Kuwait Banking Sector Stability and Growth: Key Insights for H1 2024

Banking sources have assured Al Jarida newspaper that the local market’s deposit financing remains secure, with ample liquidity present at all levels. This includes funds from the private sector and high-net-worth individuals, reflecting robust cash flow and solid operational foundations.

Liquidity and Interest Rates: Current Trends

With expectations for a reduction in US interest rates growing, the banking sector in Kuwait maintains significant government deposits, with stability across pricing and average balances. This suggests a solid foundation despite potential shifts in global financial policies.

Deposit Trends and External Financing

In the first half of 2024, deposits from local banks to foreign banks amounted to approximately KD 5.225 billion, compared to KD 5.599 billion in the same period last year—a decrease of about 6.7% year-on-year.

Banking Sector Dynamics: H1 2024 vs. 2023

Recent data reveals that financing operations for external and foreign organizations grew by 30.5% in the first half of this year, an increase of KD 1.048 billion. This growth primarily involves facilities for foreign investors, major international companies, and parent company units engaged in development projects in Kuwait.

The rise in corporate and foreign institutional banking operations signifies a strategic move towards risk distribution and the exploration of new markets. This expansion helps accommodate the growth of banks' businesses amid increasing local competition and a constrained market environment.

Impact of Foreign Banking and Loans

The decline in total value over recent periods amounted to approximately KD 374 million, attributed to payments due during the two quarters ending June 30.

Foreign windows provide banks with diversification opportunities and channels to invest excess liquidity. Loans from local banks to foreign banks grew annually by 16.8%, increasing by KD 385 million, with the total value rising from KD 2.291 billion to KD 2.676 billion.

The cumulative value of banking sector deposits with foreign banks, foreign institution facilities, and foreign bank loans is estimated at about KD 12.2 billion.

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