Kuwait - Mubasher: Kuwait's credit growth maintained an improved pace of 8.2% year-on-year in July 2016, according to National Bank of Kuwait (NBK).
On other hand, Kuwait's credit declined in July on monthly basis as it went down by KWD116 million, largely on a decrease in lending for the purchase of securities and the real estate sector.
Meanwhile, private deposits saw a large decrease during the month, some of which was offset by gains in government deposits. Domestic interest rates eased slightly in July.
Growth in household lending remained relatively subdued in July, adding KWD 55 million. Growth moderated to 9.8% y-o-y, its slowest pace since December 2011. Installment loans continued to largely support the expansion in credit, albeit at a reduced pace, with growth edging lower to 11.7% y-o-y. Shorter-tenor consumer loans registered another small monthly decline and were down by 2.3% y-o-y.
Nonbank financial companies saw a net decline in credit, but maintained positive growth compared to a year before. Sector debt shrank by KWD 62 million in July, though growth picked up to 3.9% y-o-y thanks to net gains in lending during recent months and an apparent end to a period of deleveraging in the sector since the financial crisis.
All remaining credit declined by KWD 109 million, though growth held up at 7.6% y-o-y thanks to basis effects. A large part of the July decline was from lending for the purchase of securities, which fell by KWD 273 million; another KWD 71 million drop came from lending to the real estate sector.
Most other sectors did relatively well, including oil & gas, construction, and trade, adding a combined KWD 241 million. Indeed, credit growth excluding lending for the purchase of securities and real estate picked up to 13.2% y-o-y.
Private deposits saw a large drop in July. Their decline by KWD 652 million pushed growth in broad M2 money supply down to 0.9% y-o-y; growth in narrower M1 money supply recorded a 2.2% y-o-y decline.
The largest decline came from KWD sight deposits, down KWD 451 million, though savings and foreign currency deposits were also lower. Meanwhile, KWD time deposits managed to increase by KWD 68 million, recording the strongest growth of 9.2% y-o-y.
An increase in government deposits helped offset some of the decline in private deposits. The KD 184 million increase helped push growth in government deposits to 32% y-o-y. Their rise over the last twelve months totaled KWD 1.6 billion.
Banking system liquidity decreased in July, but maintained a healthy level. Bank reserves (i.e. cash, deposits with the CBK and CBK bonds) contracted by KWD 290 million to KD 5.7 billion, or 9.7% of total bank assets.
The decrease was predominantly in CBK deposits and coincided with a KWD 896 million drawdown in CBK foreign reserves, which decreased to KWD 8.1 billion.
Interest rates held relatively steady in July. The 3-month Kuwait interbank offered rate (Kibor) dropped 1 basis point (bp) to 1.51% in July. Rates have since been relatively steady with the 3-month Kibor at 1.56% in early October. Customer deposit rates also appeared to ease, seeing drops of 1-2 bps across some of the various maturities.
