The "Fitch" credit rating agency expected that the quality of Kuwaiti banks' assets will be resilient in 2022 similar to 2021, supported by some restructuring and debt write-offs.
The agency suggested that profitability rates will continue to improve this year, due to the increase in activity and business volume and the expected high interest rates. Noting that the Central Bank of Kuwait will raise the discount rate by 25 basis points as of March 17, 2022.
The agency expects banks to remain under pressure from low interest rates, continued investments in digitization, and high regulatory requirements related to provisions. Capitalization will remain adequate in 2022, supported by higher loan loss provisions, moderate growth, improved profitability, and resilient asset quality.
According to the agency, funding and liquidity should remain strong in 2022, backed by large and stable deposits from government-related entities. According to “Fitch”, Kuwait's exceptionally strong external balance sheet and large net foreign assets support the sovereign rating. “Fitch” praised the response of the Central Bank of Kuwait during the Corona crisis, noting that the Central Bank's intervention was quick to help overcome the impact of the crisis by reducing interest rates, reducing capital and liquidity ratios, in addition to imposing other measures.
Source (Al-Rai Kuwaiti Newspaper, Edited)
