Business | Banking

Kuwait bank suffers $8.15m loss

Commercial Bank of Kuwait, (CBK), the country's third biggest lender by market value, made a $8.15 million (Dh29.94 million) loss in the second quarter on provisions, according to Reuters calculations.

  • Reuters
  • Published: 23:06 July 25, 2009
  • Gulf News

Kuwait: Commercial Bank of Kuwait, (CBK), the country's third biggest lender by market value, made a $8.15 million (Dh29.94 million) loss in the second quarter on provisions, according to Reuters calculations.

Net profit for the first half came in at 800,000 dinars (Dh10,239,078) the bank said in a statement on Friday without giving quarterly figures.

Reuters calculated the second-quarter loss based on financial data which showed the bank made 3.14 million dinars net profit in the first quarter of this year and 36.4 million dinars profit in the second quarter of 2008.

"Commercial Bank of Kuwait has reported a profit before provisions of 66.9 million dinars and, after the bank's board of directors has allocated provisions against the loan and investment portfolios, the net profit is 0.8 million dinars," the bank's chairman Abdul Majeed Al Shatti said in a statement.

CBK had a total of 256.2 million dinars of loan provisions in the first half of the year, the statement said.

On Friday, Fitch Ratings said Kuwaiti banks, including CBK, were coming under increased stress due to contraction in the local economy and exposure to risky asset classes which would affect their profitability.

"Kuwaiti banks' exposure to risky asset classes is significant, with over half of the banking system loan book exposed to potentially risky sectors of the economy, including investment companies, real estate and construction, and lending for the purchase of securities," Fitch said.

Al Shatti said in the statement that despite government steps to support the local economy, the "outlook remains uncertain."

In March, Al Shatti said 2009 would be a difficult year and CBK may take provisions to weather the global downturn.

Earlier this month, National Bank of Kuwait the country's largest, posted a 32.7 per cent fall in second-quarter net profit on provisions and a fall in the value of investments.

Kuwait Finance House, the Gulf's second largest Islamic lender, has posted a 61 per cent fall in second-quarter net profit on provisions as the global crisis hit Kuwaiti banks.

Kuwait has been hit hard by the financial crisis. The government had to step in to save Gulf Bank last year, the only major bank in the region requiring a government bailout, while several major Kuwaiti investment firms are struggling to meet debt requirements. CBK's total assets amounted to 3.7 billion dinars at the end of June, while shareholders equity stood at 451.5 million dinars, the bank said.

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