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Treasury Department a major contributor to Ahli United Bank Kuwait’s profitability

Digital platforms and automation of processes were the main focus in Treasury from front to back and end-user

Founded in 1941, Ahli United Bank Kuwait is one of the leading Islamic banks in Kuwait. With its headquarters in Kuwait City, the bank offers a wide range of services from personal banking to treasury to its clients. The Treasury Department of Ahli United Bank Kuwait is one of the core functioning departments. The robust performance of the Treasury Department throughout the years has contributed significantly to the Bank’s profitability.

The Islamic banking sector in Kuwait is in a constant state of growth and Ahli United Bank Kuwait is establishing itself as a key player in the region. The global Islamic finance market is growing despite the Covid-19 pandemic. The growth is mainly attributed to strong investments in Islamic Sukuks. Recent sukuk issuance by Ahli United Bank Kuwait as issuer has witnessed diversified participation of regional and international investors. In a conversation with International Finance, Mr. Abdullah AlLangawy – GM Treasury shares further insights into the bank’s products and services, Covid-19 crisis and their plans going forward.

IF: 1. How important is the treasury department for Ahli United Bank Kuwait?
The Treasury department in AUB Kuwait plays an important role in the sense that it manages the liquidity profile of the bank and acts in alignment with various departments in the bank to ensure proper and available funding. It acts as a gauge to encourage liabilities through the funding centre using the FTP mechanism. In addition to its close monitoring in coordination with finance to meet all central bank required ratios and early contingency indicators.

2. Can you elaborate on your bank’s liquidity management mechanism?
In order to meet a balanced liquidity status, treasury relies on clients and interbank for cash flow and liquidity management where the main local currency KWD and FCY (USD) being the bulk of liquidity assessment. Excess liquidity is managed through interbank in short-term MM lending and borrowing and any additional funds are invested in longer tenures in Sukuks investments to ensure the adequate return for the bank and short tenors IILM sukuks which qualifies as HQLA for central bank reserve and other regulatory ratios.

3. What are some of the major milestones achieved by Ahli United Bank in the last two years?
Major milestones were being consistent with the vision of the bank to transform into a digital bank. Digital platforms and automation of processes were the main focus in Treasury from front to back and end-user. Platforms for FX and money market were added to automate the covering of client and interbank, platform of the commodity to buy and sell commodities was incorporated as well to expedite and ensure the accuracy of the transaction of the bank to comply with Islamic Shariah provisions

4. How was your bank affected by the Covid-19 pandemic? And, how did you address the Covid-19 crisis?
Ahli United Bank has taken strong measures and changes towards the Covid-19 crisis both financially and humanely. Remote work from home, as well as work shifts, have been established in order to fulfill social distancing requirements.

We have adapted to a more digitalised environment and workflow for the safety of our staff and clients. With a quick activation of remote access to all staff and dynamic team formation the bank was put into the road of digitalisation to transact and serve clients remotely with minimum human physical touch. Formation of teams and committees that served the most critical tasks within the bank were key to function efficiently, some of the main ones were liquidity and contingency plan committees where focus was on stress scenarios and alternative plans to ensure a healthy liquidity of the bank with minimum impact on liquidity drainage and emphasis on compliance with central bank of Kuwait ratios.

5. Can you tell us a bit about the Sukuk market in Kuwait? Do you plan to list more sukuks in the near future?
Capital market in Kuwait has been progressing well and mirrors global debt market movements. Issuance in Kuwait is driven by conventional and Islamic banks and certain corporates for regulatory and funding purposes and is primarily denominated in USD. Issuance in Kuwait is dominated by banks. Recent issuance by AUB Kuwait has witnessed diversified participation of regional and international investors affirming confidence in banks fundamental metrics and robust management.

6. What are your plans going forward, especially when it comes to treasury and investment services?
Integration of other departments in the bank to optimize cross-selling opportunities and provide seamless transactions that would provide precision and consistency with the user experience. Involvement in Shariah compliant exchange traded funds ( ETF’s ) that allow the bank to widen its portfolio of investment with exposure to various international market and market sectors to diversify portfolio and enhance the yield.

Enhancement of liquidity management tools by usage of early warning indicators with AI to highlight unstable deposits and give sufficient time to replenish them with substitutes that serve a better use and cheaper funding which ultimately increases the overall performance of the bank.

7. What are some innovative solutions and services provided by the Ahli United Bank treasury? Can you elaborate on some of the treasury services offered by Ahli United Bank Kuwait?
Bank is constantly working on providing solutions considering customer requirements given the current and anticipated market outlook. Products includes but not limited to the following:
Exotic FX currency access, Profit rate swaps for hedging customer interest rate position, online platform for commodities reducing overall processing time for Murrabaha deals.

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