NBK ECO­NOMIC RE­PORT Kuwait credit growth hits post-2009 record of 8.7%

Kuwait Times - - BUSINESS -

Au­gust saw a healthy gain in credit, with growth im­prov­ing to 8.7 per­cent year-on-year (y/y), its best pace since mid-2009. Credit rose by KD 276 mil­lion, on a no­table in­crease in house­hold loans and busi­ness credit. Mean­while, pri­vate de­posits saw an­other de­cline dur­ing the month, though an in­crease in govern­ment de­posits helped off­set some of that de­crease. Do­mes­tic in­ter­est rates held steady through­out the month.

Growth in house­hold lend­ing was strong in Au­gust, adding a net of KD 113 mil­lion, though growth con­tin­ued to mod­er­ate. Growth slowed to 8.9 per­cent y/y, its slow­est pace since late 2011. The gain was well above the monthly av­er­age in­crease of KD 55 mil­lion recorded since Novem­ber 2015.

Lend­ing to non­bank fi­nan­cial com­pa­nies saw a small net gain and main­tained pos­i­tive growth com­pared to a year be­fore. Sec­tor debt added KD 4 mil­lion in Au­gust, with growth pick­ing up to 4.4 per­cent y/y. The sec­tor ap­pears to have largely com­pleted delever­ag­ing that be­gan in the wake of the 2008 fi­nan­cial cri­sis.

All re­main­ing credit rose by KD 160 mil­lion with growth im­prov­ing to 8.9 per­cent y/y. Growth in lend­ing to this seg­ment has ac­cel­er­ated to its most rapid pace since the fi­nan­cial cri­sis. The largest gains were in the oil & gas sec­tor and lend­ing for the pur­chase of se­cu­ri­ties, adding a com­bined KD 119 mil­lion. In­dus­try and con­struc­tion also saw some de­cent gains. De­clines were vis­i­ble in the trade and real es­tate sec­tors; growth in the lat­ter has been flat com­pared to the pre­vi­ous year for sev­eral months now.

Pri­vate de­posits were down in Au­gust on the heels of a large drop the month be­fore. De­spite the KD 281 mil­lion de­cline, broad M2 money sup­ply growth im­proved to 2.8 per­cent y/y on base ef­fects. Nar­rower M1 money sup­ply growth also rose to 1.8 per­cent y/y. Draw­downs were vis­i­ble across the board, with the largest de­cline com­ing from KD time de­posits, down KD 122 mil­lion.

An in­crease in govern­ment de­posits helped off­set some of the de­cline in pri­vate de­posits. The month saw a gain of KD 94 mil­lion, with growth at 27 per­cent y/y. Govern­ment de­posits have grown no­tably over the last twelve months, adding KD 1.7 bil­lion, at a time when pri­vate sec­tor de­posits have been un­der pres­sure.

Bank­ing sys­tem liq­uid­ity de­creased in Au­gust, but main­tained a healthy level. Bank re­serves (i.e. cash, de­posits with the CBK and CBK bonds) con­tracted by KD 186 mil­lion to KD 5.6 bil­lion or 9.3 per­cent of to­tal bank as­sets. The de­crease was pre­dom­i­nantly in time de­posits with the CBK and co­in­cided with a KD 381 mil­lion draw­down in CBK for­eign re­serves, which de­creased to KD 7.7 bil­lion. Mean­while, net do­mes­tic debt is­suance was limited in Au­gust, with out­stand­ing pub­lic debt in­stru­ments (PDIs) ris­ing by a mere KD 30 mil­lion to KD 2.57 bil­lion. In­ter­est rates have been rel­a­tively steady. The 3month Kuwait in­ter­bank of­fered rate (Ki­bor) added 6 ba­sis points (bp) in Au­gust to reach 1.56 per­cent. Rates have been rel­a­tively steady since (Chart 5). Mean­while, cus­tomer de­posit rates ap­peared to ease dur­ing Au­gust, de­clin­ing by 1-2 bps for var­i­ous ma­tu­ri­ties.

Iran’s cur­rent oil out­put is al­most 4 mil­lion bar­rels per day (bpd), and its ex­ports have reached 2.4 mil­lion bpd, the man­ag­ing di­rec­tor of the Na­tional Ira­nian Oil Com­pany (NIOC) was quoted as say­ing by the oil min­istry’s news agency yes­ter­day. “The OPEC meet­ing is close and we won’t give up on re­gain­ing our share (of the oil mar­ket),” Ali Kar­dor was quoted as say­ing by SHANA.

OPEC oil price down 19 cents to $47.04 pb

Price of OPEC’s bas­ket of crudes went down 19 cents last Fri­day set­tling at $ 47.04 per bar­rel, com­pared to $47.23 pb last Thurs­day, ac­cord­ing to OPEC’s bul­letin yes­ter­day. The 170th (Ex­tra­or­di­nary) Meet­ing of the OPEC Con­fer­ence had opted for an OPEC-14 pro­duc­tion tar­get rang­ing be­tween 32.5 and 33.0 mil­lion bar­rel per day, in or­der to ac­cel­er­ate the on­go­ing draw­down of the stock overhang and bring the re­bal­anc­ing for­ward. The av­er­age an­nual rate of OPEC’s crude of the past year stood at $49.49 per bar­rel.

Egypt’s GDP growth up to 4.3% in 2015/16

Egypt’s gross do­mes­tic prod­uct (GDP) growth for 2015/16 climbed to 4.3 per­cent from 4.2 per­cent in the pre­vi­ous year, Egypt’s Prime Min­is­ter Sherif Is­mail told Reuters yes­ter­day. The bud­get deficit widened to 12.1 per­cent, Is­mail said, from 11.5 per­cent a year ear­lier. The prime min­is­ter’s GDP fig­ure dif­fered from a re­port from two fi­nance min­istry of­fi­cials ear­lier yes­ter­day that Egypt’s GDP grew 3.8 per­cent in 2015/16. Both fig­ures were lower than the tar­geted growth of 5 per­cent for the year.

Shar­jah plans seis­mic on­shore oil and gas sur­vey

The emirate of Shar­jah, one of the United Arab Emi­rates, will con­duct a 3D seis­mic on­shore sur­vey of about 500 sq km (195 sq miles) of its ter­ri­tory in search of deep oil and gas reser­voirs, Shar­jah Na­tional Oil Corp said yes­ter­day. Most of the area has not pre­vi­ously been cov­ered by 3D seis­mic sur­veys, Shar­jah Na­tional Oil Corp said in a state­ment, adding that the sur­vey is ex­pected to be com­pleted by the end of De­cem­ber. Oil was dis­cov­ered in Shar­jah in the 1960s and com­mer­cial pro­duc­tion be­gan in 1974. Pro­duc­tion in­creased with the dis­cov­ery of two fields in 1980 and 1982.

TOKYO: A man walks by an elec­tronic stock board of a se­cu­ri­ties firm in Tokyo yes­ter­day. Asian stocks wob­bled yes­ter­day as a re­vived FBI in­quiry into US pres­i­den­tial can­di­date Hil­lary Clin­ton’s pri­vate email server sharp­ened un­cer­tainty over the elec­tion, while in­vestors also awaited key eco­nomic data this week. —AP

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