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Kuwaiti credit growth eases back in October.

Kuwaiti credit growth saw a drop in October following two strong months. Despite this, growth is still expected to finish the year on a healthy note, said NBK Capital. Personal facilities continue to carry credit growth while credit to the nonbank financial sector remained a drag due to ongoing deleveraging.

Loans fell -0.1 per cent month-on-month, but were up 4.7 per cent on year-ago levels and 4.1 per cent year to date. Private deposits saw a small increase in October although overall deposits were stable at +0.0 per cent M/M, 9.2 per cent Y/Y and 6.5 per cent YTD. Private deposits were up 0.2 per cent while public sector deposits fell 0.7 per cent.

Outstanding credit to residents stood at KWD 26.8 billion in October, down KWD 48 million on the month. This was the largest drop in over a year. Total credit is still up a good KWD 1.15 bn year-to-date (ytd) and year-on year growth is now 5.0 per cent and should finish the year at around 6.0 per cent.

Consumer/household lending growth remains strong as personal facilities (excl. securities) saw another strong gain in October. The gain offset much of the credit losses in other sectors. Rising KWD 116 million, this sector has added KWD 846 million to outstanding loans ytd and is up 15.6 per cent y/y.

Trade, industry and "other" business credit drove most of the drop in credit, in addition to a larger than usual decline in lending to non-bank financials. The latter was down KWD 40 million in October, off 16.7 per cent on the year. Other declines were largely in industry (down KWD 28 million) and trade (down KWD 19 million) and "other" (down KWD 69 million). Construction was alone in seeing a small rise (up KWD 7 million) while real estate lending was flat.

An increase in sight and saving deposits caused both the narrow (M1) and broad (M2) measures of money supply to expand by KWD 99 million and KWD 84 million, respectively. M1 and M2 are up 10.2 per cent and 5 per cent y/y respectively.

Private sector resident deposits were up a small KWD 46 million in October, a pace similar to the September gain. While dinar deposits rose by KWD 143 million, this was offset by a decline in foreign currency deposits, which followed a large increase in September. Gains in dinar saving and sight deposits were partly offset by a decline in dinar time deposits.

Deposit rates on dinar time deposits fell between 11 and 16 basis points across maturities in October. This coincided with the October discount rate cut and took average rates for the month down. The 1-month, 3-month-, 6-month and 12-month deposit rates averaged 0.64 per cent, 0.86 per cent, 1.09 per cent and 1.34 per cent.

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Publication:CPI Financial
Date:Dec 4, 2012
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