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Dubai, (Reuters) – Dubai Islamic Bank posted a net profit of 450 million dirhams ($122.5 million) in the second quarter, down 40 percent from a year earlier but better than analysts’ forecasts. The bank, one of the largest Islamic lenders in the Gulf Arab region, said in a statement on Saturday half-year profit stood at 820 million dirhams. Analysts surveyed by Reuters had forecast earlier this month that the bank’s second-quarter profit would fall between 53 and nearly 67 percent. [ID:nL697302]
The bank said it took a provision of 135 million dirhams in the second-quarter, which is less than amounts announced by several regional banks hit by losses on loans. “The bank’s total impairment provision for first half of 2009 now stands at 239 million dirhams. This reflects a prudent and conservative approach during a period of marked global financial instability,” the statement said. DIB said last month it had no exposure to troubled Saudi conglomerates Saad Group [SAADG.UL] and Ahmad Hamad Al Gosaibi Group & Brothers.
The bank’s investment and financing assets fell to 50.7 billion dirhams from 52.6 billion dirhams at the end of 2008, the statement said without elaborating. Total assets rose 3 percent to 87.8 billion dirhams in the same period. “As we begin to see gradual stabilisation of the markets in the past quarter, DIB is optimistic of the recovery of regional markets,” Chairman Mohammed al-Shaibany said in the statement. “The bank’s financing-to-deposit ratio stood at 71 percent as of 30 June 2009,” it said, adding this “reflects the bank’s conservative credit policy as well as a strong liquidity position.”
On July 7, Standard & Poor’s Ratings Services lowered its long-term counterparty credit rating on DIB to ‘BBB+’ from ‘A-‘ with a negative outlook but affirmed the ‘A-2′ short-term counterparty credit rating on the bank. S&P said it expected a decline in the real estate sector in Dubai to put pressure on DIB’s asset quality and profitability, adding the negative outlook reflected it expectation of a weakening of DIB’s financial profile. Established in 1975, Dubai Islamic Bank is one of the oldest players in the fast-growing Islamic banking sector. (Reporting by Firouz Sedarat).
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KUWAIT, (Reuters) – Commercial Bank of Kuwait (CBKK.KW) (CBK), the country’s third biggest lender by market value, made a 2.34 million dinar ($8.15 million) loss in the second quarter on provisions, according to Reuters calculations. Net profit for the first half came in at 800,000 dinars, the bank said in a statement on Saturday without giving quarterly figures. Reuters calculated the second-quarter loss based on financial data which showed the bank made 3.14 million dinars net profit in the first quarter of this year and 36.4 million dinars profit in the second quarter of 2008.
“Commercial Bank of Kuwait has reported a profit before provisions of 66.9 million dinars and, after the bank’s board of directors has allocated provisions against the loan and investment portfolios, the net profit is 0.8 million dinars,” the bank’s chairman Abdulmajeed al-Shatti said in a statement. CBK had a total of 256.2 million dinars of loan provisions in the first half of the year, the statement said. On Friday, Fitch Ratings said Kuwaiti banks, including CBK, were coming under increased stress due to contraction in the local economy and exposure to risky asset classes which would affect their profitability.
“Kuwaiti banks’ exposure to risky asset classes is significant, with over half of the banking system loan book exposed to potentially risky sectors of the economy, including investment companies, real estate and construction, and lending for the purchase of securities,” Fitch said. Shatti said in the statement that despite government steps to support the local economy, the “outlook remains uncertain.” In March, Shatti said 2009 would be a difficult year and that CBK may take provisions to weather the global downturn. Earlier this month, National Bank of Kuwait (NBKK.KW), the country’s largest, posted a 32.7 percent fall in second-quarter net profit on provisions and a fall in the value of investments. Kuwait Finance House (KFIN.KW), the Gulf’s second largest Islamic lender, has posted a 61 percent fall in second-quarter net profit on provisions as the global crisis hit Kuwaiti banks.
OPEC member Kuwait has been hit hard by the financial crisis. The government had to step in to save Gulf Bank (GBKK.KW) last year, the only major bank in the Gulf Arab region requiring a government bailout, while several major Kuwaiti investment firms are struggling to meet debt requirements. CBK’s total assets amounted to 3.7 billion dinars at the end of June, while shareholders equity stood at 451.5 million dinars, the bank said. (By Rania El Gamal and editing by Firouz Sedarat)
INTERNATIONAL WORKSHOP IN ISLAMIC ECONOMIC, BANKING AND FINANCE, 8th-9th JULY 2008, Jointly organised by Durham Islamic Finance Programme, Durham University and Center for Islamic Area Studies at Kyoto University, KIAS, Japan; and Global COE Program: In Search of Sustainable Humanosphere in Asia and Africa, Japan.