Commercial Bank of Kuwait (CBK) reported improved earnings this week but challenges remain as the lender tries to rebuild from damage incurred in the global financial crisis.
The bank posted a profit of 19.6 million dinars in the third quarter, against a loss of 2.5m dinars in the same period last year, a regulatory filing on the Kuwait Stock Exchange showed yesterday. But only a few thousand shares changed hands after the release, with the stock trading up slightly more than 1 per cent to 920 fils a share as investors recognise the bank has not yet fully recovered.
Elena Sanchez, a banking analyst based in Dubai for the Egyptian investment bank EFG Hermes, said the results were in line with EFG Hermes's expectations.
CBK took a larger hit in the financial crisis than most of its peers. It was heavily exposed to many of the Kuwaiti investment companies that went under. As a result, "they haven't been able to focus on growth in their loan book or international expansion", Ms Sanchez said.
CBK is also a creditor to Awal Bank in Bahrain,controlled by Maan al Sanea and his Saad Group, which recently filed for bankruptcy protection.
Awal Bank last week requested an extension to the deadline to compile its schedule of assets and liabilities for the case.
According to its petition filed with the US bankruptcy court in Manhattan, Awal has between US$50m and $100m of assets and more than $1 billion of liabilities.
The bank withdrew from ratings by Standard & Poor's (S&P) in September, which could make it difficult to raise debt in the future. In its final report, S&P raised the possibility that the Kuwait government would provide support for the bank.
"This year should be the last of the high provision charges the bank should take and then we should see some profitability improving by 2011," Ms Sanchez said.