A report issued by the Kuwaiti Financial Center "Markaz" showed that the Kuwaiti banking sector will continue to face pressures in terms of profitability and asset quality for the rest of the year. According to the report, profitability is expected to decrease for the year 2020, with a decrease in net income from 1.202 billion Kuwaiti dinars in 2019 to 592 million Kuwaiti dinars in 2020, due to the decrease in operating income resulting from shrinking net interest margins and a decrease in non-interest income due to the decline in commercial activity.
As for the listed banks, deposit growth is expected to decline to 5 percent during the current year 2020, down from 8.1 percent last year. Credit demand is expected to moderate at 4 percent year-on-year in 2020 due to declining economic activity and production caused by government restrictions, according to the center. Additionally, nonperforming loans are expected to reach 4.7 percent in 2020, up from 1.8 percent in 2019. On this basis, defaults are likely to be more in sectors such as real estate, where some borrowers may be leveraged.
According to the report, the epidemic is expected to add significant pressure on the Kuwaiti banking sector in 2020 and 2021, and the subsequent decline in oil prices is expected to reduce economic activity to levels not seen in decades.
Source (Al-Rai Kuwaiti newspaper, Edited)
