Merger‐Driven Expansion, ESG Integration and Digital Innovation in Islamic Megabanking: A Maqasid al‐Shariah Performance Analysis of Kuwait Finance House

Advancing sustainable growth and ethical finance requires Islamic megabanks to balance strategic expansion with robust Environmental, Social, and Governance (ESG) integration and digital innovation. This paper examines Kuwait Finance House (KFH) as a case study to assess whether merger‐driven consolidation, ESG integration, and digital innovation can reinforce one another in an Islamic megabank, evaluated through a Maqasid al‐Shariah (Islamic Objectives) lens over the period 2019–2024. Using a mixed‐methods performance analytics framework, the research integrates quantitative financial and ESG indicators with qualitative strategic assessments. Data sources include KFH's Audited Consolidated Financial Statements (FY 2024), Refinitiv Eikon workspace, industry reports, and academic literature. Findings reveal that the merger with Ahli United Bank of Kuwait (AUBK) not only delivered scale efficiency but also opened non‐traditional markets, strengthened operational synergy, and reinforced risk management through harmonized capital adequacy. Moreover, KFH's ESG integration advances the United Nations Sustainable Development Goals (SDGs), particularly SDG 8 (Decent Work and Economic Growth) and SDG 13 (Climate Action), by promoting community development, human rights protection, and emission reduction. The study positions KFH's transformation as a replicable model for Islamic banks in Southeast Asia, MENA, and Africa, offering policymakers and practitioners practical insights into achieving sustainable growth while embedding ethical finance principles.