Kuwait's NBK Q1 profit falls 22.6% on provisions

LOWER PROFITS: OPEC country's oldest bank, which has 69 branches in Kuwait. (Getty Images)

National Bank of Kuwait (NBK) posted a 22.6 percent decline in first-quarter net profit, after booking provisions to weather a global financial crisis.

The country's biggest bank by assets posted net profit of KD63.5m ($216.9m), or 22 fils per share, in the first quarter, NBK said in a statement on the bourse website on Tuesday.

This is compared with KD82m, or 28 fils per share, in the year earlier period. There are 1,000 fils to the dinar.

Operating income in the first quarter rose 10 percent to $507m compared to $460m a year ago, the bank said.

NBK has made a "voluntary decision to make additional general provisions as a precautionary measure against any protracted impact of the global financial crisis on the local economy," the bank said in a statement.

It did not specify the value of the provisions taken.

Analysts at EFG-Hermes had expected first-quarter net profit of KD61m, according to a Reuters survey in April.

Chief Executive Ibrahim Dabdoub told Reuters in March the bank was on course to match last year's first-quarter net profit and did not at that time see the need for provisions in 2009.

"Growth in our operating income is a testament to the robustness of our business model," Dabdoub said in a statement on Tuesday. "Our solid franchise and diversified revenue sources position us to maintain our leadership position."

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).

The OPEC country's oldest bank, which has 69 branches in Kuwait, said in January it would scale back its foreign expansion but still plans to set up an Islamic lender in Switzerland.

Assets were almost unchanged at KD12bn at the end of March 2009, NBK said, after KD11.97bn at the end of December.

Return on assets was 2.15 percent, while return on equity was 17.9 percent, the bank said.

Shares of NBK were down 1.64 percent on Tuesday. Earnings were released after market closed. ($1=.2928 Kuwaiti Dinar) (Reuters)

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