Consumer credit drives growth in banking sector

Kuwait’s banking sector remained stable last year despite growth easing from double-digit levels in 2013 and 2014, according to the most recent Financial Stability Report released by the Central Bank of Kuwait (CBK) in July. Although exposure to the slowing real estate industry could see the sector’s non-performing loan (NPL) ratio rise from historic lows recorded last year, the sector as a whole remains stable, liquid and well capitalised, with lending continuing to rise on the back of strong consumer credit growth.

Assets grow apace

Total industry assets rose by 2.6 percent last year, with domestic asset growth hitting 5.7 percent as a result of rising domestic credit. Domestic lending was up 8.5 percent, compared to 6.3 percent in 2014, driven by a 10.6 percent increase in household lending.

Credit growth has continued into this year, with the National Bank of Kuwait (NBK) reporting that private sector credit increased by 7.7 percent y-o-y in April. Consumer credit remained a major growth driver, with instalment and consumer loans rising by KD44 million ($145.3 million) over the month, up 11.5 percent y-o-y. In its most recent “Kuwait Economic Brief”, published in September, NBK reported that credit growth remained relatively steady at 7.2