(MENAFN - Arab Times) Commercial Bank of Kuwait announced an operating profit before provisions for the period of KD 101.269 million (2010: KD 93.609 million) an increase of 8%.
This was allocated as provisions against the loan and investment portfolios resulting in a net profit attributable to shareholders of the parent bank for the year to 31st December 2011 of KD 0.810 million.
Commenting on the financial results for the period, Chairman Ali Yousef Al Awadhi said that the planned strategy, to be a leading retail bank in Kuwait and to be the best bank for commercial business while outperforming our peers in profitability, is moving well ahead.
Al Awadhi noted that although other performance indicators showed a return to profitable growth with net interest income of KD 91.6 million up 4% on last year and operating income up 5% the Board of Directors' decided to protect the bank's capital base and shareholders' value by allocating the Operating Profit as provisions against the loan and investment portfolios.
Al Awadhi went on saying that Commercial Bank is moving well ahead according to its planned strategy that aims at strengthening the bank's financial position, reduce the percentage of NPLs and generating income from the bank's core business activities.
Al Awadhi explained that nonperforming loans are 6.7% of gross loans as at December 2011, down from 15.4% at 2010. Al Awadhi further explained that the downward trend of the Kuwait economy is a result of weak government spending, the sluggish performance of KSE and the related negative impact on assets values, noting that the improvement in the economic and business environment will positively reflect on the banking sector and on Commercial Bank. Commercial Bank's financial position and balance sheet is strong with additional judgmental provisions that provide the bank with more comfort when taking up businesses, added Al Awadhi.
The bank continues to demonstrate its cost control leadership with operating expenses down 5% on 2010. Operational efficiency is a competitive advantage for the bank which continues to maintain one of the lowest cost/income ratios with 22.03% for 2011.
Commercial Bank's total assets at the end of December 2011 reached KD 3.714 billion (2010: KD 3.623 billion) with shareholders equity of KD 530.5 million (2010: KD 465.9 million). The capital adequacy ratio at December 2011 is 18.58% (2010: 19.96%) which exceeds the minimum 12% required by the Central Bank of Kuwait.
The bank recently adopted international best practise when calculating its capital adequacy ratio by no longer recognising as a credit risk mitigant its own shares pledged as collateral. This resulted in a slight reduction in the bank's ratio. The bank continues to have a strong capital base with more than twice the international ratio required by Basel II.
Commercial Bank of Kuwait takes the opportunity to thank the bank's valued customers for their trust and confidence, the Executive Management team and staff for their hard work and loyalty and shareholders for their continued support and faith.