. Seventy employees from KFH Malaysia were also present to attend to the young guests. Selected by Lembaga Zakat Selangor, the children reside at a hostel under the administration of the body, where they receive proper care and support.

Total breakdown of KFH Malaysia’s community involvement in 2010

Puan Jamelah JamaluddinCEO, KFH Malaysia

Putra Mosque, Malaysia

Charitable Activities Funds US$

Underprivileged community 386,720

Education 733,454

Islamic-related activities 862,800

Environment 12,635

Medical support 729,324

Employees Community Programme 44,571

Total 2,769,504

Local OutreachWe have continued our work in support of the health and prosperity of our social fabric, actively participating in local community life, offering support to the most important issues in health, education and safety.

15 Emergency centers costing approximately KD 1.5 million (more than $5 million USD) began development in 2010, with some opening that year.

Al Zour is a construction of chalets specifically made for people with special needs that started in 2010 costing KFH KD 1 million (more than $3.5 million USD).

Promoting healthy living in Bahrain with KFH Bahrain’s sponsorship of the celebration of the 20th anniversary of the Bahrain Diabetes Society, which was held under the patronage of HRH Prince Khalifa bin Salman Al Khalifa, the Prime Minister of Bahrain. As part of the celebrations, an international conference and exhibition aimed to increase the level of awareness and highlight the latest developments in combating diabetes. KFH-Bahrain’s participation in this occasion stems from its strong belief in promoting the Bahraini society, especially medical institutions and initiatives that care for the well being of Bahraini people. The Bank is particularly interested in organizations like the Bahrain Diabetes Society, which are striving to provide a high level of awareness and health care for those who are suffering from diabetes. The high incidence of diabetes found in the Kingdom can have significant repercussions, both on the social and economic level.

KFH Bahrain also supported Think Pink Bahrain’s initiative to install a state-of-the-art MRI scanning facility to assist the Salmaniya Medical Complex in their fight against breast cancer. KFH-Bahrain’s support will contribute towards the civil works in both the Radiology MRI room and Oncology Simulator room. Currently, advanced MRI scanning treatment is limited in Bahrain and upon purchasing this equipment; Salmaniya Medical Complex will be able to provide advanced breast cancer screening and diagnosis free of charge for all women in the Kingdom.


Local programmes and campaigns are long-running in KFH. Numerous local programmes are set up annually which benefit the local community. A round-up of 2010’s events include:

• Sponsorship of the Kuwait Parental Care Society’s Disabled Care Week

• Support of the College of Administrative Sciences on Renewal of Accreditation

• Support of “House of Abdullah Care of Children” charity event with the American Bilingual School, Kuwait

• Youth India Kuwait Sports Day

• Sponsorship of International Islamic Centre and activities of Islamic Finance Club

• Printing of books and brochures with the Kuwait Society for Traffic Safety

• Material support for patients at the Sabah Al Nasser Health Centre

• Sponsorship of Deaf Bowling tournament hosted in the United Arab Emirates

• Support for students of Kuwait University to attend the World Environment Conference 2010 in Dubai

• Sponsorship of Kuwait-Syrian Journalists

• Program for restructuring the workforce and executive in a Career Opportunities forum

• Support of small-business owners in Kuwait

• Sponsorship of Gulf Run, Kuwait

• Young Arab Leaders Forum “Building the Next Generation of Leaders”, Bahrain

• Fourth GCC Islamic Conference of Charity

• Bahrain International Book Fair Sponsorship

• Hosting “Leaders for Excellence Conference” at the University of Bahrain

• Sponsoring the traditional pearl diving trip for second consecutive year

KFH employee contributes to charitable activities, Kuwait City

Local Outreach Sector Focus

Al Salam International Hospital (SIH)Al Salam’s Community Service Strategy is to promote health and environment awareness through community interaction to raise society standards. The goal is to involve the community through interactive methods.

Strategic Objectives

1. Planting the basis of a healthy life and awareness in the young generation

2. Focusing a great amount of attention on the core of the family, the woman

3. Educating the mother on the essentials of raising a child as a newborn and life’s early stages

4. Educating the family on how to shift lifestyle from unhealthy to healthy habits

5. Educating medical workforce along with community members on the ethics that should be expected

6. Encouraging and promoting the compliance to safety, security, and health guidelines

7. Reallocating the community’s energy towards being proactive instead of reactive

8. Energy conservation d starting with SIH as an example to lead the way

2010 highlights

School trips and invites with five of Kuwait’s biggest schools

Employee welfare: monthly strategic management & planning lecture; nurses day celebration

Instructions to turn off all unnecessary energy consuming equipment or apparatus in hospital

1000+ students have been checked free of charge

Ramadhan and your health newsletter

Awareness of Diabetes and Hypertension “The Silent Killer”

Al-Sheikh Jazzem El-Mehalhal lecture on “Ethics of Medical Practice.”

Campaign on “how to prevent or decrease the incidence of complications?”

“Don’t smoke your life away” campaign

Elderly care program and exibition

Monthly antenatal and postnatal educational courses, free of charge for mother

“Healthy Day” at Global Investment Company


Diverse views from

KFH

DrMariam Bibi

An Interview with

Position: Consultant and Chief Obstetrics & Gynecologist Department: Human Recourse & Services, Al Salam International Hospital

Has working for Al Salam met your expectations?

Of course. I started my medical career 40 years ago when medical facilities in Kuwait were still at their infancy. It was limited, and I actively participated in the development of the Kuwaiti Health Sector which has resulted in its current high standards. Al Salam is definitely one of the leading hospitals in the country, giving the highest priority of medical services, with international accreditation.

Do you think that women are empowered in the workforce at Al Salam?

As the Chief Member of Maternity and Child Care, Al Salam has valued my views and judgment throughout my career. At present, I am building on the current initiatives such as the baby Friendly Office and have introduced the First Trimester Scanning which identifies prenatal abnormalities.

How are patients treated differently at Al Salam?

We use consultants in our hospital for all check-ups and procedures to ensure the best treatment for our customer. This method has made a great difference in obtaining constructive feedback and putting our patients at ease.

What sustainability initiatives would you like to see in Al Salam in the future?

Being an important player in the health sector, I think it would be fantastic to keep the quality of service at the hospital and I believe that the hospital should expand into new branches to respond to all clients needs.


Global Stewardship

Looking towardsthe future of energy

The future of energy supply is in our generation’s hands. Throughout our operations, we strive to be part of the solution and not the problem, advocating that the low cost production of alternative energy in relation to fossil fuel makes it a highly promising investment sector. With the Middle East and North Africa being one of the world’s richest regions in solar and wind energies, the outlook indeed looks promising.

Teaming up with Bloomberg New Energy Finance, a leader in providing

independent analysis, data and news in clean energy, KFH Kuwait hosted a

workshop in June 2010 on renewable energy, which discussed topics such as global

investment, policy and technology trends and the implications of renewable in the

Middle East.

Al Salam International Hospital’s Green Strategy started in 2010, seeing

improvements in its facilities without disruption patient services. Employed

an Astec Re-Ply Roofing system, state-of-the-art technology where hospital

staff and customers were unaware of the drastic changes happening on the

rooftop. Sustainability was a key driving force in implementing this system, as it

is renewable and thus reduced maintenance costs over time and increased its

overall life cycle. Hospital was able to dramatically reduce surface temperatures

of the roof, averaging 14 C difference, which translated into a cooler indoor

working environment and thus reduced energy usage of air conditioners. To

top it off, the indoor air quality was improved, making the hospital environment

more comfortable for our patients, their visitors and the staff.

Al Salam hospital have also made significant strides in efficient water

management, where the plumbing design was revised in 2010 with pressure

regulating values being installed in all areas of the hospital wherever applicable.

Our KFH Bahrain office is housed in the highly resource efficient Bahrain World

Trade Center. This LEED-certified building features three wind turbines which

can result in up to 15% of energy savings of electricity consumption per year.

In addition the building also incorporates special solar glass which contributes

to reduced air temperature in the building, a district cooling system, energy-

saving fluorescent lighting and a sustainable water drainage system.

Managing our emissionsCalculating emissions is the first step towards their mitigation and reduction. In a climate threatened by climate change and depleting ozone layer, now, more than ever, must we must fully exercise our role as stewards of the Earth.

Our carbon footprint

The urgency to address global warming, backed by accumulating scientific evidence, has garnered international attention. The United Nations Framework Convention for Climate Change has stimulated significant global efforts in mitigating greenhouse gas emissions and adapting to climate change. The ultimate objective is to prevent human interference of the climate system that could be deemed “dangerous” by stabilizing greenhouse gas concentrations and adapt naturally to climate change. There is thus a new paradigm required from countries and indeed, companies, to meet future demands of energy.

By calculating KFH’s carbon footprint based on our electricity consumption, we have addressed our biggest source of greenhouse gas emissions. Now that the size of our respective carbon footprints are known, we can begin the path towards measuring our success in energy conservation in the global context.

KFH Kuwait KFH Bahrain KFH Malaysia KFH Turkey Al Salam Hospital

Electricity consumption (Kwh) 3,267,482 806, 226 2,832,020 11,521,811 3,000,000

Total CO2 emissions (kg)* 2,638,448 717,623 1,577,463 4,987,123 2,422,460

Total CO2 emitted per FTE (kg CO2) 1,197 2,687 2,682 1, 757 2,752

Ozone friendly chillers were installed in our offices in Kuwait to ensure our emissions contain no ozone depleting substances found in refrigerants. This goes in line with The Montreal Protocol on Substances That Deplete the Ozone Layer and the national phase-out of CFCs and HCFCs.

Diyyar Al Muharraq Goes Green at KFH Bahrain. In keeping with their vision, strategies are implemented to minimize the environmental impact of construction, while establishing the foundation for a sustainable future:

• Compliance with the internationally recognized Green Building Rating System for New Construction (LEED-NC) in the issuance of building permits.

• Solar orientation of buildings is being carefully considered along with the potential use of solar and wind energy. The use of technologies such as solar thermal water heathers, solar powered streetlights and a smart grid for monitoring and optimizing energy consumption is also being considered.

• Gold sponsor for this third edition of the Energy & Water Conservation Expo 2010. The Expo is aimed at identifying energy and water conservation techniques that could be used in the commercial and industrial sector.

• Construction by third party developers is subject to adherence to the development guidelines that focus on waste reduction, where there are plans to introduce a centralized waste collection/separation/removal and recycling concept.

• First reclamation project in Bahrain with a continuous monitoring program, which is regularly submitted to the government environmental bodies for review.

• Promoting biodiversity in the landscapes with trees and networks of paths community connectivity.

• Use of Xeriscape planting techniques to promote water efficiency, where selective irrigation techniques are used on plants which are grouped together according to their water demand.

• Low maintenance targets with energy efficient, low consumption electrical items such as pumps for drainage, potable water, irrigation and sewage to reduce overall electricity impact.


Using our resources wisely

Our role as stewards of the earth which KFH does not want to take lightly, especially considering our regional environmental sensitivity. We must sustain our earth’s natural resources for many generations to come.

Annual water consumption

KFH

Kuwait

KFH Bahrain

KFH Malaysia

KFH Turkey Al Salam Hospital

Water (liters) 47,278,390 9,000,000 4,183,000 49,540,000 9,539,200

Water consumption per FTE (liters)

21, 451 33, 708 7,113 17, 462 10,840

The majority of our operations and investments are situated in the Middle East, a water-scarce region. In addressing this critical factor, KFH puts reducing water consumption a main concern in ensuring our sustainability.

Breakdown of annual water consumption in KFH Kuwait’s branches 2010

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

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State of Kuwait Ministry of Electricity & Water awarded KFH for outstanding achievements in its energy savings program for 2009 and 2010

Paper consumption in our Kuwait offices has seen an increase, but we will make up for this by ensuring more is recycled. The total paper consumption per Full-Time Employee (FTE) for 2010 was 24 kg.

Paper

consumed

(tonnes)

Paper

Re-distributed

(tonnes)

Recycled

2009 49.9 15,350 30.7%

2010 52.7 20, 750 39.4%

Paper consumption in KFH worldwide

KFH Kuwait KFH Bahrain KFH Malaysia KFH Turkey Al Salam Hospital

Paper consumption (kg) 53, 000 16,000 22,000 168,000 26,125

Paper consumption per FTE

(kg)

24 60 37 59 30

Paper consumed

PaperRe-distributed

2010

Annual tree planting in Kuala Lumpur, has been kicked started by KFH Malaysia to celebrate 53 years of Malaysian Independence. Trees can act as carbon sinks, absorbing and locking away carbon dioxide, the main greenhouse gas responsible for climate change. Trees also help cleanse the air by intercepting airborne particles and can reduce urban-city heat by absorbing pollutants such as carbon monoxide, sulfur dioxide and nitrogen dioxide.

Palm trees by the beach, Malaysia


Our Business Principles

Our Customers

Our People

Our Deeds

Our Environment

Ambition To be the leading Islamic Bank in Coroprate Sustainability

Create a balanced dialogue between KFH and its customer base

Be an employer of choice

Uphold reputation in our positive impact to society

Be the leading bank in the region in conservation

2011 Goals Increase number of subsidaries reported on in next CSR report

Create a KFH Group policy on Corporate Responsibility

Train our employees on corporate sustainability skills

Improvement of customer satisfaction score

Develop Shariah financial services education through use of social-media, video and other modern mediums

Engage in Social Media Networks to increase involvement and dialogue on CSR issues

Increase number of women in workforce, with focus on senior positions

Establish a CSR Committee for the group to promote sustainability

Develop diverse products and services that can create indirect economic impacts

Increase awareness in renewable energy investments

Promote reduction in electricity consumption

Decrease office paper consumption per FTE

Finally, we wish to create a univeral CSR system to be used across KFH to faciliate in tracking and gathering our corporate sustainabilty indicators across our subsidiaries. This will improve the efficiency, completeness and accuracy in future reporting.

Our vision in corporate responsibility is to embark on positive economic, social and environmental change by using our Shariah principles to guide the way. Based on our findings in consolidating and writing this Corporate Sustainability Report, we understand we need to improve on our sustainability performance. Our long-term plan is presented here.

Our Stakeholder Engagement PlanStrategy

How we engage Sustainability priorities Actions

Kuwaiti Government • Regular correspondence with the government ministries

• Investment in the national economy

• Contributing to the national economy

• Positive contributions to Vision 2035

• Meeting national laws and regulations

1) Establish sustainability-focused linkage with ministries

2) Discuss sustainibilty issues

Customers • Range of feedback mechanisms initiated either by KFH or the customer

• Use of latest technological trends to facilitate dialogue

• Customer satisfaction surveys

• Branch expansion

• Satisfaction in products and services

• Quality in customer care

• Efficient branches and technology

• Shariah product innovation

• Competitive rates and charges

1) Conduct and report results on customer satisfaction surveys, including customers of key initiatives such as affordable housing

2) Include feedback from the survey when developing annual sustainability initiatives related to customer services

3) Establish a dedicated customer care unit

Employees • Regular career appraisals leading to training schedules

• Regular team meetings

• Job satisfaction

• Career longevity, lifelong learning

• Fair compensations and promotions

• Pleasant working environment

1) Conduct employee engagement and satisfaction survey

2) Introduce an employee-initiated feedback mechanism scheme

Investors/ Shareholders • Board of Director’s meetings

• Ongoing correspondence

• Confidence in KFH in handling business, customers, suppliers and employees

• Net annual returns

• Shariah Compliance

1) Continued investment in diverse industries and economies

2) Annual Corporate Sustainability Reporting

Suppliers • Supply management in regular ordering and feedback

• Continued support and fair treatment

• Efficiency in product/service usage

1) Look to create dialogue mechanisms to further understand expectations and suggestions to improve sustainability

Rating Agencies/Regulatory Authorities

• Compliance to regulations and submissions

• Support State Audit Bureau

• Transparency

• Compliance

1) Continued annual and corporate sustainability reporting

2) Regular contact and dialogue

NGOs • Awareness of expectations and regular donations, sponsorships, inaugurations and support in society

• Sound environmentally-friendly practices and investment

• Continued investment in community

1) Look to establish dialogue mechanism to obtain their feedback on KFH sustainability initiatives

Shariah Board • Regular board meetings and correspondence

• Compliance

• Continued improvement in products and services

• Representation of Shariah on global platform

1) Stimulate Shariah product and service creativity that meet global sustainability objectives


Key Performance Indicator PagesReporting Level

Economic

EC1

Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings and payments to capital providers and governments

12

EC7Procedures for local hiring and proportion of senior management hired from local community at locations of significant operation

26, 27, 31

EC8Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro-bono engagement

34, 35, 36, 37,

38

EC9Understanding and describing significant indirect economic impacts, including the extent of impacts

2, 6, 17, 18

Labor

LA1Total workforce by employment type, employment contract, and region, broken down by gender

26, 27, 28

LA3Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations

32

LA7Rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities by region

32

LA10Average hours of training per year per employee by gender, and by employee category

31, 32

LA12Percentage of employees receiving regular performance and career development reviews

32

LA14 Ratio of basic salary of men to women by employee category 27

Environment

EN1 Materials used by weight or volume 45

EN2 Percentage of materials used that are recycled input materials 45

EN4 Indirect energy consumption by primary energy source 43

EN6Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives

42, 44

EN8 Total water withdrawal by source 44

EN16 Total direct and indirect greenhouse gas emissions by weight 43

EN19 Emissions of ozone-depleting substances by weight 43

Product Responsibility

PR5Practices related to customer satisifaction, including results of surveys measuring customer satisfaction

22, 23, 24, 47

Product & Service Impact

FS1Policies with specific environmental and social components applied to business lines

15, 16, 43

FS4Processes for improving staff competency to implement the environmental and social policies and procedures as applied to business lines

33

FS11Percentage of assets subject to positive and negative environmental and social screening

16

FS14Initiatives to improve access to financial services for disadvantaged people

25

Human Rights HR1Percentage and total number of significant investment agreements and contacts incorporating human rights concerns, or that have undergone human rights screening

33

Society SO1Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting

17

Full Reporting Partial Reporting

GRI Index OurApproach

This corporate sustainability report gives an overview of KFH’s performance from its main office across its subsidiaries. This is the first Corporate Sustainability Report KFH has published.

Content and Materiality

The report content was developed after careful consideration and identification of the most important topics and related indicators by undergoing an iterative process using the Principles of materiality, stakeholder inclusiveness, sustainability context and guidance as defined in GRI 3 Guidelines. Performing a materiality analysis based on stakeholder expectations and sustainability priorities, and subsequently reporting on the most material Key Performance Indicators.

Data collection

We used tailor-made questionnaires to identify and consequently gather the data required to meet the standards of GRI. These were distributed to the relevant departments in each of the KFH offices as part of this report. The departments were: Human Resources, Financial Control, Shariah Compliance, Marketing & Communications, Strategy & Investment and Facility. We are confident that the overall reliability of the data is robust but recognize that some is subject to some degree of uncertainty due to judgments and estimation methods used. Monetary figures were converted to United States Dollars ($) using conversion rates as of 31/12/2010.

Completeness and Boundaries

The report covers all banking operations in KFH Kuwait in addition to local operations in KFH Bahrain, KFH Malaysia and KFH Turkey. The report also covers KFH subsidiaries in the State of Kuwait, Al Salaam International Hospital and International Turnkey Systems. Due to the differences of data available for each of the subsidiaries, it was difficult to consolidate all the results and figures given, as such subsidiaries were reported separately.

Global Reporting Initiative

The Global Reporting Initiative (GRI) has developed sustainability reporting guidelines that aim to increase transparency and accountability of economic, environmental and social performance. We support the GRI and we believe that a B grade applies to our CSR 2010. We have additionally reported on performance indicators specific to our line of work, financial services, using the GRI’s Financial Services Sector Supplement (FSSS).

Assurance

All financial numbers in the sustainability report are based on audited financial statements found in our 2010 annual reports. We have submitted our sustainability report to GRI for transparency check where we have an approved application level. We understand the importance of assurance of corporate sustainability reports and aim to have our reports audited in future.


KFH extends special thanks to those who have directly and indirectly contributed to the successful preparation of the KFH Corporate Sustainability Report 2010 including,

Special

Project ManagementFahad Khaled Al-Mukhaizeem, Head of Strategic Planning / Marketing & PR Departments - KFH Kuwait

Momtaz M. Saif, Sustainability Project Manager / Strategic Performance Manager - KFH Kuwait

KFH KuwaitAdel Abdullah Al-Were, Deputy Manager General Services

Adel Saboba, Economic Researcher

Ahmed Al-Nori, Manager Compensation & Manpower Planning

Ahmed Al-Rashid, Creative Supervisor

Dawood Sami Al-Jarrah, Sharia’a Auditor

Houssam Q. AlKhatib, Service Quality Manager

Imad R. Mirza, Development & Training Manager

Khaled Al-Otaibi, Business Development

Khaled Al-Sayer, Digital Marketing Supervisor

Mohammed M. Al-Musalam, Senior Strategy Officer

Salahuddin Ahmed, Investment Manager

Zakaria Al-Ansari, Dealer

Ziad Salameh, Corporate Marketing Manager

KFH TurkeyGökhan ENGÜL - Corporate Communication

KFH BahrainAdnan Shakoor Malik, Head of Strategic Planning & Governance

Ahmed Khalifa Khalfan, Assistant Manager Corporate Communications

KFH MalaysiaAkmal Baqi Mohamed Ariff, Head, Corporate Communications Division

Hajjah Rumaizah Dato’ Abu Bakar, Corporate Communications Division

Fazidah Zakaria, Corporate Communications

KFH Research Ltd.Baljeet Kaur Grewal, Managing Director Tursina Yaacob, Director

Al Salam International HospitalAliaa El Sayed Sawsen Sobhi, Marketing & PR Department Secretary

Dr Mariam Bibi, Consultant & Chief of Obs & Gyne

International Turnkey SystemsDr. Costas G. Constantinidis, AGM

Muhammed Asif, Accounting Manager

Ernst & Young sustainability assurance advisors to Kuwait Finance House Group

Thanks


GlossaryCarbon dioxide A greenhouse gas associated with global climate change, expressed as CO2.

Carbon Footprint The total amount of greenhouse gases produced due to anthropogenic activities. It is

the sum of all emissions of carbon dioxide, which were induced by your activities in a

given time frame.

CSR Corporate Sustainability Reporting/Report

Economic Value Distributed Includes payments to suppliers, employee wages and benefits, payments to

providers of capital, payments to governments and community investment.

Economic Value Generated Net sales plus revenues from financial investments and sales of assets.

Economic Value Retained Calculated as Economic value generated less Economic value distributed.

Equator Principles Voluntary set of standards for determining, assessing and managing social

and environmental risk in project financing.

Full-Time Employee (FTE) Total number of full time employees working in KFH as of 31/12/2010.

Global Reporting Iniative GRI is a network of many international partners that has developed a framework for

sustainability reporting, in particular sustainability reporting guidelines, sector

supplements and protocols.

Greenhouse Gas Greenhouse gases are gases in the atmosphere that absorb and emit radiation within

the thermal infrared range. This process is the fundamental cause of the greenhouse

effect, where the planet is warmed by the atmosphere.

Kg CO2 Total kilograms of carbon dioxide.

Montreal Protocol An international treaty designed to protect the ozone layer by phasing out the

production of a number of substances believed to be responsible for ozone depletion.

Ozone-friendly Not containing chemicals that are destructive to the ozone layer.

Ozone Layer A layer in the earth’s stratosphere at an altitude of about 10 km (6.2 miles) containing a

high concentration of ozone, which absorbs most of the ultraviolet radiation

reaching the earth from the sun.


Kuwait Finance House

P. O. Box 24989 Safat

13110 Kuwait

Tel: 22445050

Fax:22455135

Cable: BAITMAL KT

[email protected]

www.kfh.com

58 I KFH Corporate Sustainability Report

Kuwait Finance House (KFH) Group of Companies

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Corporate Sustainability Report - kfhonline.com.my · Corporate Sustainability Report Kuwait Finance House (KFH) Group of Companies 2010. In an ever-changing world, we at KFH wish