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Kuwait: Credit growth steady at eight per cent in January.

NBK's latest Economic Update reports Kuwaiti credit growth was steady at 8.0 per cent despite a third consecutive month of declining business credit in January. Growth in January came from household borrowing which remained the fastest growing of all sectors, though it continued to confirm a moderating trend. Meanwhile, money supply continued to slow down as private deposits contracted on the month.

The monthly gain was a relatively modest KWD 51 million, less than a third of the KWD 180 million average monthly gain seen in 2013. Weakness came largely from the non-financial business sector which saw its third consecutive monthly drop in credit.

Household debt remained the most dynamic part of bank credit gaining KWD 89 million, though growth did slow slightly to 16.0 per cent year-on-year (y/y). The sector is expected to continue to see growth moderate in 2014, a trend seen since the middle of 2013. Consistent healthy growth in this sector, however, has pushed its share of total bank credit up by two percentage points in the last 12 months to account for almost 30 per cent.

Non-bank financials deleveraged further during the month following an unusual gain in December. Credit to the sector was down by another KWD 20 million in January, bringing the year-on-year decline to 12.8 per cent. This trend is likely to continue in 2014, though at a slowing pace as the health of investment sector improves.

All remaining credit was down KWD 18 million, with growth mostly steady at 6.7 per cent y/y. Credit was down on declines in the real estate and "other" sectors, which were down by KWD 60 million and KWD 23 million, respectively. Meanwhile, the trade sector gained KWD 49 million.

Money supply (M2) growth slowed further to 7.8 per cent y/y with private deposits down by KWD 213 million. The decline in deposits was largely in KWD time, down KWD 178 million. KWD sight and saving deposits were also lower. By contrast, foreign currency deposits saw a small increase. M1 growth eased to 10.3 per cent.

Deposit rates on KWD time deposits remained mostly unchanged from the previous month. Rates on the 1-month, 3-months, 6-months, and 12-months timed deposits stood at 0.56 per cent, 0.74 per cent, 0.94 per cent, and 1.12 per cent respectively.

Activity in the local interbank market has been picking up, with interbank deposits up 54 per cent over the last twelve months. Meanwhile, KWD interbank rates (KIBOR) have risen since the middle of 2013. The average one-week and one-month rates rose by around one and six basis points during January to 0.47 per cent and 0.63 per cent, respectively. The overnight rate gained one basis point.

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Publication:CPI Financial
Date:Mar 15, 2014
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