National Bank of Kuwait SAK, the country’s largest lender, posted 2012 earnings that beat estimates amid what it called a “stagnant” operating environment. The shares fell after it proposed a lower dividend.
Net income rose 0.9 percent to 305.1 million dinars ($1.1 billion), the bank said in an e-mailed statement today. That compares with a mean estimate of 302.6 million dinars from five analysts, according to data compiled by Bloomberg.
“We achieved a solid set of results despite the ongoing challenges,” Group Chief Executive Officer Ibrahim Dabdoub said. “The outlook for 2013 has improved as we expect to see more government spending, mainly on mega projects, which in turn generates economic activity and creates opportunities for the private sector.” Last year was “turbulent” for the banking industry “as the operating environment remained stagnant,” Dabdoub 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. Kuwait has dragged implementation of a $110 billion development plan to diversify and modernize its oil-reliant economy, hampering the demand for debt.
The board recommended a cash dividend of 30 fils a share and five bonus shares for every 100, the bank said. NBK paid a cash dividend of 40 fils and 10 bonus shares for every 100 in 2011. The shares dropped 2 percent, the most since Oct. 22, to 970 fils. There are 1,000 fils to the dinar. The stock lost 5.7 percent last year compared with a 2.1 percent gain in the Kuwait Stock Exchange Index.
“NBK’s results were better than our expectations, on account of higher capital gains and lower provisions,” said Naveed Ahmed, a banking analyst at Kuwait City-based Global Investment House KSCC. (GLOBAL) “While the quality of earnings is lower than what we would be happy with, lower-than-expected provisions might actually be a good sign, though needs further investigation. We are happy with the payouts which are in line with our forecast.”
Kuwaiti loan growth rose to 5.2 percent in the year to November, having risen as high as 5.5 percent in September, the fastest pace in almost three years. Personal loans grew 12 percent. While political turmoil thwarted attempts to speed up investment projects and spur corporate lending, the government and parliament have pledged cooperation to put the development plan on a fast track.
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