KPMG Analysis Highlights Resilience of Kuwait’s Banking Sector in 2025.

Building on its comprehensive performance review released in April 2025, KPMG Kuwait has unveiled its latest Kuwait‑focused annual banking report, offering an in‑depth examination of the financial results of the country’s listed banks for the year ended 31 December 2025 (“YE’25”). Published under the title Kuwait Listed Banks’ Results – YE’25, the report presents a comparative, analytics‑driven assessment of the sector’s performance between YE’24 and YE’25.

Kuwait’s banks demonstrated notable resilience, recording double‑digit asset growth of 12.22%, rising from KD 113.93 billion in YE’24 to KD 127.85 billion in YE’25. Net profit registered a measured but steady increase of 0.4%, moving from KD 1.56 billion in YE’24 to KD 1.57 billion in YE’25. Capital adequacy ratios remained robust at 18.23%, comfortably above the Central Bank of Kuwait’s minimum requirement of 14%, underscoring the sector’s strong capitalization and prudent risk practices.

The report also highlighted a marginal but meaningful improvement in the non‑performing loan ratio, which eased from 1.47% in YE’24 to 1.38% in YE’25, reflecting enhanced credit discipline across the sector and reinforcing overall financial stability.

Summarizing Kuwait’s banking sector performance, Bhavesh Gandhi, Partner and Head of Financial Services, KPMG Kuwait, stated “Our yearly report indicates that the banks in Kuwait have emerged stronger amid a series of challenging developments throughout the year—ranging from global tariffs and voluntary oil production cuts to rising geopolitical tensions across the region, all of which could have dampened growth prospects. This performance reinforces the fact that while executives remain vigilant in monitoring these factors, their focus continues to be firmly directed toward the growth and resilience of the sector.

The KPMG publication probed deeper into the banks’ performance based on eight key performance indicators (“KPIs”) to identify any underlying themes that could play a part in shaping Kuwait’s banking industry. These KPIs were (a) total assets, (b) net profit, (c) share price, (d) return on equity (“ROE”), (e) return on assets (“ROA”), (f) cost‑to‑income ratio, (g) loans by stage, (h) and non‑performing loan (“NPL”) ratio.

The report also highlights several trends that may shape the banking sector in 2026. Among the most significant is the accelerated investment in Artificial Intelligence (“AI”). Almost every bank—including the Central Bank of Kuwait—has either announced or is in the process of announcing its own AI‑enabled solutions, signaling a structural shift toward advanced digital transformation.

Speaking further on the role of AI, Salman Bin Khalid, Partner and Head of Audit, said “Banks have witnessed the substantial cost‑efficiency impact that AI brings to operations, and there is no turning back. However, the next phase must see AI transition from being purely an operational tool to becoming a strategic decision‑making enabler. We have observed this evolution among banks across the region, and the benefits are increasingly evident”.

In addition to technological developments, the report notes the implications of Kuwait’s direct involvement in ongoing geopolitical tensions in the Middle East, which have placed pressure on the supply‑demand equilibrium of the oil ecosystem and have driven up the oil prices. While this temporary “oil shock,” as characterized by experts, may ease once the conflict subsides, its longer‑term ramifications could diverge from initial expectations.

The publication further examines regulatory forces that may shape the sector in 2026. The implementation of key policies—including the mortgage law, the debt law, IFRS 18, and enhanced anti‑money laundering regulations—is expected to influence the operating environment and financial reporting practices throughout the year.

While the long‑term impact of these developments remains to be fully determined, the decision‑making processes of banks will undoubtedly be informed by these evolving dynamics. The performance of the sector in the first half of 2026 will serve as an early benchmark to gauge how these factors are beginning to manifest.

To read the complete report visit kpmg.com/kw