Bank reserves rise to KD 5 bln in Dec – Credit growth slows to 3.2%; money supply growth increases

21/02/2018 07:05 AST

Bank credit contracted for the third consecutive month in December, with growth slowing to 3.2% y/y. Outstanding credit declined by KD 65 million, despite the usual end-of-quarter spike in lending for the purchase of securities. Business credit was particularly weak, registering its largest monthly decline in over a year. By contrast, private deposits rose for the second consecutive month, pushing money supply growth to its most rapid pace in 13 months. Meanwhile, interest rates were higher on the month, pricing in the CBK’s repo rate increase.

Business credit (excluding nonbanks and securities lending) dropped by KD 225 million, with growth slowing to 3.4% y/y. The declines were in the industrial, construction, trade and “other” sectors. The only sector to see a noticeable gain was oil & gas, which added KD 52 million and grew by 25% y/y in December. Separately, lending for the purchase of securities rose by KD 100 million: a smaller jump than the usual end-of-quarter increases seen in the past. Meanwhile, the non-bank financial sector saw a small gain.

Household lending saw a moderate gain during the month, with growth steady at 7.3% y/y. The KD 53 million net increase in household debt (personal facilities excluding securities lending) came from a KD 60 million increase in installment loans, which are used primarily for financing a home, while consumer credit shrank during the month. The contraction in consumer loans continued to widen to -4.9% y/y while installment loan growth was steady at 8.8% y/y.

Arab Times