Total Deposits At Local Banks Reach Kd 43.083 Billion

21 December 2018 Business

Over the past five years, from mid-December 2013 to mid-December 2018, the average price of Kuwait’s barrel of oil dropped from US$ 105.9 per barrel in mid-December 2013 to about US$ 59.3 per barrel in mid-December 2018, i.e. 44% loss. This loss was without calculating the effect of inflation. For half a century, unfortunately all successive Kuwaiti governments failed in reducing the general budget’s reliance on oil revenues in financing 90% of its total revenues. OPEC and oil-producing countries outside of it are currently trying to agree on a programmed cut-off of its production in order to stop the deterioration of oil prices which lost about 25% of their value in about a month. This means the level of production is vulnerable to drop and unless this happens prices may drop further, says Al-Shall Economic Report prepared by Al-Shall Consulting Co headed by Jassem Al-Saadoun.

The government employs about 79.4% of the total national workforce, or about 322.4 thousand citizens, more than half of whom have neither real work nor room to accommodate them. The possibility of continuing the replacement of unveiled unemployment with veiled unemployment is linked with 90% at least of continued rise in oil prices and production. The state treasury   pays   about   3-4   times  what  a  public sector employee pays for insurance premium insurance and pays about half of what a private sector employee and his employer pay for insurance apart from what the state treasury pays to support indigenous nationals’ employment in the private sector. The public treasury pays about KD 15 billion within the current budget’s expenditures as salaries and wages both direct and indirect, such as insurance premiums and support to goods and services. Any disorder by adding new burdens to the pension system means its imbalance. And there is no option to pay its deficit except through resorting to the public treasury.

To sum up the foregoing is that public revenues eroded considerably and their decline is not circumstantial or provisional but is a long-term decline. And as the public budget funding depends on the world’s highest rate on selling an exhaustible and unstable asset in its price, it is assumed that the top priority of the two decision-making authorities is to ensure the balance of the public finance within a definite period of time and to diversify sources of its funding within a gradual and specific period. Adding to this the sanctity of facing the requirements of life necessities and (creating) job opportunities for about 400,000 of young citizens who will join the labor market within 15 years, or an equal number to all who are currently in the labor market, the enormous constitutional and ethical responsibility of the decision-makers are embodied. Regrettably, what the majority of   those   who   are  in  the  two  decision-making authorities are quite the opposite not only from the angle of its negative impact on the stability and continuity of a homeland but also from its awful reflections on those who believe that they are buying their loyalty and support. Public finance and social security funds conditions have lost their sustainability ability.

Rain Compensations

Undoubtedly, any one exposed to loss without its involvement has the right for compensation. Most of these losses were the result of the infrastructure’s betrayal through a major default of planning, implementation and management. That is the responsibility of the officials in the government such as the Ministry of Public Works, the Ministry of Housing and the Housing Care Authority and the Public Authority for Roads and Land Transport. It is also the responsibility of private sector companies such as the contractors and design and supervision offices. While the harmed person has the right for quick compensation, the public treasury is not supposed to bear the sins and corruption of those responsible entities. These compensations should be recovered later, materially and morally, i.e. in funds and penalties from those responsible entities.

In a statement attributed to the Minister of Social Affairs and Labor, she mentioned that the technical team had finished identifying the liabilities of contractors, consultants and government officials who caused such damages whose value is unknown yet as they are still in the inventory and audit phase though some of them are due for payment accordingly to the Minister’s statement. Certainly, the verification party has a more precise estimate and the public has the right to hear these estimates.

The government commits two essential errors that double up its corruption and poor performance. The first mistake is the evasion from reforming its ministries’ work by assigning other parties to carry out their work such as the Amiri Diwan assuming the duties of the Ministry of Public Works. The second mistake is the establishment of organizations, institutions, councils and backing permanent committees to their ministries, with numbers of more than two and half the number of those ministries though their ministries have huge surplus of incapacitated labor. In a final report on rainfall damages details of which were published by “al-Jarida” newspaper, the Technical Committee entrusted with inspecting highways held the General Authority for Roads and Land Transport the responsibility for the failure. It is established recently with incomplete structure and is facing internal conflict over its authority and responsibility.

This is only an example of the misery of public policies. Authorities are established and in the minds of the decision-making authorities is the prize of quotas in the leadership positions, or skipping the turn and the right to be appointed in their other positions to buy out loyalties. If we add the costs of managing that authority since its inception to the costs of failure attributed to it like the rain damage incident only, costs of damage compensation will double, in addition to the damage of dispersed responsibility. It is fair to say, that is just an example repeated with every established organization which ends by conflict over quotas for positions. In addition to the damages of unsustainable inflation for public expenditures, its performance deteriorates and corruption levels increase. Therefore, we believe that it is necessary to study the rainfall crisis not only by limiting it to the incident circle but rather from the perspective of the failure of a public administration approach that yields one crisis every month.

 Financial and Monetary Statistics – September 2018 

In its monthly monetary statistical bulletin for the month of September 2018 as published on its website, the Central Bank of Kuwait (CBK) stated that the balance of total domestic public debt instruments (including bonds and Tawarruq operations since April 2016) declined by KD 450 million compared to June 2018, to become KD 3.542 billion in the end of September 2018, 9.8% of the nominal GDP for 2017 in the amount of KD 36.3 billion (excluding USD 8 billion of foreign loans). The average interest rate on public debt instruments scored 3.000% for one year, 3.250% for 2 years, 3.375% for 3 years, 3.500% for 5 years, 3.625% for 7 years and 3.875% for 10 years. Local banks capture 100% of total public debt instruments (100% in the end of June 2018).

The CBK bulletin states that total credit facilities for residents offered by local banks in the end of September 2018 scored about KD 36.556 billion about 56.3% of total local banks’ assets, up by about KD 460.3 million, a quarterly growth rate by about 1.3%, over its level in the end of June 2018. Total personal facilities scored about KD 15.590 billion or 42.6% of total credit facilities (KD 15.248 billion in the end of June 2018), a quarterly growth rate by 2.2%. Total value of installed loans there from scored about KD 11.543 billion, or 74% of the total value of personal facilities. An amount of KD 2.656 billion there from, about 17% of the total personal facilities, went for the purchase of securities. Value of consumer loans amounted to about KD 1.021 billion. Credit facilities for the real estate sector amounted to KD 7.939 billion or 21.7% of the total (KD 7.979 billion in the end of June 2018), nearly two-thirds of the credit facilities went to personal and real estate facilities. Also, approximately KD 3.3745 billion or 9.2% went to trade sector (KD 3.3748 billion in the end of June 2018), about KD 2.021 billion or 5.5%, went to the construction sector (KD 1.964 billion in the end of June 2018) and KD 2.006 billion went to the industry sector or 5.5% (KD 1.958 billion in the end of June 2018), and KD 1.130 billion or 3.1% went to the financial institutions – other than banks – (KD 1.187 billion in the end of June 2018). 

The bulletin also indicates that total deposits at local banks scored about KD 43.083 billion representing about 66.3% of total local banks liabilities, a decrease by about KD 436 million compared to its amount in the end of June 2018, a quarterly decline rate by 1%. About KD 36.657 billion, 85.1% of the total belongs to clients of the private sector in the comprehensive definition including   major   institutions   like   the – Public Institution for Social Securities – does not include the government. About KD 33.743 billion were in Kuwaiti dinars, 92.1% went to private sector clients and the equivalent of KD 2.914 billion was in foreign currency to private sector clients.

As for the average interest rate on customer time deposits, both in the Kuwaiti dinar and the US Dollar versus the end of June 2018, the bulletin states that it is still in favor of the Kuwaiti dinar in the end of the two periods. It scored about 0.862 points for 1-month deposits, about 0.800 points for 3 months, about 0.732 points for 6-month deposits, and about 0.612 points for 12-month deposits.

The difference in the end of June 2018 was about 0.799 points for 1-month deposits, about 0.719 points for 3-month deposits, about 0.656 points for 6-month deposits, and about 0.551 points for 12-month deposits. The monthly average exchange rate for the Kuwaiti dinar against the US Dollar in September 2018 scored about 302.716 Kuwaiti fils for each US Dollar, a rise by 0.16% compared with the monthly average for June 2018 when it scored about 302.245 Kuwaiti fils per each US Dollar.

Boubyan  Bank  Financial  Results – 30 September 2018

Boubyan Bank announced results of its operations for the first 9 months of the current year 2018 which indicate that the bank’s net profits (after tax deductions) scored about KD 40.4 million, a rise by KD 6.4 million or by 18.9% compared with KD 34 million for the same period of 2017. The rise in net profits is attributed to the rise in total operating income by a higher value than the rise in total operating expenses. Therefore, the bank’s operating profit (prior to provisions deductions) increased by KD 9.9 million or by 18.4%, reaching KD 63.4 million versus KD 53.5 million during the same period of last year.

In details, total operating income of the bank increased by KD 13.4 million or by 14.6%, and scored about KD 104.9 million versus KD 91.5 million for the same period of 2017. This resulted from the rise in all items of the bank’s operating income, most importantly item of net financing income that rose by KD 7.8 million, scoring KD 84.7 million compared with about KD 76.9 million. Item of net fees & commissions income rose by about KD 3.2 million reaching KD 10.6 million versus KD 7.4 million. 

Total operating expenses increased by a lesser value than the rise in total operating incomes, i.e. by KD 3.5 million or by 9.3%, to KD 41.5 million compared with KD 38 million in same period of 2017. The rise included all items of operating expenses. Percentage of total operating expenses to total operating income scored 39.6% versus 41.5%. Provision for impairment increased by KD 3.22 million or by 18%, to KD 21.15 million versus KD 17.93 million. The net profit margin scored 38.5% against 37.1% in same period of 2017.

The bank’s financial statements indicate that total assets increased by about KD 282.7 million or by 7.1%, and scored KD 4.253 billion compared with KD 3.970 billion in the end of 2017. Total assets increased by KD 423.1 million or by 11%, when compared with the same period of 2017 when total assets scored KD 3.830 billion. Item of Islamic financing to customers increased by KD 316.3 million or by 11%, and scored KD 3.193 billion (75.1% of total assets) compared with KD 2.877 billion (72.5% of total assets) in the end of 2017. It increased by 12.1% or by KD 345.4 million, if compared with KD 2.848 billion in the same period of 2017 (74.4% of total assets). Percentage of Islamic financing to clients to total deposits and other balances scored 85.6% versus 85.1%. Meanwhile, item of deposits with other banks decreased by KD 114.9 or by 35.5%, scoring KD 208.9 million (4.9% of total assets) versus KD 323.9 million (8.2% of total assets) in the end of 2017. It also decreased by KD 81.9 million or by 28.2%, when it scored KD 290.8 million (7.6% of total assets) in the same period of last year.

Figures indicate that the Bank’s liabilities (excluding total equity) increased by KD 261.3 million or by 7.4% and scored KD 3.779 billion compared with KD 3.518 billion in the end of 2017. If we compare total liabilities with the same period of 2017, it would increase by KD 391.9 million or by 11.6%, when total liabilities scored KD 3.387 billion. Percentage of total liabilities to total assets scored about 88.9% versus 88.4%.

Results of analyzing financial statements calculated on annual basis indicate that all profitability indexes of the bank rose compared with the same period 2017. The average return on shareholders’ equity (ROE) increased to 13.9% versus 12.1%.

Likewise, the average return on capital (ROC) increased and scored 23.1% versus 20.4%. The average return on assets (ROA) scored 1.31% versus 1.24%. Earnings per share (EPS) rose and scored 15.83 fils against 13.21 fils. (P/E) scored 26.6 times compared with 25.0 times as a result of the EPS increasing by 19.8% above its level on 30 September 2017, against a higher increase in the market share price by 27.7% above its price on 30 September 2017. (P/B) scored 2.8 times versus 2.3 times.

The Weekly Performance of Boursa Kuwait 

The performance of Boursa Kuwait for last week was mixed compared to the previous one, where the traded value, traded volume, and the number of transactions increased, while the general index decreased. Al Shall Index (value weighted) closed at 429.4 points at the closing of last Thursday, showing a decrease by 3.2 points or by 0.7% compared with its level last week. While it increased by 42.4 points or by 11% compared with the end of 2017.

 

SOURCE : ARABTIMES

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