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KUWAIT CITY, July 6: Moody’s credit rating agency confirmed that the issuance of sukuk in Kuwait currently may increase once the public debt law is approved in the National Assembly, noting that the sukuk market in the country is still limited, and the country has strong liquidity currently due to the high oil prices, and the government has huge financial reserves, capable to cover its financing needs even if oil prices fell to the range of 60 or 70 dollars per barrel, reports Al-Qabas daily. Moody’s stressed that the eventual approval of the public debt law would boost the sovereign sukuk issuances for Kuwait, and the law may be approved later this year, but it may face further delays.
The agency said that the growth of the Kuwaiti Islamic finance market is one of the fastest in the Middle East, noting that the average growth of Islamic finance in Kuwait between December 2016 and December 2021 amounted to 8%, double the pace of financing conventional banks in the country in the same period.
The sources pointed out that this growth is led by the steady demand for banking products that are compatible with Sharia in Kuwait, which include corporate and individual clients, and reach large segments of the Kuwaiti workforce. The sources indicated that Islamic finance in Kuwait accounts for 42% of the total financing of banks in the country, and this percentage constitutes one of the highest major Islamic markets around the world.
The sources stated that the financing assets of Islamic banks in Kuwait was 85 billion dollars as of September 2021, up from 79 billion in December 2020, pointing out that the increasing demand for Islamic financial products refl ects their development over the past decade, and the scope of Islamic financial products has expanded and is now deepened and is comparable with the country’s traditional banking services.
The sources say Boubyan Bank is a good example of the rapid growth of the Islamic banking sector in Kuwait, expecting that the bank’s business will continue to grow in the current year, as high oil prices contribute to enhancing the economic recovery after Corona, which both the Islamic and conventional banks benefit from, noting that the bank announced an asset value of 7.5 billion dinars on March 31, and the bank focuses on digital innovations and is attracting young customers.
According to the sources, the bank has now become the third largest lender in Kuwait on the back of the strong growth in its business in recent years. The bank’s market share in the finance sector has reached 11.2%, and the market share is 10.5% for customer deposits. Moody’s pointed out that KFH is the largest Islamic bank in Kuwait and the second largest, with assets of $72 billion. For the other to turn into an Islamic bank, the plan still requires the approval of the Central Bank of Kuwait and the general assemblies of both banks