EFG Hermes Financial Group revealed that Kuwaiti banks recorded an increase in their total profits by 190 percent in the third quarter of this year on a quarterly basis compared to their profits in the second quarter, which means a 50 percent decline in the total profits of banks on an annual basis.
The sector’s profits in the second quarter were affected by many factors, including closures that led to a decrease in income fees, the impact of reducing interest rates on margins, in addition to the high costs of provisions, pointing to the increase in the risk cost base during the second quarter, which is likely to record a decline during the third quarter, on the condition that it will rise again in the last quarter of 2020.
According to the group, Kuwaiti banks are under pressure at the level of net interest margins "NIMs", which will continue until 2021, in addition to the costs of risk, which will exceed normal levels during the next year, indicating that due to the postponement of retail loan installments, it is expected that the growth of credit in the retail sector will not improve, siignificantly during the third quarter of this year.
It also noted that Central Bank of Kuwait data indicates that credit growth has slowed over the past few months, and that the retail sector is likely to record credit growth, starting from the fourth quarter of this year, driven by low borrowing costs.
Source (Al-Rai newspaper-Kuwait, Edited)
