Use of KFH e-channels has grown in recent years
The use of KFH e-channels has grown in recent years
KUWAIT: Kuwait Finance House KFH’s Chairman Hamad Al-Marzouq said that the overall financial position of the GCC banks is positive with solid capitalization as reflected by their average capital-asset ratio of around 18.7 percent, which is well above the minimum regulatory requirements.
“The asset quality of the GCC banks is quite sound with non performing financing NPFs ratio at around 3.2 percent. In Kuwait, for example, this ratio is lower at around 2 percent. Also, The GCC banks have healthy return on equity delivering around 12.7 percent,” Al-Marzouq added in the inaugural seminar of TCB Gulf Center in the Kuwait Chamber of Commerce and Industry.
He said that one of the most important challenges facing the global markets lies in the increase of debt over a short period of time, indicating that the high level of debt is due to the very loose monetary environment. Posing significant risks at all levelswhether individuals, companies or lenders especially developing countries, the global debt has risen from $87 trillion in 2000 to $ 247 trillion by the end of 2017.
“I have seen companies and countries with junk quality issues being oversubscribed by about 15 times. I think this will impact the emerging markets,” AlMarzouq added.
“Coming to the key challenges facing the GCC banks, I see that the main challenge lies in the operating activities growth. Going forward, I believe that the banks will not be able to achieve similar growth rates to those they recorded over the past decades. The main reason is the lack of government expenditure which is the main engine and the key provider for economic activity in the GCC.” He explained.
Al-Marzouq added that when oil prices were very volatile, GCC governments responded to those developments by tightening up the projects. This has reflected negatively on the economic growth in general. He noted that it is very difficult for the private sector to plan going forward because of the volatile oil prices which in turn impact the government spending and show a structural imbalance in the GCC economies.
With the large expected participants in the future workforce, Al-Marzouq stressed that generating jobs during the coming period poses a major challenge that these GCC countries can handle only through privatization. “We have seen the privatization law approved by the parliament almost 8 years ago, but the program has not been activated since then,” he added.
“Another challenge the GCC banks face is that of accommodating the changes in the consumer behavior, in terms of spending through cashless financial transactions. There are forecasts that these cashless financial transactions are going to dominate at least 80 percent of total transactions in the next 5 years. This is quite significant.” Al Marzouq explained.
He recommended that the GCC banks should upgrade their strategies and update their payment methodologies in order to adapt to the new reality.
In this regard, Al-Marzouq pointed to the growing use of KFH e-channels by customers in recent years. The Conference Board Gulf Center for Economic and Business Studies (the “TCB GulfCenter”) is part of an expansion program in the GCC region. The Conference Board was founded in May 1916 by some of the most prominent business leaders in the United States at that time. TCB has been on the forefront of a century of transformations in economic metrics, corporate governance and human capital practices that have shaped the global economy we know today.