UPDATE 2-Kuwait Gulf Bank warns of slower 2008 growth

(Adds CEO interview, details, analyst)

By Ulf Laessing

KUWAIT, July 20 (Reuters) - Kuwait's Gulf Bank (GBKK.KW: Quote, Profile, Research, Stock Buzz) said it expected 2008 net profit growth to be much slower than last year after a 41 percent second-quarter fall due to debt write-offs, slow consumer lending and difficult global markets.

The quarterly results contrast with double-digit quarterly profit growth rates of major rivals National Bank of Kuwait (NBKK.KW: Quote, Profile, Research, Stock Buzz) (NBK), Commercial Bank of Kuwait (CBKK.KW: Quote, Profile, Research, Stock Buzz) and major Islamic lender Kuwait Finance House (KFIN.KW: Quote, Profile, Research, Stock Buzz) (KFH).

To offset tougher consumer lending rules at home, Kuwait's fourth-largest lender by market value wants to launch new loan products and is considering acquisitions in the Middle East.

Net profit fell to 23.8 million dinars ($89.78 million) in the quarter, below the 44.7 million dinar profit forecast by Global Investment House in a Reuters survey last month.

"Our expectations are much slower than they were last year," Chief Executive Louis Myers told Reuters when asked about a 2008 net forecast. Last year, net profit rose 23 percent to 130.44 million dinars.

"With the challenges that the markets present and which you have seen in the first half of the year we will definitely not come in where we have been in 2007," he added, declining to be more specific.

He said Gulf Bank had taken provisions of 18.5 million dinars in the second quarter, some two-thirds of it to write off bad debt for one ailing business client.

Myers said the investment income had been also lower in the first half due to investments on global markets including equities, adding that the funds were globally dispersed and not invested in the U.S. subprime market.

He added consumer lending growth had been much slower in the first half after the central bank toughened rules at end-March to tackle record inflation hitting 10 percent since February.

Faisal Hasan, head of research at Global, said he would monitor the bank's provision level closely.

"The impact of tightening credit regulation in retail loans will also to trickle in the sector in the next few quarter," he said, adding that he was still generally upbeat about the Kuwaiti banking sector.

EXPANSION

Gulf Bank, which has no foreign operations, still sees plenty of growth opportunities in its home market and would consider acquisitions in the region if the right opportunity came up although nothing was imminent, Myers said. "We consider our options at this point of time ... I think we certainly would if the price is right ... It's really a question about the opportunities," he said.  Continued...