(Updates with analyst comment in sixth paragraph.)
Oct. 12 (Bloomberg) -- National Bank of Kuwait SAK, the country’s biggest bank, said third-quarter profit fell amid a weak operating environment.
Net income dropped to 78.9 million dinars ($286 million), or 20 fils a share, from 79.3 million dinars, or 21 fils, a year earlier, the bank said in a statement to the Kuwait Stock Exchange today.
“We have tightened our levels of control and risk management in light of the ongoing operating challenges in the Arab world,” Chief Executive Officer Ibrahim Dabdoub said in an e-mailed statement. “We remain optimistic about our regional expansion strategy in the long run.”
The global credit crisis weakened lending and investment banking in the Middle East, pushing up provisions for loan defaults and led to a decline in the value of banks’ investments. Kuwait was forced to guarantee all deposits at local banks in 2008 after Gulf Bank KSC lost $1.3 billion in derivatives trading and Global Investment House defaulted on $2.8 billion of debt. In April 2009, the government enacted a Financial Stability Law to bolster financial institutions.
The non-performing loans to gross loans ratio declined to 1.59 percent for the nine months ended September from 1.61 percent a year earlier, the bank said.
The results were expected because growth in Kuwait is slow, said Naveed Ahmed, a banking analyst at Kuwait City-based Global Investment House KSCC. “The actual difference from our expectations is coming from provisions only, they took lower provisions,” said Ahmed today in a phone interview. “Net interest income increased to the highest in the last 10 quarters.”
NBK shares have lost 16 percent this year, matching the decline in Kuwait’s benchmark index. The stock rose 1.9 percent to 1,100 fils at the close in Kuwait today.
--Editors: Tim Farrand, Peter Woodifield
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