Competition among Kuwait’s banks for premium customers is intensifying, with medium-sized and smaller lenders challenging banks that have recently introduced financing offers with interest rates of around 4 percent.
The preferential rates are roughly 2.5 percentage points below the maximum rate permitted for financing entities, and the move by two banks to offer loans at around 4 percent has encouraged other lenders to compete for the same customer segment.
The growing competition could lead to further reductions in financing rates if banks continue to compete aggressively for premium customers. However, the offers are currently focused on a specific segment rather than the wider banking market.
Banks are primarily targeting Kuwaiti customers with stable employment and relatively high salaries. Residents and stateless persons are excluded from the preferential status offered under these programs.
Eligibility requirements vary between banks, but the targeted segment generally includes customers with stable employment and monthly salaries preferably starting at around Dh1,500? Wait, in Kuwait this is KD1,500.
The segment includes high-net-worth individuals with substantial deposits and investments, as well as doctors, judges, senior officers, engineers, technicians, artificial intelligence professionals, oil-sector employees and teachers.
The competition is not limited to reducing borrowing costs. Banks are also seeking to strengthen long-term relationships with high-value customers, retain significant deposits and maintain liquidity by keeping large balances within the banking system.
Premium packages can include exemptions or discounts on selected banking fees and charges, along with services and benefits tailored to affluent customers.
For banks, expanding credit offerings to premium customers could also support future growth in loan portfolios, particularly in housing finance. At the same time, banks can increase fee and commission income generated through banking, investment and financing services used by high-net-worth customers.
The preferential packages therefore serve several purposes, including supporting credit growth, attracting new deposits, securing stable sources of funding and increasing transaction volumes generated by premium customers.
Most banks offer broadly similar benefits to their premium segments. These can include dedicated relationship managers, priority services at branches and call centers, preferential returns on selected savings products and discounts or exemptions on certain banking fees.
Premium customers may also receive credit and financing cards with higher limits and additional benefits.
Some premium banking programs extend beyond traditional banking services to include investment facilities, concierge services, travel benefits and airport lounge access. This has broadened competition for affluent customers beyond interest rates and financing costs.
