Islamic banks record 8.5% growth
KUWAIT CITY, Oct 13: Fitch Ratings affirmed that the flexible credit quality of Kuwaiti Islamic banks in the first half of this year will further support their operating environment during the coming period, with higher oil and interest rates and stronger credit growth, reports Al-Qabas daily.
The agency pointed out that further development of digital banking services will remain a top priority for those banks. In a recent report, Fitch said the assets of Islamic banks in Kuwait grew by 8.5% in the first half of this year, compared to the same period last year, adding the Islamic financing assets in the country constitute 45.5% of the total assets of the Kuwaiti banking sector.
Fitch added the Islamic banking services in Kuwait benefit from the majority of the Muslim population, who in turn control the great demand for Islamic banking products, as Kuwait is still among the largest Islamic banking markets around the world.
Fitch added that Islamic banks in Kuwait benefit from government support, through financial and legal legislation that supports their operating environment, noting that the Central Bank of Kuwait recently drafted an alternative law to the Deposit Insurance Law (deposit insurance project) for all banks in Kuwait and is subject to final review before it is submitted to the government.
However, it is not yet clear whether the investment accounts of Islamic banks for profit sharing will be included in the aforementioned bill.
The agency pointed out that the percentage of bad debts in Kuwaiti Islamic banks decreased by 1.4% until the end of the first half of 2022, in line with the percentage of bad debts in conventional banks, noting that Kuwaiti Islamic banks, like their traditional counterparts, reduced the fees for underfunding to the average total financing since the first half of 2017, due to the sufficient levels of provisions that have accumulated in the Kuwaiti banking sector in general in the past two years, but it is still higher in Kuwaiti Islamic banks.