KUWAIT CITY, Sept 5: Kuwait’s banking sector has demonstrated notable stability in its financial metrics, according to recent reports. As of the end of the first half of the year, the coverage ratio for non-performing loans (NPLs) reached an impressive 245.7 percent. This comes as the ratio of non-performing loans to total loans stood at 1.7 percent, returning to levels seen in the third quarter of the previous year. This follows a decrease to 1.4 percent in the fourth quarter of 2023, a slight rise to 1.6 percent in the first quarter of 2024, and stabilizing at 1.7 percent in the second quarter of this year. In addition, the net non-performing loans to net loans ratio has increased to 1.1 percent, up from 0.9 percent at the end of last year’s fourth quarter. This metric highlights the proportion of troubled loans with total net loans.

On the liquidity front, the sector’s regulatory liquidity ratio stood at 21.4 percent, surpassing the minimum required threshold of 18 percent. This ratio includes balances with the Central Bank of Kuwait, government treasury bills and bonds, and customer deposits in dinars. The capital adequacy ratio for the sector was reported at 18.1 percent, while the ratio of Tier 1 capital to the capital base reached 84.3 percent, reflecting a robust capital position. Official data also revealed that the net interest margin for the sector was 2.9 percent. The ratio of basic income to operating income improved to 83.4 percent, up from 81.6 percent in the previous quarter. Moreover, the sector’s net profit margin was recorded at 40.7 percent, with a return on average equity of 10.8 percent and a return on average assets of 1.4 percent.