KUWAIT CITY, Feb 7, (Agencies): The Bank of Kuwait & the Middle East realized net profits amounting to KD 14.3 million in 2009. The profit was generated by operating income to the tune of KD 85 million. The Bank also succeeded to increase the net interest income by 35.6 percent.
On the other hand, and in line with the Bank’s prudent policy to safeguard against unforeseen economic circumstances on the aftermath of the local and international economic events, the Bank succeeded to realize such profits after making provisions (includes additional precautionary provisions) in 2009 amounted to KD 47.1 million.
This reflects the Bank’s ability to smoothly withstand the fluctuations of the economic cycle. The total deposits increased by 3.8 percent to KD 1,988 million, the total assets increased by 1.1 percent to KD 2,261 million while total loans and advances increased by 6 percent to KD 1,561 million.
In his announcement of the Bank’s year-end Financial Statements, the Chairman & Managing Director Hamad Abdulmohsen Al-Marzouq said that the Bank has achieved an increase of 51.1 percent in its core profit before provisions and non recurring items signifying a positive trend in profitability for the years to come.
He added that the Board of Directors has proposed to distribute stock dividend only with a view to support the capital base and to avoid the burden of capital increase on the shareholders. Mr. Al-Marzouq went on to say that the Bank’s operating performance and indicators witnessed, by the grace of Allah, marked growth during the year 2009 and that these are positive results; notwithstanding the initiative adopted by the Bank’s management to maintain extra general and precautionary provisions, in addition to the mandatory provisions computed in accordance with the Central Bank of Kuwait instructions and international accounting standards, in order to safeguard against the impact resulting from the world financial crisis.
Factors
Al-Marzouq added that the main factors for the realized profits was the growth in the performance of all business segments, driven by the diverse sources of revenues, expansion of activities and risk distribution, amid increased concern to satisfy customer requirements with the introduction  of several innovative services and products, confirming that the next phase shall be very challenging to the Kuwaiti banking sector with the need to develop and position its instruments and products within the accelerated changes witnessed in the whole world.
Al-Marzouq went on to say that the year 2010 will signify a distinguished climacteric in the course of action of the Bank of Kuwait & the Middle East, in that the Bank takes constant steps towards the conversion into Islamic banking, which is expected to commence by the second quarter of 2010, following the completion of the legal procedures for conversion and obtaining the Amiri Decree, and the registration as an Islamic bank with the Central Bank of Kuwait. The Bank of Kuwait & the Middle East will begin a new era as one of the leading Islamic banks in the market.
Al-Marzouq stressed that the Bank will continue to adhere to its consistent and diligent policies as well as outstanding management practices. As such the Bank won independent accreditations from leading international rating agencies. The international credit rating agency FITCH concluded that “BKME”, (which will be renamed “Ahli United”, with the commencement of the actual conversion into an Islamic bank) enjoys high-performing risk management practices which contributed to place it on the forefront of the local banks.
The FITCH rating to BKME derives its conclusion from the Bank’s leading position in Kuwait with regard to safeguarding its customer deposits, compliance with repayment of long term debts and accordingly, rated the Bank at (A-), implying a stable position for the long term liabilities. This further signifies the optimistic approach taken by FITCH concerning the business outlook of the Bank, evidenced by solid indicators that the Bank continues to enjoy financial stability and consistency.
The above rating has been reaffirmed by the leading position held by the Bank, as recorded by the report issued by the Institute of Banking Studies with respect to the various financial indicators during the years 2005 - 2008, reflecting the highly graded financial stability which the Bank enjoys, emanating from a long history extending to 69 years of banking services in the State of Kuwait.
Strength
Concluding his statement, Al-Marzouq stressed his confidence in the strength of the economic conditions in Kuwait in general, and that the local banking sector, guided by the prudent policy adopted by the Central Bank of Kuwait, shall survive the adverse impacts of the global financial crisis better than its world counterparts.
Al-Marzouq also seized the opportunity to extend sincere thanks and appreciation on behalf of the members of the Board of Directors of the Bank, to the Bank’s customers and shareholders for their esteemed confidence in the Bank and their contribution to materialize this achievement as well as their prompt response and positive cooperation with the Bank for completion of the process of conversion into Islamic banking, whereas the Bank is expected to commence its operations as an Islamic bank starting the second quarter of the current year after completing all legal related issues.
In spite of the bank’s precautionary policy amid the negative ramifications of the global financial crisis, the bank managed to achieve the aforementioned profits thanks to allocations involving additional precautionary voluntary allocations estimated at KD 47.1 million, the bank said in a press release on Sunday.
The bank posted a rise in its net operating profits hitting 51.1 percent, saving allocations and unrepeated items, something which indicates the favorable trend of the bank’s profits for the coming years, BKME Chairman Hamad Al-Marzouq said.
The bank is going to distribute bonus shares, rather than cash money, with a view to shoring up the institution’s capital base and fending off potential capital increase burdens on shareholders, he said.
The bank’s profits are mainly due to the growth of performance in all sectors thanks to diversified revenues, expanded activities, distributed risks, growing attention to customers’ requirements and high-quality and developed services, he added.
The next stage necessitates a necessary revamp and development of banking tools and products amid swift world changes, he added.