Kuwait cenbank says banks results 'acceptable'

Kuwait's central bank views the financial sector in the Gulf Arab state as more stable than at the start of the year, noting local banks had "acceptable" profits given the financial crisis, a local newspaper quoted the central bank governor on Sunday.

"Most of the Kuwaiti banks are still posting acceptable profit rates, although there were some banks that posted losses in the first half of this year," Sheikh Salem Abdul-Aziz al-Sabah told al-Rai newspaper in published remarks on Sunday.

The central bank has asked local lenders to boost provisions against bad loans and book them on a quarterly basis rather than at the end of the year to "reinforce the financial situations of the banks" and help them weather the crisis, he said.

The governor added that, despite the higher provisioning, the local financial sector is more stable now than at the beginning of the year, adding more time is needed to overcome the effect of the crisis.

OPEC member Kuwait has been hit hard by the financial crisis. The government had to step in to save Gulf Bank last year, the only major bank in the Gulf Arab region requiring a government bailout, while several major Kuwaiti investment firms are struggling to meet debt requirements.

Earlier this month, the central bank told local lenders that their methods for stress tests are inadequate, and should be more stringent, local newspapers said, citing an internal memo.

"The ways and means approved by the central bank should not be interpreted that there are instabilities with a big impact on the situations of local banks," the governor said in Sunday's newspaper comments. "But it is the nature of its work that requires (the central bank) to follow up and be assured on the conditions of banks."