Kuwaiti banks report robust profits despite economic downturn

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KUWAIT CITY, March 21: Despite a downturn in the Kuwaiti economy in 2023, banks in the country reported robust profits, largely driven by increased interest rates, according to ‘The Banker’ magazine, reports Al- Qabas daily. Despite a 0.7% contraction in GDP due to oil production and price declines, Kuwaiti banks saw annual net profits rise by 28.7% to 1.5 billion dinars.

The surge in profits was attributed to a significant uptick in net interest income, which reached 2.6 billion dinars in 2023, up from 2.3 billion dinars the previous year. This increase mirrored global trends, with international banks also benefiting from higher interest rates aimed at combating inflation. With the Central Bank of Kuwait raising interest rates to 4.25%, Kuwaiti banks saw their net interest margins strengthen, reaching 2.78% in the third quarter of 2023.

Despite political and economic uncertainties, banks are optimistic about maintaining stable growth throughout 2024. Redmond Ramsdell of Fitch Credit Rating Agency anticipates Kuwaiti loan growth to remain relatively strong, between 3% and 4% for the year, supported by continued profitability from higher interest rates. Major Kuwaiti banks are eyeing opportunities in the project market as the government invests in infrastructure projects aligned with Kuwait Vision 2035.

Digital banking is on the rise in Kuwait, with 95% of the population using digital channels for banking. Kuwaiti banks are investing in digital solutions to meet evolving customer demands, particularly among the youth demographic. Salah Al-Fulaij, CEO of National Bank of Kuwait, highlighted the bank’s commitment to financing development projects and embracing digital transformation to enhance customer experience and innovation

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