14/07/2015 08:05 AST
KUWAIT CITY, July 13, (KUNA): The Central Bank of Kuwait (CBK) has issued the Financial Stability Report (FSR) for 2014 — Governor Dr Mohammad Al-Hashel announced on Monday. This is the third in a series of reports published by CBK as part of its efforts to enhance transparency and to make available reliable information and statistics related to the Kuwaiti banking system and financial sectors, he added.
The FSRs issued by CBK analyze and highlight economic and financial developments in terms of their effect on financial stability and the resilience of the financial system to unanticipated adverse shocks, thus maintaining the provision of efficient financial services at the macroeconomic level, Al-Hashel told KUNA. He added that the latest FSR is composed of five chapters, the first of which assesses the role and performance of banks — both conventional and Islamic — as financial intermediaries, while the second one evaluates the risks faced by the banking system.
The third chapter of the report examines the trends in profitability and solvency of the banking system and its resilience to a variety of major shocks, both endogenous and exogenous under different financial and economic stress scenarios.
The fourth explores the key developments in money, for-eign exchange, equity and real estate markets, the four key components of the domestic financial market. As for the fifth part, it examines the performance of retail and large-scale payment and settlement systems in the country, significant components comprising Kuwait’s financial system and stability. According to the report, the consolidated banking sector balance sheet marked another year of double-digit growth. In 2014, assets worth KD 7.2 billion were added to the banking system, putting total assets at KD 66.4 billion by year-end — marking growth of 12.2 percent, versus 11.9 percent in 2013, the CBK governor noted.
Both in absolute and growth terms, this was the most significant expansion recorded in the last seven years. Growth of the consolidated balance sheet of banks reveals, in part, that the increased international activity of Kuwaiti banks remains robust and accounts for 20.4 percent of the consolidated balance sheet, thereby providing a major source of banks’ income that reduces reliance on local sources and strengthens their stability.
Banks have also expanded their consolidated loan portfolio by another KD 4. 2 billion, posting the strongest growth (11.5 percent) observed in the last five years, Al-Hashel said. At the domestic level (Kuwaiti banks and foreign banks’ branches in Kuwait), credits granted to national economic sectors rose from KD 29 billion as of December 2013 to KD 30.8 billion in December 2014, an increase of KD 1. 8 billion and a yearly growth rate of 6.2 percent, less than the growth rate of 8.1 percent in the last year). However, the growth rate in 2014 reveals the upward trend of credit offtake compared to 0.4 percent in 2010, 1.6 percent in 2011 and 5 percent in 2012. In addition, growth of banking credit encompasses most of the local economic sectors including installment (housing) loans and loans granted to the real estate sector.
By December 2014, such facilities totaled KD 16 billion, marking an increase of KD 1.4 billion compared to December 2013, and a yearly growth rate of around 9.4 percent, which is higher than the growth rate of the total loan portfolio. Governor Al-Hashel said that the 2014 FSR report revealed that the asset quality of the banking system visibly improved over the last few years, and the gross nonperforming loan ratio (NPLR), on a consolidated basis, dropped to a historically low level of 2.9 percent in December 2014. Improvement of asset quality demonstrates the success of the CBK and local banks in their combined endeavors over the last years to analyze and assess the quality of loan portfolios in accordance with the strict implementation of the re
Arab Times
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