Kuwait Gulf Bank made $5.52m net loss in Jan

ON-GOING LOSSES: Despite posting a net loss in January 2009 troubled Gulf Bank is showing signs of improved performance, say experts. (Getty Images)

Kuwait's troubled Gulf Bank made a net loss of KD1.6 m ($5.52m) in January, a relative improvement on major fourth-quarter losses brought on by derivatives deals.

Kuwait's fourth-largest bank by market value posted a fourth-quarter loss of KD445.5m on Saturday, blaming the derivatives losses that triggered a central bank rescue last year as the global financial crisis hit the world's top oil-exporting region.

Mustapha Behbehani, a director at Gulf Consulting, said the figures showed the bank seemed to have left the worst behind it after the central bank ordered a restructuring including an emergency rights issue which covered most of the losses.

"We're waiting now for a new board but I think with a new management things will be better," he said.

Last year, the government guaranteed all deposits in Kuwaiti banks in a bid to restore confidence after Gulf Bank's difficulties raised investor fears that the sector's exposure to the global credit crisis ran deeper than first thought.

Banks in Kuwait and in other Gulf Arab countries have seen sharp profit declines as the financial crisis freezes credit markets and slows property markets, with some posting quarterly and annual losses and being forced to take provisions.

Total assets rose to KD5.045bn on January 31 from KD4.95bn a month earlier, Gulf Bank said in a statement on the Kuwaiti bourse website.

In December, Gulf Bank shareholders approved a rescue plan ordered by the central bank to raise KD375m in an emergency rights issue to cover derivatives losses of the same amount.

The bank is expected to announce a new board as next the step of the revamp.

Behbehani said the new board should pursue an expansion abroad like other Kuwaiti lenders or diversify into Islamic banking to spread its risk.

Shareholders' equity rose to KD413.86m in January from KD37.98m in December, the bank said.

In October, the central bank halted trading in Gulf Bank until the end of a restructuring plan that saw Chairman Bassam Al Ghanim replaced by his brother Kutayba.

No date has been given when trading would resume. (Reuters)

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