meed-logo

line1 line2 line3
SIGN IN / REGISTER

Kuwaiti banks enter bounce-back mode

10 August 2023

 

With low levels of non-performing loans (NPLs) and improving funding metrics, 2023 is proving to be a solid year for Kuwaiti banks. At the same time, the promise of project-related lending is also starting to firm up on the horizon.

Profitability is trending in the right direction, with half-year results in 2023 revealing robust performances for the largest banks in the tightly knit firmament of 11 Kuwaiti banks. 

While unlikely to repeat last year’s growth levels, which saw net income increase by 25.3 per cent on average thanks in part to bulging interest margins, lower loan impairments and a continued focus on cost efficiencies, this year’s six-month reporting cycle indicates double-digit growth will be repeated for the full year.

National Bank of Kuwait (NBK), the country’s largest lender, reported a 16 per cent increase in first half 2023 profits to KD275.3m ($895.3m), as interest income rose. Total assets in the first half increased by 5.3 per cent to KD36.1bn ($117.4bn).

As NBK chief executive Isam al-Sager noted: “Strong business growth, robust liquidity and prudent levels of asset quality will continue to drive profit growth throughout 2023.”

Robust fundamentals

Improving NPL metrics – already the lowest in the GCC – and solid funding growth are driving improvements for the country’s banks.

The IMF noted in an assessment earlier this year that banks remain well capitalised and liquid — comfortably exceeding prudential regulatory requirements. Last year, the average capital adequacy ratio was 17.3 per cent, above the 12 per cent limit required by the Central Bank of Kuwait (CBK).

NPLs remain low by regional standards, at least in part because Kuwait’s small and medium-sized enterprise (SME) sector is not as vibrant as some other Gulf states, meaning fewer insolvent customers to deal with. The average bank’s customer portfolio comprises Kuwaiti nationals who work in solid government jobs and are considered low-risk customers.

Another supporting factor in terms of asset quality is the solid performance of Kuwait’s real estate sector, which has relatively little exposure to foreign investments – removing the risk of speculation-driven increases affecting the banking market.  

On a note of caution, Ashraf Madani, vice-president and senior credit officer at Moody’s Investors Service, says there have been some issues for Kuwaiti banks with foreign operations, in Turkey and Egypt, for instance.

“Foreign currency translations have also impacted capital. So we saw a slight decline in the capital ratio over the past two to three years. But there’s still strong capitalisation,” he says.

“Most banks have large corporate borrowers that have been in the business for quite some time. They have established long-term relationships with the banks, and the portfolio has good seasoning.”

The funding side is also improving, Madani notes, and this year there seems to be higher growth from the deposit side compared to the credit side, which is slightly favourable for the funding of banks.

Growth in the pipeline

Lending to the private sector should remain strong, despite a series of interest hikes that have grown by 250 basis points since the global monetary policy tightening cycle began in 2022.

Lending growth averaged a healthy 7.7 per cent last year, although this year will not be as high.

“This year, our expectation is that the credit growth in the system will be around 3 per cent,” says Madani.

“That’s for two reasons. Number one is that we don’t expect the exceptional growth last year to continue on the consumer side because we’re coming from a high base already in 2022.

“And number two, there are some repayments on the corporate side this year, and these are basically offset by some good project awards on the corporate side. There are some big projects awards happening this year.”

Another push for credit growth will come from a new mortgage law, under which local lenders can provide a housing loan of up to KD140,000 ($455,000) and on which the state will cover the interest for the first KD70,000 ($227,000) on behalf of the borrower.

An increase in project awards this year could technically drive credit higher, but expected tepid growth on the consumer side will likely exert a smothering effect on total loan performance.

On the regulatory side, the Central Bank’s regular review of the adequacy of its financial regulatory perimeter and macroprudential policy toolkit have won the IMF’s plaudits.

The fund said the CBK will continue to regularly stress test the banking system's resilience to emerging financial stability risks, and said the existing blanket guarantee on bank deposits should be gradually replaced with a limited deposit insurance framework to address moral hazard.

Meanwhile, the interest rate cap on commercial loans should be phased out to support efficient risk pricing and credit supply to SMEs.

Though NBK, once the largest GCC bank by assets, has been overtaken in size by the region’s emergent banking behemoths such as the UAE’s First Abu Dhabi Bank and Saudi National Bank, it and other national heavyweights remain active lenders with a keen interest in servicing economic opportunities in Kuwait and beyond.

Big ticket mergers are not in the pipeline this year, but after the tumult of recent years, Kuwaiti lenders will be happy with stable, if unspectacular, growth.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11060286/main.gif
James Gavin

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Read the December 2025 MEED Business Review

    28 November 2025

    Download / Subscribe / 14-day trial access

    The region boasts a pipeline of over $140bn-worth of railway schemes, according to data from regional projects tracker MEED Projects.

    This puts the GCC at the centre of global rail construction activity, with progress being made on several large-scale rail schemes.

    From the Qiddiya high-speed rail in Saudi Arabia to the planned expansion of Dubai’s metro network and the long-awaited revival of the GCC railway, a new wave of projects is shaping the region’s economic future.

    As leading construction, engineering and technology firms either expand or return to the region after years of reduced activity, MEED’s latest issue of MEED Business Review looks at the scale and ambition of ongoing rail projects.

    We also consider the region’s growing role as a rail hub, with an increasing need for ongoing servicing, upgrades and new technologies.

    This month’s market focus covers Bahrain, where Manama is pushing ahead with diversification amid mounting fiscal constraints and external pressures.

    MEED’s latest issue also includes our 2025 EPC contractor ranking, as well as analysis on the cost advantages, technological gains and strong execution giving Chinese contractors a regional edge.

    This edition is bursting with features and interviews. The team looks at Libya's ramp up of oil activity; visits the under-construction Aramco Stadium in Khobar as it races towards completion; provides an update on Abu Dhabi's $6bn solar and storage project; and interviews Turki AlShehri, regional vice president for Saudi Arabia and the GCC at French power and water developer Engie.

    We hope our valued subscribers enjoy the December 2025 issue of MEED Business Review. 

     

    Must-read sections in the December 2025 issue of MEED Business Review include:

    > AGENDA: 
    > Regional rail construction surges ahead
    > Middle East becomes a hub as rail networks mature

    INDUSTRY REPORT:
    EPC contractor ranking
    > Larsen & Toubro climbs EPC contractor ranking
    > Chinese firms expand oil and gas presence

    > CURRENT AFFAIRS: Oil companies ramp up activity in Libya

    > CONSTRUCTION: Aramco Stadium races towards completion

    > RENEWABLES: UAE moves ahead with $6bn solar and storage project

    > INTERVIEW: Engie pivots towards renewables projects

    > BAHRAIN MARKET REPORT: 
    > COMMENT: Manama pursues reform amid strain
    > GVT & ECONOMY: Bahrain’s cautious economic evolution
    > BANKING: Mergers loom over Bahrain’s banking system
    > OIL & GAS: Bahrain remains in pursuit of hydrocarbon resources
    > POWER & WATER: Bahrain advances utility reform
    > CONSTRUCTION: Bahrain construction faces major slowdown
    > TRANSPORT: Air Asia aviation deal boosts connectivity
    > DATABANK: Bahrain’s economy walks precarious path

    > MEED COMMENTS: 
    > Bahrain’s willingness to disrupt takes flight with Air Asia
    > Projects shift from spending plans to investment opportunities
    > Lukoil deal collapse puts $1.8bn of Iraq projects at risk
    > Clear rules drive Saudi Arabia's tariff edge

    > GULF PROJECTS INDEX: UAE fuels Gulf projects expansion

    > OCTOBER 2025 CONTRACTS: Saudi Arabia and UAE lead deal signings

    > ECONOMIC DATA: November 2025: Data drives regional projects

    > OPINION: Riyadh’s American bond

    > BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15168493/main.gif
    MEED Editorial
  • Petrofac’s UAE operations continue after layoffs

    28 November 2025

    The UK-headquartered company Petrofac is continuing to work on projects in the UAE after issuing termination notices to around 180 of its staff in the country.

    Operations across Petrofac’s portfolio in the UAE are progressing as normal, according to statements sent to several media organisations.

    The employees were given notice of their early release from the company on 19 November as part of restructuring measures.

    On 27 October, Petrofac announced that it had applied to appoint administrators, a move that potentially put thousands of jobs at risk and increased uncertainty for projects worth billions of dollars in the Middle East and North Africa (Mena) region.

    The total value of projects awarded to Petrofac and under construction in the region is $5.83bn, according to information recorded by the regional project-tracking service MEED Projects.

    Petrofac also has bids under evaluation for 15 projects in the region worth a total of $19.28bn, according to MEED Projects data.

    Ongoing restructuring

    On 25 November, Petrofac released a statement saying that it was seeking to appoint administrators to its subsidiary Petrofac International Limited (PIL).

    This subsidiary was previously focused on the group’s engineering and construction activities in the Mena region.

    In its statement, Petrofac said that its subsidiary would “shortly make an application to the Royal Court of Jersey seeking a letter of request under section 426 of the Insolvency Act 1986”.

    It added: “The purpose of this application is to ask the Royal Court of Jersey to issue a letter of request to the High Court of England and Wales and seek its assistance in appointing administrators to PIL.”

    Petrofac said that PIL had no ongoing contracts in the Mena region and it intends to redeploy PIL’s 120 staff to other subsidiaries “wherever possible”.

    It added: “The administration of PIL is expected to facilitate the purpose of Petrofac Limited’s administration, to help preserve the value of the wider Group and to facilitate the planned M&A solutions.”

    Petrofac has said that it is continuing to push ahead with options for alternative restructuring and M&A solutions with key creditors.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15173959/main.jpg
    Wil Crisp
  • PDO starts Dhulaima field early phase development project

    28 November 2025

     

    Petroleum Development Oman (PDO) has started the prequalification process for engineering, procurement and construction (EPC) works on a project to develop key on-plot facilities as part of an early phase development of the Dhulaima onshore field.

    The Dhulaima Upper Shuaiba field is located in the Lekhwair cluster in PDO’s Block 6 concession area. The Dhulaima early phase development project is to be executed on an operation lease contract for a duration of five years, PDO said in the prequalification document.

    Majority state-owned PDO floated the prequalification questionnaire on 18 November, and has set a deadline of 7 December for contractors to submit responses.

    The broad scope of work on the Dhulaima early phase development project covers EPC, as well as all associated civil, mechanical, piping, electrical, fabrication, instrumentation, control, testing, and pre-commissioning commissioning, and de-commissioning activities of the following on-plot facilities:

    • Gas injection compressor package: Complete gas injection compressor package with all auxiliary systems, associated piping, associated instrumentation for safeguarding and control, etc, as complete skid. All the necessary power, utilities as required for the compressor package and its driver shall be included as part of the scope, along with all associated systems, foundations, piping, electrical, instrumentation. Type of compressor and driver to be proposed by the bidders.
    • Gas injection manifold package: Complete gas injection manifold including all tie-ins to existing facilities, pipe supports, control valves, and instrumentation.

    PDO is the operator of the Block 6 hydrocarbons concession in Oman, which is the sultanate’s largest and most prolific concession. Situated onshore and covering an area of 75,119 square kilometres, Block 6 contains 202 oil fields and 43 gas fields.

    The Omani government holds a 60% stake in PDO, with the other shareholders being UK-based Shell (34%), France’s TotalEnergies (4%) and Thai state-owned PTTEP (2%).

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15169037/main.jpg
    Indrajit Sen
  • Top deals signed at Dubai Airshow 2025

    27 November 2025

    The Dubai Airshow 2025 drew to a close on 21 November, with deals exceeding $202bn, double the $101bn secured at the 18th edition in 2023. 

    This new milestone reinforces Dubai’s position as a global aviation hub and central force shaping the future of the aviation and space industries, according to a statement from the Government of Dubai Media Office.

    The 19th edition of the event, held at Dubai World Central under the theme ‘The Future is Here’, also drew record attendance, welcoming 248,788 visitors, including industry leaders, government officials and aviation specialists from across the globe. 

    More than 1,500 exhibitors took part, with 440 participating for the first time, along with 490 military and civil delegations from 115 countries. The show also included 21 national pavilions, 98 chalets, an extra 8,000 square metres of display space, and a startup ecosystem with 120 startups and 50 investors.

    One of the most globally diverse editions to date, this year’s airshow featured the usual mega-orders, but also a surprise fleet pivot and an emerging picture of the region’s biggest players taking control of their futures by influencing the development of tomorrow’s jets and securing their supply chains. 

    Anchor customer

    UAE national carriers placed orders for 502 aircraft during the five-day event, with Emirates leading the charge. On the first day of the airshow, Emirates announced a $38bn order for 65 new Boeing 777-9 aircraft. The airline also ordered 130 GE9X engines from GE Aerospace, which power the new twin-engined planes. 

    The deal gives Boeing a boost after the 777-9’s debut was delayed to 2027 – but equally significantly, it provides strong backing for Boeing’s feasibility study to develop the 777-10, a larger variant of its 777X family, as Emirates pushes to replace its Airbus A380 fleet.

    “Emirates has been open about the fact that we are keen for manufacturers to build larger capacity aircraft, which are more efficient to operate, especially with projected air traffic growth and increasing constraints at airports,” said Sheikh Ahmed Bin Saeed Al-Maktoum, chairman and chief executive of Emirates Airline and Group.

    “We fully support Boeing’s feasibility study to develop the 777-10 and have options to convert our latest 777-9 order to the 777-10 or the 777-8.”

    Several days later, Emirates also ordered eight more A350-900 aircraft, worth $3.4bn and powered by Rolls-Royce Trent XWB84 engines, while also urging Airbus to explore a larger version of its A350-1000 wide-body.

    Emirates’ commitment to new aircraft at the Dubai Airshow 2025 is worth $41.4bn at list prices, and brings the airline’s total wide-body aircraft orders to 375, with deliveries scheduled through 2038.

    It was also announced that Emirates would deploy Starlink Wi-Fi across its entire in-service fleet, beginning with Boeing 777 aircraft in November 2025 and completing the rollout by mid-2027.

    Airbus pivot

    Flydubai also signed a memorandum of understanding (MoU) with Boeing to purchase 75 Boeing 737 MAX aircraft valued at $13bn. In one of the show’s biggest strategic shifts, a further MoU was signed with Airbus for 150 A321neo aircraft, making the airline a new Airbus customer.

    Sheikh Ahmed, also chairman and CEO of flydubai, said this addition would diversify the airline’s narrow-body fleet and “enable flydubai to play a key role in the success of Dubai World Central’s expansion plans, an airport we aim to become the largest airport in the world”.

    “We look forward to establishing a strong and enduring partnership between flydubai and Airbus,” he said. 

    Etihad Airways confirmed an order for 32 new Airbus aircraft, including freighters, marking a significant expansion of its wide-body fleet, while Gulf Air, Bahrain’s national carrier, finalised a firm order for 15 787 Dreamliners with options for three more as the carrier looks to further develop its international network. The order adds three Boeing 787s to the airline’s commitment this July and brings Gulf Air’s order book to 17 of the versatile widebody jets.

    Saudi Arabia's emerging airline, Riyadh Air, confirmed a purchase of 120 CFM LEAP-1A engines for its incoming A321neo fleet.

    Taking control

    In a clear sign that Gulf airlines are taking charge of their supply chains, Emirates and France's Safran Seats signed an MoU to bring a manufacturing and plane seat assembly factory to Dubai. The joint industrial cooperation, the first of its kind, will initially focus on Emirates’ business and economy class seats for cabin retrofit projects, with plans to expand into new aircraft in the future.

    “This agreement with Safran marks a pivotal and strategic cooperation that establishes Dubai as an aerospace manufacturing hub,” commented Sheikh Ahmed. “We're bringing world-class seat production capabilities and supply chain to our doorstep, creating highly skilled jobs, and developing capabilities to support Emirates and produce seats for export to other carriers.”

    Emirates is also securing its own engine maintenance capabilities, signing an MoU with Rolls Royce to conduct engine maintenance, repair and overhaul on its own A380 fleet at a new plant in Dubai from 2027.

    Green airline fuel

    Sustainability was a core priority at the airshow, with initiatives including the supply of sustainable aviation fuel (SAF) for participating aircraft, the use of electric and propane-powered ground support equipment in partnership with Jetex, and exhibition halls run entirely on renewable energy.

    On the sidelines of the event, Emirates and Enoc Group signed a memorandum of understanding to explore and develop joint initiatives for the supply of SAF to Emirates at its Dubai hub.

    Defence deals

    Capping the exhibition were the 36 deals signed on behalf of the Ministry of Defence and Abu Dhabi Police by the UAE’s Tawazun council – the national authority mandated to enable, regulate and sustain the UAE’s defence and security industrial ecosystem. Valued at AED25.455bn, the deals included contracts for drones, rescue gear, aircraft parts and support.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15167232/main.gif
    Marianne Makdisi
  • Prequalification begins for Riyadh King Salman Stadium

    27 November 2025

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s Sports Ministry has issued a notice inviting companies to prequalify for a contract to design and build the King Salman International Stadium in Riyadh.

    The notice was issued on 26 November, with a prequalification deadline of 16 February.

    The stadium will cover an area of about 660,000 square metres (sq m) and will have a seating capacity of 92,000.

    The stadium will feature a 150-seat royal suite, 120 hospitality suites, 300 VIP seats and 2,200 dignitary seats.

    The plan also includes several sports facilities covering more than 360,000 sq m, including two training fields and fan zones; a closed sports hall; an Olympic-sized swimming pool; an athletics track; and outdoor courts for volleyball, basketball and padel.

    The new stadium will host the final of the 2034 Fifa World Cup and will serve as the Saudi national football team’s main headquarters.

    US-based architectural firm Populous is the lead architect for the stadium.

    Construction of the stadium is expected to be completed by 2029.

    The stadium will be located next to King Abdulaziz Park.

    Saudi Arabia stadium plans

    In August last year, MEED reported that Saudi Arabia plans to build 11 new stadiums to host the Fifa World Cup in 2034.

    Eight stadiums will be located in Riyadh, four in Jeddah and one each in Al-Khobar, Abha and Neom.

    An additional 10 cities will host training bases. These are Al-Baha, Jazan, Taif, Medina, Alula, Umluj, Tabuk, Hail, Al-Ahsa and Buraidah.

    There are expected to be 134 training sites across the kingdom, including 61 existing facilities and 73 new training venues.

    The kingdom was officially selected to host the 2034 Fifa World Cup through an online convention of Fifa member associations at the Fifa Congress on 11 December 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15166460/main.jpg
    Yasir Iqbal