The internal determinants of Kuwait Finance House's (KFH) profitability / Nurul Hanis Fatin Noorlin

Kuwait Finance House was founded in 1977, in the State of Kuwait. The bank operating in accordance with the principles of Shari 'ah. The establishment of KFH in Malaysia was in 2005. KFH offers many types of Islamic banking products and services such as corporate and investment, retail, and consumer banking services. According to Gurmeet Kaur, as reported in the Star newspaper, its total assets as at financial year ended Dec 31, 2014 (FY2014) stood at RM10.47bil. KFH said it posted a moderate financing growth of 10.2% in 2014 in view of the cautious approach adopted in the business strategy with emphasis on asset quality. Net profit for FY2014 came in at RM92.82 mil, down from RM97.74mil previously (Gurmeet Kaur, 2015). Thus, this research is conducted in order to examine the relationship between profitability of KFH and the internal determinants that affect its profitability. The purpose of this research is to determine the factors that affect the Return of Assets (ROA) of Kuwait Finance House (KFH). The data is collected by using the secondary data. The type of the data used in this research is time series where the data is collected on annual basis. The data is obtained from the financial statements of Kuwait Finance House (Malaysia) based on the performance of the bank from the past 10 years which is from the year 2006 until 2015. The data collected were analyzed by using Eviews program with Ordinary Least Square Regression (OLS). The hypotheses will be tested based on the result obtained from OLS regression. The t-test, multicollinearity and heterocedasticity test would be run. The internal determinants that will be used in this study are capital adequacy, expenses management, asset quality and deposits which give an impact on the Return of Asset of Kuwait Finance House (KFH). There are significant and insignificant relationship between the independent variables and dependent variable.