Kuwait banking sector overcomes repercussions of COVID pandemic
This news has been read 14141 times!
KUWAIT CITY, May 19: The Kuwaiti banking sector announced financial results for the first quarter of 2021, which showed this vital sector has overcome the repercussions of the COVID-19 pandemic, reports Al-Rai daily. This proves the effectiveness of 43 measures that the Central Bank of Kuwait (CBK) has taken since the beginning of the crisis in April 2020. These measures have been widely praised by international institutions, such as the International Monetary Fund (IMF) and global credit rating agencies. Measures taken since the discovery of the first covid-19 case in the country covered four key areas: monetary policy, regulatory and prudential policy, financial stability and social responsibility. In March last year, CBK cut the discount rate to 1.5 percent while reducing the interest rate on repo agreements by one percent.
The second measure came in October last year to reduce 0.125 percent in intervention rates on all interest rate structures up to 10 years; including CBK bonds, term deposit acceptance system, direct intervention instruments, and public debt instruments. Also in March 2020, banks did not submit financial statements for the first quarter of that year. In April 2020, banks were allowed to use 2.5 percent hedging capital buffers. Other measures included reducing the risk weight of exposures on small and medium enterprises (SMEs) to 25 percent instead of 75 percent, raising the maximum available funding to 100 percent instead of 90 percent, lowering the minimum liquidity coverage standard, lowering the minimum stable net financing standard, and lowering the minimum regulatory liquidity ratio.
The Central Bank’s action regarding financial stability consisted of 18 measures and a circular calling on banks to activate emergency plans, business continuity and respond fairly to crises; in addition to continuing to provide banking services to commercial companies supplying food-related commodities. One of the important circulars issued by CBK in March last year was related to financial stability; that is, to postpone the collection of loan installments for those affected by the crisis within a period of six months and no penalties were imposed. This is in addition to a circular that obliges local banks to refrain from selling or demanding collateral for loans until the markets stabilize.
This news has been read 14141 times!
