Kuwait banks backed by government, poised for Vision 2035 growth: Moody’s
Moody’s underscores that Gulf banks, supported by strong sovereign finances, are well-positioned to play a pivotal role in implementing regional diversification agendas, particularly in financing non-oil sectors and government-backed initiatives.
A recent Moody’s Investors Service report highlights the strong financial foundations of Gulf banks, emphasizing that robust government buffers and a proven record of financial support continue to underpin the stability of the region’s banking sector.
In Kuwait, the report noted a well-balanced ownership structure, with the government holding 18 percent of total bank equity. Lending activity remains focused on the private sector, as government loans account for only 7 percent of total bank lending, leaving ample liquidity for financing private projects and individuals.
Government deposits constitute 22 percent of total bank deposits, providing a secure liquidity buffer while reducing vulnerability to fluctuations in public spending.
Moody’s emphasized Kuwait’s enormous sovereign resources, estimated at nearly 700 percent of GDP, far exceeding public debt and the size of the banking sector, which stands at roughly 150–200 percent of GDP.
The report states that these strong buffers position Kuwaiti banks to support the country’s economic development plans and the objectives of Kuwait Vision 2035.
Key pillars include attracting foreign direct investment from technology giants such as Alphabet and Microsoft and financing major infrastructure projects.
Across the GCC, the agency noted that governments maintain close financial ties with domestic banks, which remain central to economic diversification strategies.
Sovereign support is expected to remain the primary mechanism for addressing potential bank failures, despite the gradual introduction of operational resolution frameworks in countries such as Saudi Arabia and the UAE.
Moody’s adds that government involvement continues to strengthen banks’ creditworthiness, often boosting ratings by 3 to 4 notches, bringing them closer to sovereign credit levels.
Overall, Moody’s underscores that Gulf banks, supported by strong sovereign finances, are well-positioned to play a pivotal role in implementing regional diversification agendas, particularly in financing non-oil sectors and government-backed initiatives.
