NBK’s net profit declines 32.7% in second quarter

National Bank of Kuwait (NBK), the country’s largest, posted a 32.7 per cent fall in second-quarter net profit on provisions and a decline in the value of investments, but it expects good year results. NBK Chief Executive Ibrahim Dabdoub also said in comments to Arabiya TV the bank had KD2.8 million ($9.73m, Dh35.73m) exposure to troubled Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi and Brothers. Shares of NBK, the country’s largest by market value, rose 3.39 per cent after the results, outperforming Kuwait’s main index which ended up 1.94 per cent. Net income in the three months to the end of June was KD62.55m, or 22 fils per share, compared with KD93m, or 31 fils per share in the same period a year earlier, said NBK in a statement on the bourse website. EFG Hermes had forecast a second-quarter net profit of KD68m, according to a survey. NBK’s first-half profit fell 28 per cent to KD126.1m from KD175.1m a year earlier, mostly due to a decision to compensate clients who were exposed to fraud by disgraced financier US Bernard Madoff, said Dabdoub. The bank also took investment provisions and voluntary judgmental loan provisions which had impacted half-year earnings by over $190 million, said Dabdoub in a statement. Madoff pleaded guilty in March to running a fraud involving as much as $65bn over 20 years, drawing in thousands of investors all over the world. Despite the fall in second-quarter and half-year net profit, Dabdoub expects better results for the year, and said he hoped the bank would meet its 2009 net profit goal of KD255m. “Although we foresee that 2009 might be a challenging year for the region’s economies, we are confident in NBK’s ability to overcome the tough conditions and expect to record good results for the year,” he said. NBK said its operating income rose 1.21 per cent to KD275.3m in the first half from KD272m a year earlier. (Reuters) CBK conducts stress test The Central Bank of Kuwait has conducted half-yearly stress testing for banks in a bid to strengthen the sector’s risk management. Eelco Schnezler, director of Enterprise Risk Services of Deloitte, said a stress test is a risk management technique used to evaluate the potential effects on a bank’s financial position in a number of exceptional but plausible stress scenarios. A meeting was held with Kuwaiti bankers on stress testing. Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .