Kuwait credit growth slows

Kuwait Times - - BUSINESS -

KUWAIT: Credit saw a mod­er­ate gain in Au­gust, with growth eas­ing slightly to 5.2 per­cent y/y. To­tal credit rose by a net KD 102 mil­lion dur­ing the month. House­hold bor­row­ing saw an ex­cep­tion­ally strong month, which co­in­cided with the rein­tro­duc­tion of loan re­book­ing. This helped make up for a drop in busi­ness credit, much of it in the real es­tate sec­tor. De­posits con­tin­ued to see de­clines re­lated to the sum­mer sea­son, eas­ing growth in money sup­ply. Mean­while, in­ter­bank and de­posit rates held steady.

House­hold bor­row­ing saw a strong gain in Au­gust of KD 185 mil­lion, with growth ac­cel­er­at­ing to 12.8 per­cent y/y. In­stall­ment loans, used pri­mar­ily to fi­nance hous­ing, con­tin­ued to be the only source of growth; con­sumer loans, used to fi­nance cars and other con­sumer durables, saw a small de­cline and reg­is­tered growth of a mere 0.2 per­cent y/y.

Credit to non­bank financial com­pa­nies saw a rel­a­tively small de­cline of KD 1.6 mil­lion, though this came on the heels of a rel­a­tively large drop in July. Non­bank financial com­pa­nies con­tin­ued to delever­age, with the sec­tor’s credit de­clin­ing 8.1 per­cent y/y.

All re­main­ing credit de­clined by KD 81 mil­lion, with growth eas­ing to 2.6 per­cent y/y. The bulk of the de­cline was in real es­tate, industry and “other” sec­tors. By con­trast, con­struc­tion and oil & gas did well. Real es­tate and se­cu­ri­ties lend­ing re­mained key sources of weaker credit growth, hav­ing seen an in­crease of 0.4 per­cent and a de­cline of 2.6 per­cent y/y, re­spec­tively. Ex­clud­ing them, busi­ness credit was some­what stronger at 6.0 per­cent y/y in Au­gust.

Pri­vate de­posits saw an­other large KD 743 mil­lion de­cline in Au­gust on sea­sonal fac­tors. Money sup­ply (M2) growth eased to 3.4 per­cent y/y. The de­cline in de­posits was across the board, both in di­nar and for­eign cur­rency, down KD 654 mil­lion and KD 89 mil­lion, re­spec­tively. In KD de­posits, all types saw de­clines in­clud­ing time de­posits, KD sight and sav­ings de­posits. Growth in nar­rower money sup­ply (M1) re­mained rel­a­tively low at 0.1 per­cent y/y due to a ba­sis ef­fect from last year’s in­tro­duc­tion of the new cur­rency, which tem­po­rar­ily in­creased the amount of cur­rency in cir­cu­la­tion.

Cus­tomer in­ter­est rates on di­nar time de­posits and in­ter­bank rates were steady in Au­gust. Av­er­age rates on the 1-month and 6month time de­posits were steady at 0.61 per­cent and 0.97 per­cent, while 3-month and 12month rates added one ba­sis point to set­tle at 0.78 per­cent and 1.22 per­cent. KD in­ter­bank rates held steady at 1.00 per­cent, though they are up 21 ba­sis points year-to-date.

BEI­JING: Peo­ple walk­ing past a restau­rant in Bei­jing. Chi­nese Pres­i­dent Xi Jin­ping said last week that an­nual ex­pan­sion should be no less than 6.5 per­cent in 2016-2020 if the coun­try is to dou­ble the size of its econ­omy and av­er­age in­comes com­pared to 2010 lev­els by the end of the decade. — AFP

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