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Wednesday, 11 July 2007

Kuwait Finance Profit Surges 72 Pct, Plans Expansion

KUWAIT - Kuwait Finance House, the Gulf's second largest Islamic lender by market value, reported a 72 percent increase in second-quarter profit on Tuesday and said it would push ahead with an expansion abroad. KFH, which raised $1.06 billion through a rights issue this year said it wanted to expand into North Africa and was seriously considering opening a bank in Algeria. The lender, in which the government is the biggest shareholder, made a profit of 65.3 million dinars ($227 million) in the second quarter, easily beating the 54 million dinars forecast by Global Investment House in a Reuters survey in June. The bank reported a first-half profit of 116.6 million dinars, up 55 percent. It did not give quarterly data in statement, which Reuters calculated from previous financial statements. o keep Islam's ban on lending on interest, Kuwait Finance House makes money by sharing profit from investments that comply with Islamic law, or sharia. otal profit rose 48 percent to 249.4 million dinars in the first half, while its average return on assets was 3.3 percent. Total assets jumped by 48 percent to 8.017 billion dinars. eneral Manager Mohammad al-Omar gave no details of what units made money in his statement but said the bank would continue expansion abroad to enter markets such as Morocco and Algeria. Competition is heating up in Kuwait, where Boubyan Bank, Kuwait International Bank and a third Islamic lender being set up by the government are vying for a slice of the market. Pending approval from Kuwaiti authorities, KFH said it was considering opening a bank in Algeria with a capital of $100 after sending a delegation to study business opportunities in North Africa. In a Reuters interview on June 18 Omar said Kuwait's second largest lender by market value wanted to use cash from its capital increase to expand in the Middle East and possibly Asia. He said KFH, which offers consumer and corporate banking, was considering applying for licenses in Saudi Arabia, Oman and Qatar and would also expand to Turkey. In Kuwait, where KFH generates most of its profits, the bank said it would add six branches to its 44 by year-end. The bank said earnings per share rose to 73 fils in the first half, up from 47 fils a year ago. - (Reuters, 10 July 07)

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