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Tue 14 Jul 2009 04:32 PM

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Kuwait's NBK sees 32.7% drop in Q2 profits

NBK boss Ibrahim Dabdoub sees fall in funds, but expects good year results.

National Bank of Kuwait (NBK), the country's largest, posted a 32.7 percent fall in second-quarter net profit on provisions and a decline in the value of investments, but it expects good year results.

NBK chief executive Ibrahim Dabdoub also said in comments to Arabiya TV the bank had KD2.8m ($9.73m) exposure to troubled Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi and Brothers.

Shares of NBK rose 3.39 percent after the results, outperforming Kuwait's main index which ended up 1.94 percent.

Net income in the three months to the end of June was KD62.55m ($217.4m) compared with KD93m for the same period a year earlier, NBK said in a statement on the bourse website.

EFG Hermes had forecast a second-quarter net profit of KD68m, according to a Reuters survey.

NBK's first-half profit fell 28 percent to KD126.1m from KD175.1m a year earlier, mostly due to a decision to compensate clients who were exposed to fraud by disgraced financier US Bernard Madoff, Dabdoub said.

The bank also took investment provisions and voluntary judgmental loan provisions which had impacted half-year earnings by over $190 million, Dabdoub said in a statement.

Madoff pleaded guilty in March to running a fraud involving as much as $65 billion over 20 years, drawing in thousands of investors all over the world.

Despite the fall in second-quarter and half-year net profit, Dabdoub expects better results for the year, and said he hoped the bank would meet its 2009 net profit goal of KD255m.

"Although we foresee that 2009 might be a challenging year for the region's economies, we are confident in NBK's ability to overcome the tough conditions and expect to record good results for the year," he said.NBK said its operating income rose 1.21 percent to KD275.3m in the first half from KD272m a year earlier.

Total assets were KD12.1bn at the end of the first half, while shareholder equity stood at KD1.6bn. (Reuters)

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