Kuwait Finance House (KFH) dropped to its lowest level in almost three months, after the country's largest Islamic bank reported a 43 per cent decline in second-quarter profit. Net profit dropped to 22.8 million dinars, compared with 39.9m dinars a year earlier, the bank said in a filing to the Kuwait bourse yesterday.
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Global Investment House expected a profit of 29.8m dinars. KFH reported a profit of 22.6m dinars in the first quarter of this year. Shares declined 5.2 per cent to 910 fils yesterday, the biggest fall since April 24. The stock has dropped 15 per cent this year. "The bank posted figures similar to those seen in the previous quarter and gave the second negative surprise during the year … it is fair to state that the results were disappointing," said Naveed Ahmed, a senior financial analyst at Global Investment House in Kuwait.
Mr Ahmed currently has a "buy" rating on the stock but said there was a "possibility of a downward revision when the full financial statements come out".
Kuwait's economy is "witnessing imbalances" that need solutions to avoid any adverse impact on the country's future, Sheikh Salem Abdul Aziz Al Sabah, the central bank governor, was cited yesterday as saying in a cabinet statement. National Bank of Kuwait, the country's biggest lender, reported a 4.5 per cent decline in second-quarter profit amid "a weak operating environment", the bank said last week.
"Kuwait's credit growth hasn't recovered since the crisis," Mr Ahmed said.
"The stimulus package, which was thought to be a catalyst to help boost growth in the banks, is still not in place. Unless there's public spending on infrastructure, we don't see banks doing any substantial credit growth."
Kuwait's cabinet in March approved a US$5.2 billion economic stimulus package to spur lending and beef up financial firms. The plan was designed to enable banks to lend about 4bn dinars within two years, of which the government would guarantee up to 50 per cent to encourage lending.