Commercial Bank of Kuwait (CBK) confirmed on Monday its 2008 goal of 20 percent net profit growth despite a slowdown to 11 percent in the second quarter after the central bank toughened lending rules.
Chairman Abdul-Majeed Al-Shatti also told Reuters Kuwait's third-largest bank by market value was in the final stages of buying Yemen Gulf Bank and hopes to conclude talks to buy a stake in an Iraqi bank by year-end as it expands in the region.
Quarterly profit rose by 11 percent to 36.4 million dinars ($136.7 million), driven by its net interest income and foreign exchange trading, but was down from 22 percent net growth in the first quarter. In the first six months, profit is up 16 percent.
Global Investment House forecast 40.20 million dinars net profit in the second quarter.
"We've taken some precautions because of the rules of the central bank but we are still aiming for the 20 percent," Al-Shatti said. "The central bank affected the retail side of the business, not the corporate side."
CBK is the third Kuwaiti lender reporting double-digit quarterly profit growth after National Bank of Kuwait, the country's biggest bank by assets, and major Islamic lender Kuwait Finance House .
The upbeat results come despite tougher consumer lending rules imposed by the central bank to help curb inflation that hit 10.1 percent in February, the latest published figure.
Faisal Hasan, head of research at Global said CBK, like other local lenders, were benefiting from a booming economy flush with windfall oil revenues.
"We were expecting growth both in the net interest income and fee-based income," he said.
CBK's net interest income rose 30 percent in the first six months, up from 26 percent in the first three months, while underlying fees and commissions were up 14 percent compared to 8 percent in the first three months.
Like other Gulf lenders, CBK has been seeking to expand abroad to offset rising competition at home where foreign players such as HSBC and BNP Paribas have entered the fray.
"Iraq has a great potential coming. The violence has subsided," Al-Shatti said, adding that CBK was already operating in northern Iraq and wanted to build a platform for growth by buying a stake in an unidentified Iraqi lender.
He declined to comment on repeated reports in daily Al-Watan that CBK wanted to buy 50 percent of Iraqi Islamic lender The Tigris and Euphrates Bank for Development and Investment.
CBK was looking at investment opportunities in North Africa and Egypt but would not bid for Banque du Caire, Al-Shatti said.
"We have our eyes open on Egypt but don't see any opportunities in the next two months," he said.
Egypt cancelled the auction of up to 67 percent of Banque du Caire, its third-largest bank, earlier this year, saying the bids from three foreign banks were too low.
CBK's return on assets was 3.3 percent in the first six months, above NBK's 3.1 percent. Assets stood at 4.3 billion dinars at the end of June, while shareholder's equity was 475.6 million dinars, CBK said.
Shares of CBK fell 2.8 percent this year, compared with almost 18 percent rise for the main stock index. The stock closed 1.38 dinars on Monday. The earnings were announced after trading hours. (Reuters)For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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