08/01/2024
737 times read
08/01/2024
737 times read
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KUWAIT CITY, Jan 8: Kuwaiti banks have continued their expansion in providing credit facilities to foreign companies operating in the country, reaching a historic high of approximately 5.8 billion dinars by the end of November 2023. This surge is attributed to the increased pace of awarded projects in Kuwait, experiencing an annual jump of 179% and reaching $7 billion in 2023.
As per data from the Central Bank of Kuwait, credit facilities for non-residents are extended to individuals without Kuwaiti work or residence permits, as well as foreign companies and commercial establishments licensed by the Ministry of Commerce and Industry or other relevant authorities.
This includes foreign companies engaged in special contracts with the government and foreign diplomatic bodies along with their affiliated entities. The statistics reveal a 5.2% annual increase in the balance of facilities for economic activities for non-residents, amounting to 290 million dinars by the end of November. The total facilities for non-residents stood at about 5.4 billion dinars during November of the previous year. Every month, net credit facilities to non-residents amounted to 277.6 million dinars in November compared to October 2023.
In detail, the credit facilities to non-residents are concentrated in the following:
-- Loans from local banks to foreign banks, including subscribed bonds, amounted to a value of 2.18 billion dinars as of The end of November 2023, compared to 2.169 billion as in the balance of December 2022, compared to 1.962 billion for the corresponding month of November 2022, with a growth rate equivalent to 10%.
-- Other services included in the credit facilities provided to non-Kuwaitis recorded about 1.2 billion dinars, compared to the value of 1.08 billion dinars at the end of December last year, i.e. a growth rate equivalent to 13%.
-- Loans granted to insurance and exchange companies, investment companies, and foreign financing companies operating in Kuwait recorded about 798.5 million dinars at the end of November 2023, compared to about 560.5 million dinars at the end of December 2022, with a growth rate equivalent to 42.4%.
-- Loans granted to commercial companies amounted to about 153.8 million dinars, compared to 180.3 million dinars, a decrease of 14.6%.
-- Industrial loans to non-residents amounted to about 399.5 million dinars at the end of November 2023, compared to 424 million dinars at the end of December 2022, a decrease of 5.7%.
-- Construction loans recorded an increase from the level of 196.8 million dinars at the end of December 2022 to a record 207.3 million dinars at the end of November 2023, with a growth of 5.3%.
-- Loans granted to foreigners to purchase securities amounted to about 67.2 million dinars at the end of November 2023, distributed among 62.2 million dinars for foreign companies and institutions and 5.1 million dinars for foreign individuals, a decrease of more than 12%, as they recorded cumulatively at the end of December 2022 about 76.4 million. Dinar.
-- Loans granted to foreign companies operating in the oil and gas sector locally amounted to about 542.6 million dinars at the end of November 2023, compared to 571.7 million dinars at the end of December 2022, recording a decrease of about 5%.
-- Loans granted to foreign real estate companies amounted to about 124.3 million dinars at the end of November 2023, compared to 125.6 million dinars at the end of December 2022, a decrease of 1%.
-- Public service loans cumulatively amounted to 152.6 million dinars at the end of November 2023, compared to 196.1 million dinars at the end of December, a decrease of 22.1%.
Local banks usually do not grant any personal facilities to foreigners who do not hold any residency in the country, as this item is devoid of any facilities. Overall, it is expected that the value of credit facilities provided to foreign companies operating in Kuwait will increase during the current year as a result of the country’s implementation of a large number of projects in the construction and oil sectors. The “MEED” magazine monitored that the total value of active projects in Kuwait amounts to $129.8 billion, distributed in two phases, the first of which is the pre-implementation phase and is worth $100.6 billion, while the value of projects under implementation amounts to $29.2 billion.
Regarding the future outlook, credit growth is likely to continue while receiving support through the recovery of economic activities, in conjunction with the easing of monetary tightening and the trend of global central banks, including the Central Bank of Kuwait, to reduce interest rates during 2024, which will reflect positively on revitalizing the economy and encouraging the private sector loans, not to mention the rise in oil prices, which enhances levels of confidence, and the potential improvement in the pace of project awarding.