UPDATE 1- Kuwait's NBK Q2 profit falls 32.7 pct, sees good year

* Profit falls on provisions, decline in investments value

* Bank has $10 mln exposure to Saudi groups Saad, Algosaibi

* Shares rise 3.39 percent after results

(Adds stock performance, details, background)

KUWAIT, July 14 (Reuters) - National Bank of Kuwait (NBKK.KW) (NBK), the country's largest, posted a 32.7 percent fall in second-quarter net profit on provisions and a decline in the value of investments, but it expects good year results.

NBK Chief Executive Ibrahim Dabdoub also said in comments to Arabiya TV the bank had 2.8 million dinars ($9.73 million) exposure to troubled Saudi conglomerates Saad Group [SAADG.UL] and Ahmad Hamad Algosaibi and Brothers. [ID:nLE404312]

Shares of NBK, the country's largest by market value, rose 3.39 percent after the results, outperforming Kuwait's main index .KWSE which ended up 1.94 percent.

Net income in the three months to the end of June was 62.55 million dinars ($217.4 million), or 22 fils per share, compared with 93 million dinars, or 31 fils per share in the same period a year earlier, NBK said in a statement on the bourse website.

There are 1,000 fils to the dinar.

EFG Hermes had forecast a second-quarter net profit of 68 million dinars, according to a Reuters survey. [ID:nL611165]

NBK's first-half profit fell 28 percent to 126.1 million dinars from 175.1 million dinars a year earlier, mostly due to a decision to compensate clients who were exposed to fraud by disgraced financier U.S. Bernard Madoff, Dabdoub said.

The bank also took investment provisions and voluntary judgmental loan provisions which had impacted half-year earnings by over $190 million, Dabdoub said in a statement.

Madoff pleaded guilty in March to running a fraud involving as much as $65 billion over 20 years, drawing in thousands of investors all over the world. [ID:nN13200587]

Despite the fall in second-quarter and half-year net profit, Dabdoub expects better results for the year, and said he hoped the bank would meet its 2009 net profit goal of 255 million dinars.

"Although we foresee that 2009 might be a challenging year for the region's economies, we are confident in NBK's ability to overcome the tough conditions and expect to record good results for the year," he said.