KUWAITI ISLAMIC BANKS REPORT 8.5% GROWTH

  • 14/10/2022

Kuwait City: According to Fitch Ratings, Kuwaiti Islamic banks' adaptable credit quality from the first half of this year will support their operating environment even more in the upcoming period, which will see higher oil and interest rates as well as a stronger credit growth. The agency emphasised that those banks' top priority will continue to be the advancement of digital banking services. In a recent report, Fitch stated that Kuwait's Islamic banks' assets increased by 8.5% in the first half of this year compared to the same period last year, and that these assets now account for 45.5% of all Kuwaiti banks' total assets. 


Since Kuwait is still one of the world's largest markets for Islamic banking, Fitch noted that the majority of its residents are Muslims, who in turn control the high demand for Islamic banking products. Fitch continued, noting that the Central Bank of Kuwait recently drafted an alternative law to the Deposit Insurance Law (deposit insurance project) for all banks in Kuwait and is subject to final review before it is submitted to the government, that Islamic banks in Kuwait benefit from government support through financial and legal legislation that supports their operating environment. However, it is unclear at this time whether the aforementioned bill will cover Islamic banks' investment accounts for profit sharing. 

The agency noted that Kuwaiti Islamic banks, like their traditional counterparts, reduced the fees for underfunding to the average total financing since the first half of 2017, as a result of the sufficient levels of provisions that have built up in the Kuwaiti banking sector generally. The agency noted that the percentage of bad debts in Kuwaiti Islamic banks decreased by 1.4% until the end of the first half of 2022, in line with the percentage of bad debts in conventional banks.

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