Gulf Bank KSC (GBK), the Kuwaiti lender that lost $1.3 billion on derivatives trading in 2008, posted a 36 percent drop in second-quarter profit as provisions rose.
Net income fell to 5.4 million dinars ($19 million), or 2 fils a share, from 8.5 million dinars, or 3 fils per share, a year earlier, the bank said in a statement to the Kuwait Stock Exchange today.
“The bank further increased the precautionary reserve by 34 million dinars to reach 124 million dinars, in line with its strategic plan to create a ‘fortress balance sheet’ and to further its capacity to grow and expand,” Kuwait’s third- biggest lender by market value said.
Gulf Bank is delivering “good results, despite the difficult economic conditions,” Chairman Mahmoud Al-Nouri said in the statement. Profit in the first half of this year dropped 30 percent to 12.8 million dinars. Operating profit was 58.7 million dinars in the six months to June 30 while assets reached 4.9 billion dinars in the same period, the lender said.
The global credit crisis weakened lending and investment banking in the Middle East, pushing up loan-loss provisions and led to a drop in the value of investments. Kuwaiti private- sector borrowing grew at the slowest pace in at least 17 years in 2011 as OPEC’s fourth-biggest exporter couldn’t meet spending pledges and stimulate investment.
National Bank of Kuwait SAK, the country’s biggest lender, posted a 40 percent drop in second-quarter profit to 39.8 million dinars as it set aside money for provisions and cited a “negative” domestic outlook.
Gulf Bank shares rose 3.9 percent to 400 fils today in Kuwait City, before the results were announced. The stock has fallen 18 percent this year compared with a 2.2 percent decrease for the benchmark Kuwait Stock Exchange index.
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