Fitch: Pressure for Kuwait banks

Fitch Ratings said in a new report that most Kuwaiti banks profitability will remain pressured by high impairment charges this year, as banks build up loan loss reserves due to the sharp deterioration in asset quality seen in 2009.

Although a significant weakening in asset quality is not expected for the remainder of 2010, some banks may continue to see increases in impaired loans due to the lag effect of the weaker economic conditions of 2009, Fitch said, and high exposure to troubled sectors.

All Kuwaiti banks were profitable in the first half of 2010, but performance varied widely across the sector, the agency said. Some banks reported robust profitability and adequate asset quality ratios, while others reported continued weak profitability due to high impairment charges and weak asset quality, Fitch said.

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