Kuwait credit growth moderates to 7.2% in Sept
Outstanding bank credit recorded a healthy gain in September, but saw growth slow notably to 7.2 percent year-on-year (y/y) due to base effects. Loans rose by a good KD 272 million, driven largely by lending for the purchase of securities. Meanwhile, household loans were flat during the month and business credit was mixed. Private deposits saw a solid gain during the month combined with a smaller increase in government deposits. Domestic interest rates held steady throughout the month.
Household lending was flat in September, with growth slowing to 7.2 percent following months of softening. The absence of growth during the month was the worst result since early 2011, though it did come on the heels of a strong showing in August. As a result, growth was the the last twelve months compared to a gain of only KD 825 million in private deposits during the same period.
Banking system liquidity improved in September, further bolstering its healthy level. Bank reserves (i.e. cash, deposits with the CBK and CBK bonds) added KD 210 million to reach KD 5.8 billion or 9.5 percent of total bank assets. The increase was predominantly in time deposits with the CBK and coincided with a KD 413 million increase in CBK foreign reserves, which jumped to KD 8.1 billion. Meanwhile, net domestic debt issuance, which taps back liquidity, rose from the previous month; outstanding public debt instruments (PDIs) rose by KD 200 million during September to KD 2.77 billion.