A Government Study By Mckinsey Reveals 99.5% Of Kuwaiti Employees Are Borrowers; Youth Group Tops The List

A study prepared by McKinsey analyzes the data of consumer and installment loans, and relied, in this regard, on a database at the level of each individual customer, which includes the data of the credit information network company, in addition to credit bank customers, while the “credit” customers who did not borrow from banks or financial institutions are excluded.

The study distributed the Kuwaiti borrowers to more than one age group, and determined the share of each of them in the total loans and the average of each indebtedness, where the age group between 25 and 34 years ranked first in terms of the most borrowers, with a total of about 155,000 borrowers, who constitute about 30% of the total ‘borrower’ employees, with an average indebtedness of 22,122 thousand dinars, while the number of this category of the total workforce is about 177,000.

McKinsey indicated that the age group between 35 and 44 years ranked second, with approximately 125,000 borrowers, an average debt of 27,826 thousand dinars, and a total workforce of about 140,000. This category is followed by the age group between 45 and 54, with a number of approximately 84,000 borrowers, and an average debt of 27,742 thousand dinars, with a total of 60,000 of the workforce.

In fourth place came the age group of up to 24 year, with a number of borrowers of about 26,000, and an average debt of about 14,259 thousand dinars, equivalent to about 35,000.

Finally, the 55-year-old group came with a number of borrowers of nearly 60,000, and an average debt of 15,237 thousand dinars, which constitutes about 17 percent of the total workforce.

The study indicated that some banks consider the continuous monthly income in full, while they consider part of it (according to the source of income), while others do not consider it completely, in which the study excluded the monthly income from the debt burden ratio (DBR), which is the ratio of monthly installments against the net salary or continuous monthly income, so that the results are more hedging, noting that the debt burden ratio mentioned in this study does not include the continuous monthly income.

In its study, McKinsey also examined the debt burden ratio by nationality and employment status, as any person over 55 years of age was considered retired, and concluded that the number of borrowers according to the (DBR) is 3.4% Kuwaiti, and 25.2% non-Kuwaiti, while 28.2 percent are employees, and 23.9 percent are retired.

The study stated that there are two basic stages for the development of the balances of the loan portfolio granted to the corporate and retail sectors, and other less developed stages, explaining that the first was during the period between 2000 and 2008, when the compound annual growth rate of the portfolio amounted to about 21 percent, noting that the value of the credit portfolio rose during This period from 5.2 billion dinars to 24 billion.

Sources stated that the second phase was between the years 2008 to 2017, when the average compound growth rate was about 4%, and the value of the portfolio increased from 24 billion to 35.9 billion dinars, which means that the portfolio of corporate and retail loans increased by about 30.7 billion yen between 2000 and 2017.

The period between 2017 and the end of the first half of 2021 is considered the least developed for the balances of the loan portfolio granted to the corporate and retail sectors, as its value increased until the end of last July to 40.9 billion dinars, which means that the compound growth recorded in the last 5 years is close to 5 billion at a compound annual growth rate of About 2.8 percent, which reflects that these stocks were in a continuous and slow growth in the last stage.

The McKinsey study database contained data of 739,450 thousand customers, including 82 thousand borrowers from the credit bank, and the number of their loans was 793,715 thousand consumer and installment loans.

 

SOURCE   :   TIMES KUWAIT

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