29 June 2008
Kuwait's fourth largest bank by assets, Commercial Bank of Kuwait (CBK), is on track to deliver growth of around 20 per cent in profit in 2008.
With 52 branches, CBK operates the second largest full service network in Kuwait and is increasingly diversifying its income stream both domestically and internationally.
Following a solid year in 2007, CBK's performance in the first quarter of 2008 was good and the bank is expected to show continued solid results for the six months to end June 2008.
In the first quarter of 2008, CBK announced a record net profit of KD 34.1 million, an increase of 22 per cent on the same period of 2007. The return on average assets was a high 3.2 per cent and a return on equity of 32.1 per cent.
Operating income was up by 76 per cent, aided by the gain on the sale of its investment in Bank of Bahrain and Kuwait. CBK sold its 19.1 per cent stake in BBK for 122.83 million Bahraini dinars (Dh1.1bn).
CBK's management is increasingly focusing on looking at opportunities outside the small banking market of Kuwait in order to drive growth going forward.
It is looking at buying a 50 per cent stake in Iraqi Islamic lender The Tigris and Euphrates Bank for Development and Investment. The management is studying the deal as part of a strategy to expand in Arab countries.
CBK is eyeing the Yemeni market and is believed to be interested in a majority stake in Yemen Gulf Bank.
It also has plans to raise its stake in Syrian Islamic lender Cham Bank.
CBK is also considering transforming itself into a full Islamic lender in order to tap the rapidly growing demand for Shariah-compliant financial services.
CBK's assets continue to grow strongly, with growth coming from the core banking operations, including retail and corporate banking.
Growth is being maintained despite stricter regulations set by the Central Bank of Kuwait, particularly in the retail banking area in respect to consumer and installment loans.
Banks are now limited from lending consumer loans exceeding more than 40 per cent of the borrower's salary. Previously the limit was 50 per cent.
The lending spread over the discount rate is limited to a maximum of three per cent against four per cent previously. Consumer and installment loans currently represent around 23 per cent of total sector loans in Kuwait. Global Investment House still expects CBK to record an average growth rate of 18 per cent per annum in loans over the next four years.
The research house is also currently positive on the stock. Growth should be aided by the continuation of a strong macroeconomic climate and local demand from sub-contractor financing for infrastructure projects undertaken by the government. CBK is focusing on the construction of the fourth refinery and development of the northern oil fields as major credit demand generators.
In addition, fee generation and loans disbursement is expected from project financing activities linked to the rebuilding of Iraq.
Kuwait's fourth largest bank by assets, Commercial Bank of Kuwait (CBK), is on track to deliver growth of around 20 per cent in profit in 2008.
With 52 branches, CBK operates the second largest full service network in Kuwait and is increasingly diversifying its income stream both domestically and internationally.
Following a solid year in 2007, CBK's performance in the first quarter of 2008 was good and the bank is expected to show continued solid results for the six months to end June 2008.
In the first quarter of 2008, CBK announced a record net profit of KD 34.1 million, an increase of 22 per cent on the same period of 2007. The return on average assets was a high 3.2 per cent and a return on equity of 32.1 per cent.
Operating income was up by 76 per cent, aided by the gain on the sale of its investment in Bank of Bahrain and Kuwait. CBK sold its 19.1 per cent stake in BBK for 122.83 million Bahraini dinars (Dh1.1bn).
CBK's management is increasingly focusing on looking at opportunities outside the small banking market of Kuwait in order to drive growth going forward.
It is looking at buying a 50 per cent stake in Iraqi Islamic lender The Tigris and Euphrates Bank for Development and Investment. The management is studying the deal as part of a strategy to expand in Arab countries.
CBK is eyeing the Yemeni market and is believed to be interested in a majority stake in Yemen Gulf Bank.
It also has plans to raise its stake in Syrian Islamic lender Cham Bank.
CBK is also considering transforming itself into a full Islamic lender in order to tap the rapidly growing demand for Shariah-compliant financial services.
CBK's assets continue to grow strongly, with growth coming from the core banking operations, including retail and corporate banking.
Growth is being maintained despite stricter regulations set by the Central Bank of Kuwait, particularly in the retail banking area in respect to consumer and installment loans.
Banks are now limited from lending consumer loans exceeding more than 40 per cent of the borrower's salary. Previously the limit was 50 per cent.
The lending spread over the discount rate is limited to a maximum of three per cent against four per cent previously. Consumer and installment loans currently represent around 23 per cent of total sector loans in Kuwait. Global Investment House still expects CBK to record an average growth rate of 18 per cent per annum in loans over the next four years.
The research house is also currently positive on the stock. Growth should be aided by the continuation of a strong macroeconomic climate and local demand from sub-contractor financing for infrastructure projects undertaken by the government. CBK is focusing on the construction of the fourth refinery and development of the northern oil fields as major credit demand generators.
In addition, fee generation and loans disbursement is expected from project financing activities linked to the rebuilding of Iraq.
By Darren Stubing
© Emirates Business 24/7 2008
