06/10/2024
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06/10/2024
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KUWAIT CITY, Oct 6: Recent banking data has highlighted the ongoing strengthening of Kuwait’s local banks, reflecting sustained growth across various operational sectors.
In the first eight months of 2024, total assets in Kuwaiti banks surged by approximately 4 billion dinars, marking a 4.8 percent increase. This growth brought the total assets to KD 88.58 billion, compared to KD 84.55 billion during the same period in 2023. This impressive expansion of total assets can be attributed to several key factors: Foreign Assets Growth -- One of the most significant drivers was the rise in foreign investments, which grew by KD 3.01 billion (13.3 percent), reaching a total value of KD 25.61 billion. This indicates that Kuwaiti banks have been strengthening their international presence and investments.
Private Sector Demands -- There was a notable increase in the demands on the private sector, which rose by KD 1.86 billion (4.2 percent), pushing the total to approximately KD 46.53 billion. This shows that local businesses continue expanding and relying on bank credit, a crucial indicator of economic vitality. Growth in Other Assets -- Other assets, too, saw growth, increasing by KD 0.24 billion (8.3 percent) to reach KD 3.11 billion.
This category often includes non-traditional investments and diversified holdings, which reflect the banks’ risk management strategies. Private Sector Dominance -- As of the end of August 2024, claims on the private sector comprised about 52.5 percent of total bank assets, underscoring the sector’s vital role in the country’s financial landscape.
Foreign Assets -- Foreign assets accounted for 28.9 percent of total bank assets by the end of August, up from 26.7 percent in the same period in 2023. This increase signifies Kuwaiti banks' strategic importance on global investments, as they continue to diversify beyond domestic borders. In line with this, the growth in foreign assets can be attributed to a 37.8 percent rise in credit facilities granted to non-residents, an 18.1 percent increase in foreign investments, and an 11.1 percent rise in other foreign assets.
However, this growth was somewhat tempered by a 7.5 percent decline in loans to foreign banks and a 2.2 percent decrease in deposits in foreign banks. These trends illustrate a delicate balance in the financial strategies of Kuwaiti banks. On the one hand, they are increasing international exposure and expanding credit to foreign businesses, a move that could be compared to Kuwaiti companies investing in prime global real estate or stocks.
On the other hand, they are pulling back on less profitable or riskier avenues such as foreign bank loans, signaling a cautious yet calculated approach to overseas growth. This overall expansion strengthens Kuwait’s banking sector and reflects broader economic resilience, as businesses, particularly in the private sector, show continued demand for credit and capital.
The results could be seen as a positive sign for Kuwait’s Vision 2035 plan, as a robust banking system is essential for fueling growth in various sectors, including real estate, infrastructure, and small and medium enterprises (SMEs), all of which are key pillars of the national development strategy.
