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Wednesday, January 28, 2009

Kuwait NBK eyes steady 2009 profit despite Q4 fall

By Ulf Laessing

KUWAIT, Jan 27 (Reuters) - National Bank of Kuwait (NBK) (NBKK.KW) hopes to keep its net profit steady in 2009, its chief executive said on Tuesday, despite a fourth-quarter dive partly on provisions to offset the impact of the global financial crisis.

Ibrahim Dabdoub told Reuters 2009 would be difficult because of the global crisis.

"To be realistic we ... say hopefully we will be able to reach, this year, last year's figure," Dabdoub said.

Kicking off Kuwait's earnings season, NBK's fourth-quarter net profit fell 78 percent to 11.6 million dinars ($40 million), missing a forecast of 65 million dinars by Global Investment House analysts in December.

Full-year 2008 profit fell to 255.3 million dinars from 273.6 million in 2007, the bank said.

Shares in NBK, the country's biggest bank by assets, rose 5.43 percent after the release of the results, which were accompanied by a recommendation for a 45 fils cash dividend and one-for-10 bonus share issue. Still, the stock is down 18 percent this year.

"This is a good result given the economic environment. They take provisions as a precautionary measure and therefore will have more cash aside when they need it," said Mustafa Behbehani, a director at Gulf Consulting Co in Kuwait.

NBK took voluntary provisions of 45 million dinars as a precaution, CEO Dabdoub said. Without the provisions, net profit would have grown by 10 percent in 2008.

The bank expects retail lending to rise this year and corporate lending to be flat, he added.

Dabdoub told Reuters in October he expected NBK to post a net profit of 350 million dinars in 2008, but later warned it would not meet the target as the credit crunch hit the Gulf.

Behbehani Gulf Consulting said the crisis would also hit profits at other lenders, such as Islamic bank Kuwait Finance House (KFIN.KW) or Commercial Bank of Kuwait (CBKK.KW), but an expected increase in government spending would minimise the impact.


The OPEC country's oldest bank, which has 69 branches in Kuwait, will lessen its foreign expansion but still plans to set up an Islamic lender in Switzerland, Dabdoub said.
"We will be slowing down our expansion unless we see a good acquisition opportunity," he said. "(Switzerland) has not been done. We are still waiting until we agree with our partners on a strategy."

NBK said in March that it planned to set up an Islamic lender in Switzerland with a Saudi partner aimed at Gulf investors in the European country.

NBK has been expanding to offset rising competition at home by buying Al-Watany Bank of Egypt and a 40 percent stake in Istanbul-based Turkish Bank in 2007. It is also active in Qatar through affiliate International Bank of Qatar (IBQ).

Both Egypt's Watany and Qatar's IBQ performed well last year, the CEO said without giving details.

Dabdoub said the bank was still eyeing expansion opportunities in Syria and North Africa, "but it takes time".

He also told CNBC Arabiya that NBK was in talks with Islamic firm Investment Dar (TIDK.KW) to buy their nearly 20 percent stake in local Islamic lender Boubyan Bank (BOUK.KW).

Operating income for the year rose 20 percent to $1.84 billion last year, compared with 2007, NBK said. Assets fell to 11.97 billion dinars at the end of December from 12.4 billion at the end of September.

There are 1,000 fils to the dinar. ($1=0.2887 dinars) (Additional reporting by Rania El Gamal; editing by David Cowell and Karen Foster)

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