The operating environment for banks in Kuwait will improve in 2022 thanks to higher oil prices and continued recovery from the coronavirus pandemic, but some challenges remain, S&P Global Ratings estimates.
The rating agency expects Kuwaiti banks' earnings to fully recover in 2022, supported by higher margins, since the lenders’ balance sheets are geared towards rising interest rates and lower credit charges.
“The macroeconomic outlook, higher oil prices and rising interest rates are smoothening the recovery path for Kuwaiti banks,” S&P said in a statement on Monday.
Funding conditions remain favourable in the Gulf country, supported by stable deposits from the retail sector and government-related entities (GREs), it said.
However, the government’s key liquidity buffer, the General Reserve Fund (GRF), has diminished substantially.
“Despite the boost to Kuwait’s fiscal and balance of payments positions over 2022-2023 from higher oil prices, the government’s medium-term funding strategy remains uncertain,” S&P said.
Banks in the GCC stand to gain from higher energy prices and a rise in interest rates that will significantly improve their bottom lines as cost of risk continues to decline amid economic growth in the region, the rating agency said last month.
On March 16, the central banks of the UAE, Saudi Arabia, Bahrain and Kuwait increased their benchmark interest rates after the US Federal Reserve raised its key rates to rein in inflation, which has hit a 40-year high in the world’s largest economy.
The Fed is expected to raise interest rates six times this year (including the one in March), and five more times in 2023 and 2024.
Most GCC central banks follow the Fed’s moves on key interest rates due to their currency peg to the US dollar, with the exception of Kuwait, whose dinar is linked to a basket of currencies.
The rating agency expects that higher interest rates will support the profitability of Kuwaiti banks … but “it remains to be seen if the increase in interest rates will cause some migration from non-interest-bearing deposits to remunerated products”, S&P said.
“Our Banking Industry Country Risk Assessment (BICRA) on Kuwait remains in group '4' (on a scale of 1-10, with '10' signifying the highest risk). Our starting point for rating Kuwaiti banks is still ‘bbb’,” S&P said.
A ‘bbb’ rating signifies adequate capacity by an entity to meet financial commitments.
Non-performing loans (NPLs) across the Kuwaiti banking sector were low entering the pandemic in 2020. But lenders’ high provisioning buffers allowed them to write off exposures with manageable adverse effects on earnings and asset quality, according to S&P.
“We now expect NPLs and cost of risk to gradually normalise on the back of a more supportive economic environment,” S&P said.
Meanwhile, a high exposure to real estate and construction, which constituted almost 30 per cent of Kuwait banks’ lending at the end of 2021, continues to be a big risk.
S&P expects NPL formation to taper off, projecting a slight reduction in the NPL ratio over the next 12 to 24 months.
While the residential property sector remains robust with rising volumes and prices, the commercial real estate sector remains under pressure from subdued demand for office space and the shift to online retail prompted by the pandemic amid excess supply, S&P said.
However, banks in Kuwait do not anticipate a significant deterioration in asset quality. “This, together with a more supportive economic environment, suggests that the banking system is recovering following the real estate price correction a few years ago,” S&P said.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Day 1, Abu Dhabi Test: At a glance
Moment of the day Dimuth Karunaratne had batted with plenty of pluck, and no little skill, in getting to within seven runs of a first-day century. Then, while he ran what he thought was a comfortable single to mid-on, his batting partner Dinesh Chandimal opted to stay at home. The opener was run out by the length of the pitch.
Stat of the day - 1 One six was hit on Day 1. The boundary was only breached 18 times in total over the course of the 90 overs. When it did arrive, the lone six was a thing of beauty, as Niroshan Dickwella effortlessly clipped Mohammed Amir over the square-leg boundary.
The verdict Three wickets down at lunch, on a featherbed wicket having won the toss, and Sri Lanka’s fragile confidence must have been waning. Then Karunaratne and Chandimal's alliance of precisely 100 gave them a foothold in the match. Dickwella’s free-spirited strokeplay meant the Sri Lankans were handily placed at 227 for four at the close.
Charlotte Gainsbourg
Rest
(Because Music)
The Baghdad Clock
Shahad Al Rawi, Oneworld
Killing of Qassem Suleimani
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
Ronaldo's record at Man Utd
Seasons 2003/04 - 2008/09
Appearances 230
Goals 115
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Key features of new policy
Pupils to learn coding and other vocational skills from Grade 6
Exams to test critical thinking and application of knowledge
A new National Assessment Centre, PARAKH (Performance, Assessment, Review and Analysis for Holistic Development) will form the standard for schools
Schools to implement online system to encouraging transparency and accountability
Mohammed bin Zayed Majlis
Global state-owned investor ranking by size
|
1.
|
United States
|
|
2.
|
China
|
|
3.
|
UAE
|
|
4.
|
Japan
|
|
5
|
Norway
|
|
6.
|
Canada
|
|
7.
|
Singapore
|
|
8.
|
Australia
|
|
9.
|
Saudi Arabia
|
|
10.
|
South Korea
|
MATCH INFO
Uefa Champions League, last-16. first leg
Atletico Madrid v Juventus, midnight (Thursday), BeIN Sports
AIDA%20RETURNS
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ECarol%20Mansour%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EAida%20Abboud%2C%20Carol%20Mansour%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203.5.%2F5%3C%2Fp%3E%0A
yallacompare profile
Date of launch: 2014
Founder: Jon Richards, founder and chief executive; Samer Chebab, co-founder and chief operating officer, and Jonathan Rawlings, co-founder and chief financial officer
Based: Media City, Dubai
Sector: Financial services
Size: 120 employees
Investors: 2014: $500,000 in a seed round led by Mulverhill Associates; 2015: $3m in Series A funding led by STC Ventures (managed by Iris Capital), Wamda and Dubai Silicon Oasis Authority; 2019: $8m in Series B funding with the same investors as Series A along with Precinct Partners, Saned and Argo Ventures (the VC arm of multinational insurer Argo Group)
Did you know?
Brunch has been around, is some form or another, for more than a century. The word was first mentioned in print in an 1895 edition of Hunter’s Weekly, after making the rounds among university students in Britain. The article, entitled Brunch: A Plea, argued the case for a later, more sociable weekend meal. “By eliminating the need to get up early on Sunday, brunch would make life brighter for Saturday night carousers. It would promote human happiness in other ways as well,” the piece read. “It is talk-compelling. It puts you in a good temper, it makes you satisfied with yourself and your fellow beings, it sweeps away the worries and cobwebs of the week.” More than 100 years later, author Guy Beringer’s words still ring true, especially in the UAE, where brunches are often used to mark special, sociable occasions.
ANDROID%20VERSION%20NAMES%2C%20IN%20ORDER
%3Cp%3EAndroid%20Alpha%3C%2Fp%3E%0A%3Cp%3EAndroid%20Beta%3C%2Fp%3E%0A%3Cp%3EAndroid%20Cupcake%3C%2Fp%3E%0A%3Cp%3EAndroid%20Donut%3C%2Fp%3E%0A%3Cp%3EAndroid%20Eclair%3C%2Fp%3E%0A%3Cp%3EAndroid%20Froyo%3C%2Fp%3E%0A%3Cp%3EAndroid%20Gingerbread%3C%2Fp%3E%0A%3Cp%3EAndroid%20Honeycomb%3C%2Fp%3E%0A%3Cp%3EAndroid%20Ice%20Cream%20Sandwich%3C%2Fp%3E%0A%3Cp%3EAndroid%20Jelly%20Bean%3C%2Fp%3E%0A%3Cp%3EAndroid%20KitKat%3C%2Fp%3E%0A%3Cp%3EAndroid%20Lollipop%3C%2Fp%3E%0A%3Cp%3EAndroid%20Marshmallow%3C%2Fp%3E%0A%3Cp%3EAndroid%20Nougat%3C%2Fp%3E%0A%3Cp%3EAndroid%20Oreo%3C%2Fp%3E%0A%3Cp%3EAndroid%20Pie%3C%2Fp%3E%0A%3Cp%3EAndroid%2010%20(Quince%20Tart*)%3C%2Fp%3E%0A%3Cp%3EAndroid%2011%20(Red%20Velvet%20Cake*)%3C%2Fp%3E%0A%3Cp%3EAndroid%2012%20(Snow%20Cone*)%3C%2Fp%3E%0A%3Cp%3EAndroid%2013%20(Tiramisu*)%3C%2Fp%3E%0A%3Cp%3EAndroid%2014%20(Upside%20Down%20Cake*)%3C%2Fp%3E%0A%3Cp%3EAndroid%2015%20(Vanilla%20Ice%20Cream*)%3C%2Fp%3E%0A%3Cp%3E%3Cem%3E*%20internal%20codenames%3C%2Fem%3E%3C%2Fp%3E%0A
What She Ate: Six Remarkable Women & the Food That Tells Their Stories
Laura Shapiro
Fourth Estate
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
