Two of country's main lenders move back into profit
Kuwaiti banks a litmus test for return to health
Kuwaiti banks were the first to show signs of weakness in the early days of the financial crisis and there are signs they could be the first to get back to full health. Two of Kuwait's main lenders, Commercial Bank of Kuwait (CBK) and Boubyan Bankswung back to second-quarter profits from net losses in the same period last year. Investors were more than happy with the results and CBK shares rose 1.1 per cent to 910 Kuwaiti fils. Its shares are up 28 per cent from a 52-week low in May. Boubyan Bank shares advanced 1.9 per cent to 520 fils and are now 13 per cent up this month and 44 per cent above their 52-week low in November.
CBK said yesterday it had made 2.3 million Kuwaiti dinars in net profit for the second quarter after a net loss of a similar amount in the same period last year. EFG-Hermes had pencilled in a net profit of 1m dinars for the lender. "At this time last year the [Kuwaiti] banks in general were at the low point. We are now seeing some signs of normalising in the sector, which is being reflected in the earnings," said Ali Khan, the head of equities at the investment bank Arqaam Capital in Dubai.
Boubyan Bank profits showed a similar upswing. It reported a 1.4m dinar profit for the second quarter compared with a net loss of 1m dinars in the same period last year. Mr Khan said loan growth for the Kuwaiti banking sector in the first half was 0.5 per cent, while deposits grew by 1 per cent, which indicated moderate improvement. Saudi Arabia, by contrast, is still not seeing any growth. Kuwaiti lenders were outstanding performers in 2008 but profitability slumped last year as their asset quality deteriorated and they had to book significant losses on loans and investments. Most banks still had huge exposure to troubled domestic property, construction and investment company sectors.