KUWAIT CITY : Commercial Bank of Kuwait announced a record net profit for the three months to March 21, 2008 of KD 34.1 million, an increase of 22 percent on the same period of 2007. Chairman & Managing Director Abdulmajeed Al-Shatti commented "Commercial Bank has started 2008 very strongly with excellent profits for the quarter and we expect to maintain this superior performance. With a return an average assets of 3.22 percent and a return on opening equity of 32.12 percent for the first quarter these results are excellent by local and international standards. Earnings per share of 27.0 fils per share for the period are 22 percent ahead of the 22.1 fils per share of 2007." Al-Shatti further explained "Operating income is up 76 percent on 2007 and includes the gain on the sale of our investment in Bank of Bahrain & Kuwait. Net interest income is 26 percent ahead, underlying fees and commissions are up 8 percent and gains from dealing in foreign currencies up 100 percent." Commercial Bank's total assets are KD 4.2 billion at the end of March 2008 and its shareholders equity stood at KD 441 million.
Al-Shatti noted that "Commercial Bank continued to expand its branch network by opening its 52nd branch in Fahed Al-Salem and that the introduction of a mobile banking service had been well received by customers. Our investment subsidiary Al Tijari Investment Co has started operations as CBK Capital and we are busy working on the integration of Union Securities Brokerage Co that was recently acquired." Al-Shatti also took the opportunity on behalf of the Board of directors "to thank the Banks valued customers for their trust and confidence, the Executive Management team headed by Jamal Al-Mutawa and the Banks staff for their hard work and loyalty and shareholders for their continued support and faith. We continue to add shareholder value, improve customer service and develop product offerings." With 52 branches Commercial Bank of Kuwait operates the second largest full service network in Kuwait.
Reuters adds: Chairman Abdul-Majeed Al-Shatti also told Reuters the Gulf Arab state's third-largest lender by market value was expanding in the Middle East and was about to buy a Yemeni bank. "We're targeting 20 percent growth (for 2008). All units are doing well," Shatti said. Net income in the first three months rose to KD 34.1 million ($128.4 million) after KD 28 million in the same period a year ago, the bank said in a statement on Tuesday. In a Reuters survey last month, Global Investment House had expected CBK to post first-quarter profit of KD 35 million.
Growth
"The growth is mainly coming from the core banking operations, it is doing well in terms of retail and corporate banking," said Faisal Hasan, Global's head of research. CBK sold its 19.1 percent stake in the Bank of Bahrain & Kuwait (BBK) in February for 122.83 million Bahraini dinars ($326 million). Quarterly profit was also driven by a 100 percent jump in gains from foreign exchange dealings, while net interest income rose 26 percent, the bank said. Fees and commissions were up 8 percent. Return on average assets was 3.22 percent, while return on equity reached 32.12 percent. Both are well above the 2.87 percent and 21.7 percent respectively reported by National Bank of Kuwait, the country's biggest lender by assets. Like other Gulf lender, Commercial Bank has been expanding in the region to offset increasing competition at home where foreign players such as BNP Paribas have entered the fray.
Process
Shatti said the lender was in the final process of buying a majority stake in an unidentified Yemeni lender. "We will announce it very soon, in a couple of months," he said, declining further comment. Daily Al-Qabas quoted Chief Executive Jamal Al-Mutawa as saying on March 6 that the Kuwaiti lender wanted to buy 70 percent of Yemen Gulf Bank. Shatti also said CBK would "very soon" have news on plans to raise its stake in Syrian Islamic lender Cham Bank. It said in March it might increase its stake to as much as 30 percent from 10 percent now. The bank said it was still considering expanding in Egypt although it was no longer interested in bidding for Banque du Caire, of which the government wants to sell as much as 67 percent by the end of April.
Shatti said CBK had not made a final decision yet whether it would transform itself into a full Islamic lender after applying earlier this year to the central bank for such a licence to tap booming demand for sharia-compliant financial services. "We don't have a final position on that yet," he said. Earnings per share rose to 27 fils in the quarter versus 22.1 fils a year ago. Earnings include unrealised profit of KD 285,000, reflecting the value of its investments. Hasan said CBK might be affected by restrictions imposed by the central bank last month on consumer loans in the medium term but saw no great risk. "We might see some slight decline in the strength but we see no major impact on the loan book," he said. Shares of CBK are up 12.50 percent this year to Tuesday's close, compared with 17 percent for the main stock index . Shares of rival National Bank of Kuwait were up 9 percent. The stock closed unchanged at KD 1.620.
© Arab Times 2008
