Kuwait Finance House K S C P : Credit Rating Disclosure

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Group Chief Executive Officer

Kuwait Finance House

Date:

29

March 2022

Ref:

10/10/134/2022

To: Chief Executive Officer Boursa Kuwait

Peace, Mercy and Blessings of Allah be upon you,

Subject: Disclosure of Material Information

Credit Ratings Commentary Issued by

Fitch Ratings

In reference to the above, and in interest of Kuwait Finance House "KFH" at adhering to the requirements of Article (4-1-1/18) of Chapter 4 'Disclosure of Material Information' of CMA Executive Bylaws Rulebook 10 (Disclosure and Transparency), KFH would like to report the following:

• • Fitch Ratings has affirmed the following KFH ratings in their report issued on 28 March 2022:

  Long-Term Issuer Default Ratings at A. Stable Outlook.

  The bank's Viability Rating at bb+.

• • No impact is expected on the KFH Financial Position.

Attached is the Appendix (9) 'Disclosure of Credit Rating Form' that has been submitted to Capital Market Authority.

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Best Regards,

Shadi Zahran

Acting Group Chief Executive Officer

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KUWAIT finance HOUSE, KSCP | State of Kuwait Headquarters	xjjSJI	I J.ul.fui
Trade Registration No 26066 | Authorized Capital KD 1,264,155.193	a), j ,ru,uoASr	juiyj-lj | n-n
Issued and Paid Up Capital KD 844,155,193	J.J AH,100,!SV
P.O.Box 24989, Safat 13110, Kuwait | T: -965 2245 5862 - [phone] | F: [phone] -vri! m vsr-; j
E:[e-mail] |www.kfh.com

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29 March 2022

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Kuwait Finance House (KFH)

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Appendix (9)

Disclosure of Credit Rating Form

Credit Ratings Commentary Issued by

Fitch Ratings

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Date

Listed Company Name

Ticker No.

Entity Issues the Rating

29 March 2022

Kuwait Finance House (KFH)

Rating Category

Fitch Ratings

Category

Outlook

Long-Term Issuer Default Ratings - (LT IDR)

Short-Term Issuer Default Ratings - (ST IDR)

The bank's Viability Rating (VR)

Government Support

A

Rating Category

High Credit Quality

108

a

Action

Rating

b^Oj^utA

Affirmed

Stable

Affirmed

Affirmed

Affirmed

FI bb+

Affirmed

'A' rating denotes to the expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.

bb

Speculative fundamental credit quality

bb' ratings denote moderate prospects for on-going viability. A moderate degree of fundamental financial strength exists, which would have to be eroded before the bank would have to rely on extraordinary support to avoid default. However, an elevated vulnerability exists to adverse changes in business or economic conditions overtime.

F1

Highest Short-Term Credit Quality

A

Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature.

The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the 'AAA' Long-Term IDR category, or to Long-Term IDR categories below 'B'.

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Rating Effect on the Status of The Company

No impact is expected on the KFH's financial position.

Current Outlook

Stable Outlook.

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Translation of the Press Release or Executive Summary

• • KFH's IDRs reflect potential support from the Kuwaiti authorities, if needed. This considers Kuwait's strong jLlC^I

capacity to support the banking system and its record of supporting domestic banks. The Stable Outlook on KFH's Long-Term IDR reflects that on the Kuwaiti sovereign rating.

• • The 'F1' Short-Term I DR is the lower of two options mapping to an 'A' Long-Term I DR because a significant part of KFH's funding is related to the government.

• • The VR reflects KFH's high-risk appetite, with significant operations in more challenging markets than Kuwait.

• • The VR also reflects the bank's leading Islamic franchise in Kuwait, strong management team, consistent strategy, good risk management framework, recovering profitability and strong funding and liquidity.

• • Leading Islamic Franchise: KFH is the largest Islamic bank in Kuwait and the second largest bank overall, with a market share of about 22% by local assets at end-2021.

• • KFH's net profit improved by 68% in 2021 owing mostly to lower impairment charges, stable funding and operating costs, and exceeded pre-pandemic levels. Fitch expects KFH's profitability to improve in 2022 in the context of expected growth, higher profit rates and stable impairment charges and operating expenses.

• • KFH's strong funding profile is supported by large retail deposits (73% of customer deposits at end-2021; much larger than peers) and current and saving accounts (52%), which are contractually short-term, but behaviorally stable.

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