Kuwaiti banks continued to clean their balance sheets from bad debts and transfer them abroad in 2021, maintaining high levels of the quality of their assets, which reached their best condition at the end of last year, as non-performing loans reached their lowest levels in history to reach 1.4 percent, compared to 2 percent at the end of 2020.
The provisions set aside by banks of about 629,577 million dinars in 2021, contributed to improving the quality of their assets, as part of those provisions were used to write off bad loans, while the coverage of provisions for non-performing loans rose to a record level last year at 310 percent, reports a local Arabic daily.
According to statistics prepared by Bayan Investment Company the total debts written off by Kuwaiti banks in 2021, after confirming the impossibility of collecting those debts was about 503.56 million dinars, an increase of 4.57 percent compared to 2020 which was about 481.53 million.
Seven banks recorded varying declines in write-down rates, ranging between 26.76% for KFH and 95.35 percent for KIB, while 3 banks increases in the volume of written off debts during the past year, namely “The United”, “Al-Watani” and “Burgan”.
As for the banks that witnessed a decrease in the volume of written off debts in 2021 compared to 2020, KIB recorded a decrease in the volume of written offs from 27.878 million dinars to 1.297 million (-95.35 percent), and in “Commercial” these debts decreased from 83.536 million dinars to 11.927 million (-85.72 percent), in “Warba” from 48.797 million dinars to 9.119 million (-81.31 percent), in “Al-Ahly” from 92.783 million dinars to 23.656 million (-74.5 percent) ), and in “Boubyan” from 15.273 million dinars to 7.115 million dinars (-53.41 percent), and in “Gulf” from 80.764 million dinars to 43.193 million dinars (-46.52 percent), and in “KFH” from 45.271 million dinars to 33.155 million (-26.76%).
As for the banks whose written-off debts increased during the past year, was the “United” group, whose volume of those debts increased, according to “Bayan” statistics, from 1.118 million dinars in 2020 to 50.248 million in 2021, and “The National” from 45.936 million dinars to 176.778 million, and “Burgan” from 40.175 million dinars to 147,073 million.
It is noteworthy that the loans written off do not cause harm to the bank’s balance sheet, as they are not written off until after they are classified as non-existent, that is, they are no longer generating income and profits, according to accounting standards , and there is no legal harm to the bank as a result of writing off debts and transferring them outside the budget.
The customer is not negatively affected, and he has the right to follow up the debt collection procedures in the usual ways, and write off debts does not mean that the banks given up their right and the right of their shareholders to collect them, through friendly or judicial claims.
As for the banks’ distributions to their shareholders for 2021, their total value — cash and bonus shares — was about 623.8 million dinars, an increase of 42.65 percent over the total distributions of banks for 2020, which amounted to about 437.308 million dinars.
Banks recorded an increase in their total cash distributions by about 79 percent, from 241.188 million dinars in 2020 to 431.682 million in 2021, while they witnessed a decrease in the value of their distributions from bonus shares by 2.04 percent, from 196.12 million dinars to 192.118 million.
“NBK” was at the forefront of banks in terms of “cash” and grant distributions for 2021, with a total value of its distributions amounting to about 251.744 million dinars, followed by “KFH” with 184.857 million, then “Commercial” with 39.618 million.