Standard & Poor's credit rating agency expected that the Kuwaiti banking sector will achieve positive growth during the current year, despite the existence of several risks circulating in the global economy.
The agency suggested that the overall credit conditions of Kuwaiti banks remain stable, except in the event of an unexpected increase in geopolitical risks in the Gulf region or a significant drop in oil prices.
According to the agency, the cost of risk for Kuwaiti banks, "COR", should decrease to less than 90 basis points during 2020, due to the steady accumulation of provisions (exceeding 200% against the size of irregular loans).
The agency expected margins pressure to decrease partly this year, after the Central Bank of Kuwait decided in 2019 to cut interest rates. Indicating that the focus in the commercial real estate sector remains a major credit risk for Kuwaiti banks, however, it is expected that the current period for correction of real estate prices will end within a period ranging from 12 to 24 months, with a limited impact on the banking system.
Source (Kuwaiti newspaper Al-Rai, Edited)
