SHARM EL-SHEIKH, Egypt: National Bank of Kuwait is looking to buy an Egyptian bank with a strong retail business next year and hopes to push into the United Arab Emirates and Syria soon, its chief executive said on Saturday. Kuwait s largest bank is expected to emerge unscathed from a regional stock market slump and looks set to top last year s net profit, Ibrahim Dabdoub told Reuters. And any loss of momentum in the second half of 2006 will be minimal. National Bank of Kuwait (NBK), which has the highest credit rating among banks in the Gulf Arab region, is flush with cash and unlikely to have to borrow to finance any acquisition. We are awash with liquidity. At the moment our capital adequacy ratio is a bit high, which is inefficient. So we are looking to spend, Dabdoub said in an interview on the sidelines of the World Economic Forum in Egypt. Now there are many banks available for sale in Egypt and I hope that we will be doing something once we digest our present expansion, he said. NBK has already launched new operations in Qatar, Jordan, Iraq, China and Saudi Arabia and is now the latest foreign player to set its sights on Egypt, where reforms and a booming economy have made the financial services sector more attractive. The central bank has been encouraging Egyptian banks to merge and public sector banks to sell off holdings in joint-venture banks. Central bank policy makes it hard to enter the market without acquiring an existing bank. Asked when he thought the acquisition might be announced, Dabdoub said: I think 2007 is the best bet. He declined to name a potential target, but speaking about the kind of bank NBK would like to acquire, he said: NBK s core strength is retail. Spread of branches, that s the key thing. Dabdoub said the NBK, which has announced plans for a rights issue this year, was also looking to expand its commercial banking operations by moving into Syria and the United Arab Emirates, where it already has an investment banking presence. Syria opened up its banking sector to foreign investment two years ago and Gulf banks, flush with cash from the region s record oil revenues, have won several new licenses. We think in the Arab world there is room for expansion of retail banking in the real sense, Dabdoub said. NBK s focus on commercial banking means it is less exposed than most Gulf rivals to the collapse in share prices across the world s biggest oil exporting region this year, Dabdoub said. He said he was confident NBK would exceed last year s net profit of $704 million in 2006. Last month the bank reported a record first quarter profit of 56.5 million dinars ($193 million), up 27.5 percent. The stock market downturn has hammered retail investors who borrowed heavily to buy shares, encouraged by record-breaking rallies that propelled Gulf bourses into the ranks of the world s best performers last year. The slump has raised concerns about risks to the banks that lent money for stock market investment, with analysts warning that the real extent of the exposure would only become clear later in the year. Dabdoub said the risks were less significant in Kuwait, where credit rules are relatively tight and the market is down less than 20 percent this year compared to Dubai s 50 percent. NBK was not involved really (in lending to the stock market). The Kuwait banks in general are not really that much involved, he said. He said most banks would see slower growth in the second half of 2006 as revenues from stocks-related activity dry up, but this applied less to NBK. As far as NBK is concerned I don t see it as yet because the trajectory is still there and our growth is still there. If there is going to be a slowdown it will be minimal, he said. Reuters
