After the Kuwaiti credit market was sluggish between 2016 and 2020, it witnessed a remarkable recovery during 2021, thanks to economic and commercial activity and companies’ need for financing after a difficult Corona virus pandemic period, in addition to the resumption of lending by banks (Consumer and personal loans) with strict terms.
The local credit market recorded a low annual growth rate between 2016 and 2020 of about 3.6%, during which credit facilities increased by 6.4 billion dinars, at an annual rate of 1.3 billion dinars, to record the credit facilities portfolio of Kuwaiti banks of about 39.8 billion dinars by the end of 2020, reports a local Arabic daily.
However, the market returned to a strong rise during the past year, as the credit facilities portfolio of Kuwaiti banks increased in 2021 by 6.3% to record 42.3 billion dinars, with an annual increase of 2.52 billion dinars, as personal facilities contributed 87% of this increase, with a value of 2.18 billion dinars, to record 19.43 billion dinars, a growth of 46%.
The total loans granted by Kuwaiti banks during the last 6 years (between 2016 and 2021) reached about 8.9 billion dinars, recording a cumulative growth rate of about 27% during that period.
Moreover, personal facilities recorded a good growth rate in 2021 of 12.6%, after the annual growth rate between 2016 and 2020 was about 4.3%, while during the first quarter of 2022, the credit market continued to recover and recorded strong growth rates, as it rose during March on the basis of Annually by 8.7%, equivalent to an increase of 3.5 billion dinars.
Thus, the portfolio of credit facilities in the Kuwaiti banking sector recorded a level of 43.6 billion dinars by the end of March 2022, which is a historical record, as the local credit market has not witnessed this growth rate since 2008 when it recorded 17.5%.
Personal facilities maintained good growth rates during the first quarter of 2022, as they increased by 13.7% on an annual basis to record 19.97 billion dinars and constituted 45.7% of the credit facilities portfolio which served as also the main lever for the growth of the loan portfolio, as it contributed 69% of the total increase in the wallet.
As an essential part of personal facilities, the consumer loans sector maintained good growth rates during the first quarter of 2022, as it recorded a growth rate on an annual basis of 14%, compared to a growth rate during 2020 of 13.3%, 6.3% in 2020 and 5% in year 2019.
Consumer loans as on March 31, 2022 constituted about 39% of the total credit facilities portfolio of Kuwaiti banks, reaching 16.98 billion dinars, and were the main driver of the credit market growth in Kuwait during the previous years. Consumer loans constituted 85% of the personal loan portfolio.
As for the growth rates of loans by economic sectors, it was the second highest increase during the first quarter of 2022 and on an annual basis for loans directed to the industrial sector, with a growth rate of 12.4% compared to a growth rate of 3.4% for the same period in 2021 to record 2.41 billion dinars, followed by facilities for investment companies With a growth rate of 10.2%, compared to a decrease of 17.3% in the same period in 2021, to record 1.04 billion dinars.
In terms of the credit portfolio and its distribution to sectors and its growth rates, it is evident that during the last 5 years, the share of personal facilities in the total credit facilities portfolio increased from 42% in 2016 to 45.7% at the end of March 2022 to record 19.9 billion dinars, which is equivalent to a total increase of 5.5 billion dinars with a compound annual growth rate of 6.5% in 5 years.
Personal facilities were the main driver of the growth of the local credit market, as they contributed about 59% of the total increase in the credit facilities portfolio, which in turn amounted to 9.35 billion dinars during the same period, with a cumulative annual growth rate of 4.7%.
As for the real estate sector’s share of the total credit facilities, it decreased in 5 years from 23% at the end of 2016 to 21.9% in March 2022 to record 9.56 billion dinars, with a cumulative annual growth rate in 5 years of 4%. Loans to the real estate sector witnessed an average increase in five years of 1.8 billion dinars.
Also, the trade sector’s share of the total credit facilities decreased from 9% to 7% and without any growth in 5 years, to record the trade facilities portfolio about 3.12 billion dinars.
As for the average decline, it was in the credit facilities of investment companies, as their share of the total portfolio of credit facilities for the banking sector decreased from 4% in 2016 to 2.4% at the end of March.
The share of loans to the construction sector decreased in 5 years from 6% to 4.4% to record 1.92 billion dinars at the end of March 2022, with a cumulative annual growth rate of negative 2% between the end of 2016 and March 2022. As for loans to the industrial sector, its share of the credit market decreased from 6 % to 5.5% during the same period to record 2.41 billion dinars at the end of March 2022, with a cumulative annual growth rate in 5 years of 5%.