Kuwait's NBK takes swipe as Q2 profit slumps

National Bank of Kuwait blames political deadlock for freezing economic performance
Kuwait's NBK takes swipe as Q2 profit slumps
National Bank of Kuwait
By Reuters
Wed 18 Jul 2012 06:45 PM

National Bank of Kuwait , the Gulf Arab state's largest lender, posted a 41.6 percent slump in quarter profit on Wednesday and took a swipe at political deadlock that has left much-needed economic reforms frozen.

Kuwait has seen eight governments come and go in just six years due to bickering between the parliament and cabinet. The last government resigned in June after Kuwait's constitutional court dissolved a parliament elected in February.

Fresh elections are expected to be held after the holy month of Ramadan, due to begin later this week.

"Domestically, a negative outlook is inevitable where government spending remains dormant, tendering of new projects significantly lags and asset values continue contracting as the local stock market considerably underperforms," Ibrahim Dabdoub, NBK's group chief executive officer, said in a statement announcing its first-half results.

Such publicly candid remarks are unusual in the Gulf Arab region and highlight the level of frustration among the OPEC member's business community.

NBK had second quarter net profit of $140.2m in the three months to June 30, according to Reuters calculations, down from $240.2m for the same period of 2011.

The figure, based on financial statements, was well below the estimates of analysts who forecast average profit of KD79.33m ($281.16m)

The results were hit by a $96.4m provision which the bank took on the back of "further potential deterioration in our operating environment."

NBK said it had net profit of $431.2m in the first six months of the year, compared to $523.5m in prior-year period.

Total assets at the bank rose 4.4 percent year-on year to $51.1bn at the end of June.

In June, the bank offered KD581m for the 52.7 percent of Boubyan Bank it does not already own, to boost its presence in Islamic banking across the Gulf region.

On Monday, NBK announced Josef Ackermann, the former chairman and chief executive of Deutsche Bank, has joined its international advisory board.

Other members on its international advisory panel includes former British Prime Minister John Major and Mohamed El-Erian, the top executive at US bond firm PIMCO.

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