In 2024, the majority of Kuwaiti banks have adopted a more stringent lending policy towards expatriates compared to the previous year, signaling a shift in credit focus towards Kuwaiti customers and a selective group of non-citizens, particularly elite professionals.

According to banking sources several financial institutions have tightened their credit criteria for expatriates, narrowing down eligible job categories for financing, reports Al-Rai daily.

Notably, some banks have excluded low-income individuals and clients with salaries below 600 dinars per month, especially those employed by non-listed companies.

The preferred list for lending to expatriates has been streamlined, emphasizing sectors such as education and healthcare, encompassing roles such as doctors, nurses, and technicians.

Additionally, stable government positions with limited competition from Kuwaitis in the medium term, managerial roles in reputable companies, and professionals in secure positions are included in the prioritized list.

Banks are targeting customers with a robust credit history and adequate end-of-service benefits. For non-Kuwaitis, the consumer loan limit is capped at 25,000 dinars for those earning salaries around 1,250 dinars and possessing service periods exceeding 10 continuous years.

Lending caution extends to newly appointed expatriates, individuals over 55 years old with salaries below a thousand dinars, and those with non-university educational certificates. Loans to this segment are selective, with low-risk credit limits.

In the preceding year, most banks refrained from issuing new loans to expatriates in the government sector, with exceptions found in specialized banks. The decrease in the appointment of non-Kuwaitis in government roles during 2023 contributed to this scenario.

Anticipated slow credit growth for non-Kuwaiti individuals’ loans is expected to persist at least until the end of the first quarter of the current year. Some banks, unable to compete in the Kuwaiti retail sector, are more open to financing expatriates under favorable terms.

These banks aim to expand lending to non-Kuwaitis to drive credit growth in their portfolios. Market studies indicate that the default rate among expatriates is not alarming, leading these banks to accept a broader risk, including considering individuals with salaries exceeding 300 dinars for borrowing, even with a shorter employment period.

In light of the credit strictness that most banks practice with expatriates, who lends to newly hired and middle-income expatriates, the sources explained that there are about 4 banks out of 10 that are more open to financing expatriates on more favorable terms than banks with low appetite for this segment.

The sources indicated that these banks are the ones that do not find a suitable credit space that meets their ambitious growth plans in the individual sector due to the intense competition for the segment of Kuwaitis that the major banks opened last year under the title “Al-Qard Al-Hassan,” and because of it they acquired the largest segment of Kuwaitis eligible to borrow, which needs competition.

They have to wait again between 3 to 5 years, which is the required period by the Central Bank for the customer to move to another bank after 30 percent of the repayment period has passed.

The sources reported that banks that cannot hope for a jump in their market share in the Kuwaiti retail sector due to the strong competition for them from several banks are instead expanding lending to expatriates in order to seek credit growth in their portfolios from any legitimate window, taking into account the requirements to combat the slowdown in credit growth due to the high cost of financing, explaining that these banks are also driven by market studies indicating that the default rate among expatriates is not alarming.

The sources said that these banks require general principles for good individual lending, including that the company in which the client works has dealings with the bank or that the company be well-known and have a known history, but they accept a broader risk than strict banks in terms of years of experience, salary rate, and the size of the end-of-service benefits, indicating that expatriates with salaries exceeding 300 dinars can borrow from these banks even if they have been employed for 4 months, which is the legally required stabilization period.

The sources explained that these banks increase their protective buffers by adopting a list of companies that is more extensive than that used in conservative banks.

In summary, Kuwait’s lending landscape for expatriates is evolving, with stricter criteria adopted by many banks. Simultaneously, other banks are exploring opportunities to grow their portfolios by catering to this specific segment of the population.

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