KUWAIT: The outlook for Kuwait’s banks has improved after a turbulent year thanks to an expected increase in state infrastructure spending, the head of Gulf state’s largest lender said.
Ibrahim Dabdoub, group chief executive officer of National Bank of Kuwait (NBK), said there was cause for optimism this year as the government adopts a more dynamic fiscal policy and accelerates spending on mega projects.
“The recent directions from the highest authority and the proposed measures to boost economic activity and spur growth are expected to lift the overall sentiment and create new opportunities in the local economy,” he said yesterday.
Dabdoub said the improvement came after a “stagnant” local economic environment in 2012, during the fourth quarter of which the lender beat analyst expectations with a steady net profit.
“Government spending was insufficient and the tendering of new projects remained behind schedule, leading to slower economic activity and an underperforming stock market,” he said in a statement.
Political tensions in the region also put pressure on business sentiment in Kuwait and beyond, he said.
Dabdoub, one of the most senior banking figures in the region, earlier this year urged Kuwait to step up spending on infrastructure to boost economic growth, in unusually frank comments for a Gulf business leader.
One of the world’s richest countries per capita, Kuwait has suffered from years of political upheaval stemming from a long-running power battle between parliament and government.
The row has held up investment and major economic reforms including implementation of a KD30bn ($108bn) economic development plan announced in late 2010.
The plan involves a series of infrastructure projects including a new airport terminal, new oil refinery and hospitals, and is aimed at diversifying the economy and attracting foreign investment.
NBK’s fourth-quarter net profit reached KD76.2m ($271m), a Reuters calculation showed, compared with KD76.8m a year ago and with an average forecast of KD62m, according to analysts.
One analyst said the results were much higher than forecast, thanks to lower-than-expected provisions and higher-than-anticipated capital gains.
“Overall we take a neutral to positive view on the result,” analyst Naveed Ahmed at Global Investment House said in a research note.
NBK shares were 2 percent lower at 0.97 dinars by 0940 GMT as investor caution lingered about the operating environment.
NBK said it would pay a reduced annual dividend of 30 Kuwaiti fils per share and five bonus shares for 2012. In 2011 the dividend was 40 fils per share and 10 bonus shares.