Kuwait: Strong credit growth as protests continue
August was another strong month for credit growth in Kuwait as the country posted its strongest monthly credit gain in over three years with a 5.5 per cent year-on-year (y/y) growth, according to a report.
Lending to businesses is improving across the board while consumer and installment loans maintain their solid pace, said National Bank of Kuwait, the country's biggest lender, in its special report. The credit gains since end of last year have topped KD1 billion ($3.6 billion), the report added.
The top Kuwaiti lender pointed out that the outstanding credit to residents had risen a significant KD260 million in August to hit KD26.6 billion, the report added. According to NBK, the deposits increased following a seasonal drop in July. In October, the central bank of Kuwait (CBK) cut its discount rate by 50 basis points to 2 per cent, yet another record low. The CBK hopes the move would provide further support to credit growth and economic activity.
We thus expect to see a further drop in the deposit rates in the coming months, the NBK said in its report. Personal facilities (excluding securities) continued to lead the growth in credit, though August saw gains in other sectors as well. Personal facilities (excluding securities) were up a strong KD93 million in August and y/y growth was 14.6 per cent.
This followed a large increase in July. Lending for the purchase of securities was also up KD 39 million in August or 6 per cent y/y. This type of lending has seen improving growth over the last year following persistent declines seen in 2010 and 2011, said the NBK report. Lending to business activity (excluding personal lending and loans to nonbank financials) rose to KD151 million, the largest monthly increase in four years. Gains were mostly in the industry and trade sectors while real estate was off slightly in August.
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