* Q3 net profit 108.1 mln dinars vs 78.9 mln yr-ago
* Results beat average analyst's forecasts
* CEO Dabdoub says government spending insufficient
* NBK consolidated Boubyan Bank results in Q3
(Adds spokesman comment on Boubyan, background)
By Sylvia Westall
KUWAIT, Oct 11 Kuwait needs to step up spending
on infrastructure to boost economic growth, the head of its
largest bank said on Thursday, in unusually critical comments
for a Gulf business leader.
"Government spending continues to be insufficient and the
tendering of new projects has significantly lagged leading to a
stagnant stock market performance and dormancy in economic
activity," Group Chief Executive Officer, Ibrahim Dabdoub said
in a statement announcing National Bank of Kuwait's
(NBK) third-quarter results.
Kuwait has suffered from years of political upheaval
stemming from a long-running power battle between the elected
parliament and a government dominated by the ruling family. The
row has held up investment and major economic reforms.
Dabdoub, is one of the most senior banking figures in the
region, having led the bank since 1983. His comments follow
similar criticisms he made in July and reflect the frustration
business leaders are facing in the oil-rich Gulf state which has
seen political instability hampering growth.
NBK, the largest lender in the Gulf state, reported a 37
percent rise in third-quarter net profit, beating analysts'
forecasts, as it consolidated results of its unit Boubyan Bank
in its quarterly results.
The lender said it raised its stake in Boubyan to 58.3
percent in the quarter, effectively rendering it a subsidiary.
NBK, said quarterly profit rose to 108.1 million Kuwaiti
dinars ($384.5 million) in the three months to September 30,
compared with 78.9 million dinars a year ago. Six analysts in a
Reuters poll had predicted 65.09 million dinars net profit on
NBK got regulatory approval for its $431 million purchase of
a 11.05 percent stake in Boubyan Bank in July, taking its
ownership to 58.34 percent.
The group's assets were 16.34 billion dinars by the end of
September, up 24.5 percent from the same time a year ago, the
bank said. Its shares have fallen 2.8 percent year-to-date on
the Kuwait bourse, while Boubyan shares have risen 3.4 percent.
Dabdoub said that any improvement in Kuwait's operating
environment "now depends on developing a more dynamic fiscal
policy, most importantly accelerating spending on mega
"We hope this will materialize in the near future
considering recent directions from the highest authority and the
proposed measures to boost economic activity and spur growth."
Kuwait's ruler, Sheikh Sabah al-Ahmad al-Sabah, last month
called for "serious and effective steps" to strengthen the
economy, according to a report of his comments from the finance
Political upheaval has held up a 30 billion dinar ($108
billion) economic development plan and this year's phase of the
project was rejected by opposition deputies in April.
The plan is supposed to provide 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.
Sheikh Sabah dissolved parliament earlier this week, opening
the way to a parliamentary election in the OPEC member state
which is likely to take place before the end of the year.
It was the sixth dissolution of parliament since Sheikh
Sabah came to power in early 2006.
($1=0.2812 Kuwaiti dinars)
(Reporting by Sylvia Westall; Editing by Dinesh Nair and Mike