BKME sees tough 2009, to turn Islamic in 2010 - Emirates24|7

BKME sees tough 2009, to turn Islamic in 2010

The Bank of Kuwait and Middle East (BKME) expects 2009 to be difficult due to a global crisis but has no exposure to troubled investment firms and will turn an Islamic bank in January 2010, a senior official said yesterday.

BKME, owned by Bahrain's Ahli United Bank, saw fourth-quarter net profit fall by 89.5 per cent to 965,000 dinars (Dh12.4 million) compared to KWD9.23m in the fourth-quarter of 2007, according to Reuters calculations based on financial data.

Analysts have said some local lenders might get hit by local investment firms struggling to replace loans amid a credit crunch hitting the OPEC country.

Global Investment House, the country's biggest investment bank, said last month it defaulted on most of its debt, while Islamic rival Investment Dar has it said it needs loans worth up to $1 billion (Dh3.67bn).

"We don't have problematic loans in our records," said Ahmed Zulficar, deputy chief executive for Risk, Finance and Operations. "BKME is exposed to some good investment firms," he said.

Last month, BKME provided fresh loans to Abyaar Real Estate Development and Aayan Leasing and Investment to help finance projects and refinance debts.

The lender, which has only branches in Kuwait, had no plans to expand abroad and would focus this year on transforming into a bank compliant with Islamic law banning the receipt of interest after winning initial central bank approval in June.

"We are changing the [bank's] system and training our staff... BKME is expected to be turned into an Islamic bank in January 2010," he said.

Zulficar declined to give a forecast for 2009 after the bank boosted net profit by 6.6 per cent to KWD51.36m last year despite the weak fourth quarter.

"2009 is going to be a difficult year and we have to be cautious," he said, declining to be more specific.

He said the bank had like other local rivals taken provisions in 2008 to help weather the crisis but declined to be more specific.

BKME shares rose 4.6 per cent yesterday following the earnings statement on Thursday, outperforming the main benchmark which eased 0.12 per cent.

The bank's shares have dropped around 13 per cent this year, compared to 3.39 per cent for the country's largest lender National Bank of Kuwait.

 

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