KUWAIT CITY, Nov 2: Private sector deposits in Kuwait’s banking sector recorded good growth during the first eight months of this year, reaching 4.8 percent to record KD 38 billion. This is the highest historical level ever reached, and came as a result of the economic closure and disruption of air and land transportation as well as sharp decrease in consumer spending and increase in the savings, reports Al-Anba daily.
It has become clear from analyzing the private sector deposits in dinars based on the type and maturity that time deposits in dinars (between a month and a year maturity) formed the largest part of the private sector deposits, equivalent to a contribution rate of 53.4 percent with a value of KD 19.13 billion, which is down by 4.3 percent since the beginning of 2020.
The demand deposits (short-term) amounted to about KD 10.47 billion, or 29 percent of private sector deposits, all of which are short-term deposits, and have increased by 22 percent since the beginning of 2020.
As a result of the nature of short-term deposits, only savings deposits amounted to KD 6.24 billion, equivalent to 17.4 percent of private sector deposits. Savings deposits have been continuously growing since 2005, reaching KD 1.78 billion , to achieve a jump of 250 percent over the past 15 years.
As for the distribution of private sector deposits with local banks, written in Kuwaiti dinars in terms of the interest rates that banks pay to depositors, it turns out that there are KD 10.93 billion worth private sector deposits without interest, and there are KD 18.97 billion of deposits on which banks pay annual interest of up to two percent, and KD 2.84 billion are deposits that banks pay annual interest ranging between 2 percent and 2.5 percent, while KD 3 billion with annual interest between 2.5 percent and 3.5 percent.
Regarding the distribution of private sector deposits by currency type, it was noted that the vast majority of private sector deposits are in Kuwaiti dinars, as deposits in dinars at the end of August 2020 accounted for 94.3 percent of total private sector deposits, equivalent to KD 35.84 billion compared to 93 percent at the end of year 2019.
Since the remaining percentage of deposits of KD 2.15 billion is in foreign currencies, this is evidence of the encouragement of the local currency and its strength against foreign currencies and the financial policy that is based on keeping the interest rate margin in favor of deposits in dinars and with the support of the official reserve assets of the Central Bank of Kuwait, which reached the end of last August about KD 14.37 billion.