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
  • Oil prices rise above $100 a barrel as conflict escalates

    9 September 2026

    Register for MEED’s 14-day trial access 

    Oil prices rose above $100 a barrel on 9 September for the first time since July as the US-Iran conflict escalated and Iran-backed Houthi forces attacked Saudi energy infrastructure.

    Brent crude futures reached $100.95 a barrel, while US benchmark West Texas Intermediate (WTI) rose to $95.60. Brent had last traded above $100 on 24 July.

    The latest escalation has heightened concerns about oil supplies from the region, with shipping through both the Strait of Hormuz and the Red Sea facing disruption.

    Flows through the Strait of Hormuz had fallen below 2 million barrels a day (b/d) from about 8-9 million b/d before the latest escalation, according to Rystad Energy.

    At the same time, Houthi attacks on Saudi Arabia threaten another important route for oil exports, with the group targeting energy infrastructure and shipping in and around the Red Sea.

    US strikes on Iranian tankers

    US forces destroyed five Iranian crude oil carriers on 8 September after Iran’s Islamic Revolutionary Guard Corps (IRGC) targeted a US Navy warship with ballistic missiles.

    The US Central Command (Centcom) said the warship successfully evaded two Iranian attacks and that no US personnel were harmed.

    Four of the Iranian vessels – Kaviz, Charminar, Horizon 1 and Riesco – were struck in the Gulf of Oman, while the Derya was attacked near Kharg Island, Iran’s main crude export hub.

    The M/T Riesco subsequently sank in the Gulf of Oman, according to Centcom.

    Iran responded by launching ballistic missiles towards Jordan. Jordan’s armed forces said 18 of 20 missiles were intercepted, with the remaining two falling in unpopulated areas.

    Iran’s IRGC also said it had attacked two US naval vessels, eight oil tankers and 10 other vessels in the Gulf, although it did not identify the vessels or provide evidence of the attacks.

    The latest exchanges mark a further escalation in the US-Iran conflict, which began on 28 February.

    Houthi attacks raise supply concerns

    The conflict has also widened into a renewed confrontation between Saudi Arabia and Yemen’s Iran-backed Houthi movement.

    On 8 September, Saudi authorities said Houthi attacks had targeted civilian and economic sites in Abha, Khamis Mushait, Jazan and Najran in the south of the kingdom, injuring 73 people.

    Saudi Arabia’s Ministry of Energy said several energy sector facilities and installations had been targeted, causing fires and forcing a temporary halt to some operations.

    The Houthis said their attacks were in response to Saudi military action in Yemen, including what they described as attacks on Houthi positions and a Saudi blockade of ports and airports.

    Riyadh condemns attacks

    Saudi Arabia has strongly condemned the Houthi attacks and warned that it would take measures to defend its territory and national assets.

    In a statement on 8 September, the Ministry of Energy said authorities were working to address the impact of the attacks and ensure the safety of facilities and personnel while maintaining operations in accordance with approved plans.

    Saudi Arabia’s Ministry of Foreign Affairs also condemned the attacks and said the kingdom had the right to take measures to defend its sovereignty and protect its citizens, residents and national assets.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19505512/main0138.jpg
    Indrajit Sen
  • What actually slows a gigaproject down

    9 September 2026

     

    Ask anyone delivering a major programme in the GCC what causes delays and sequencing will come up early. Utilities go in too late. Approvals lag behind construction. Stations, depots and access roads are procured as if they belong to different projects rather than one system.

    “None of this is new. The industry has understood these risks for years,” says Alan Caldwell, managing director for transport and infrastructure at WSP Middle East.

    For Caldwell, that is what makes the pattern worth interrogating rather than simply restating.

    “The more important question is why the same issues around interfaces, approvals, stakeholder alignment and delivery sequencing continue to slow major programmes when the risks are already so well understood,” he says.

    The answer, he argues, is not that these programmes are too big or too technically complex. What breaks a schedule is a wider system delivered as a set of disconnected parts; an approval sitting with an authority team with no visibility of the construction sequence downstream; or a station package proceeding without the utilities diversion it depends on.

    “Infrastructure programmes do not struggle because a railway is too large or a highway network is too complex,” Caldwell says. “They encounter difficulties when interconnected elements are delivered in the wrong order.”

    Sequencing decisions are rarely purely technical either, he adds. They are commercial – shaped by which assets need to unlock value first, which phases are tied to funding, and where sales or investment assumptions depend on infrastructure landing in a particular order.

    Approvals sit at the centre of that logic. On many programmes, they become one of the biggest sources of lost time – not because the requirements are unreasonable, but because approvals are not planned, evidenced or owned as part of the delivery logic from day one.

    Caldwell has seen the same pattern across three decades of Gulf delivery, from early work on Palm Jumeirah to today’s region-wide transport programmes.

    “The decisive factor has often been the same: whether interfaces, approvals, responsibilities and delivery sequencing are aligned early enough to prevent complexity becoming delay.”

    Integration needs to be well understood

    “Most programme teams in the region would say they understand the need for integration,” Caldwell says. Fewer are structured to deliver it. “The harder task is turning that understanding into the way projects are actually set up and managed,” he argues.

    Riyadh Metro is the reference point he returns to, precisely because engineering complexity was not the deciding factor in its delivery.

    Coordinating a city-scale transport system meant aligning design, construction, systems, utilities and stakeholder interfaces across every delivery vertical.

    “The lesson for the region today is clear,” Caldwell says. “Ambitious programmes need a delivery model that gives every contributor a shared view of progress, risk, decision-making and the business case driving programme priorities.”

    That shared view, he argues, will be what the next phase of Gulf delivery is judged on.

    Whether clients, consultants, contractors, operators and approval authorities can work to a single delivery logic will be key.

    “This requires more than coordination meetings. It requires integrated ways of working, shared common data environments and governance structures that make risks, decisions and dependencies visible before they become delays,” he says.

    From reporting progress to managing risk before it lands

    Digital tools have a role here, Caldwell says, but not as a headline in themselves.

    Digital twins, programme visualisation and data-led modelling matter only if they help teams identify and address problems before they affect the wider programme.

    “The real value is not technology for its own sake,” he says. “It is the ability to see, in one place, where approvals are outstanding, where interfaces are unresolved, where programme dates are slipping, where clashes are emerging and where decisions need to be escalated."

    None of it works without governance behind it, he cautions. “A dashboard will not resolve a delayed approval if nobody knows who owns the decision, when it needs to be made, or how it should be escalated.”

    Data only has value if the processes and responsibilities around it are clear, which is why Caldwell frames the shift the region needs not as digitisation, but as a move “from programme management as a discipline focused mainly on reporting and coordination, and towards project and programme intelligence”.

    With many of the region’s programmes running for a decade or more, he adds, delivery models also need to flex as funding assumptions, user needs and policy priorities change along the way.

    “The ambition behind the Gulf’s transformation programmes is not in question,” Caldwell says.

    What will determine how much of it is realised on time is whether delivery models evolve at the same pace: earlier integration, clearer approval pathways, shared data environments, and every contributor working to a delivery logic that connects technical sequencing with the funding and operational case behind it.

    “The region’s next challenge is not imagining bigger projects,” he says. “It is changing the way they are delivered, operated and adapted over time.”

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19502016/main.gif
    Yasir Iqbal
  • Qatari firm wins $221m Qiddiya stadium MEP deal

    9 September 2026

     

    Register for MEED’s 14-day trial access 

    Qatari contractor Elegancia MEP, part of Estithmar Holding, has won a SR829m ($221m) mechanical package contract for the Prince Mohammed Bin Salman Stadium in Qiddiya, Saudi Arabia.

    The contract covers full mechanical, electrical and plumbing (MEP) works for the stadium, and is Elegancia MEP’s largest award in Saudi Arabia to date.

    The 45,000-seat stadium will feature a fully combined retractable pitch, roof and LED wall.

    The stadium’s main construction works are being undertaken by a joint venture of Spanish firm FCC Construction and local firm Nesma & Partners.

    Saudi gigaproject developer Qiddiya Investment Company awarded an estimated SR15bn ($4bn) deal to build the stadium in October 2024, as MEED exclusively reported.

    The contract covered the construction of a multipurpose stadium on top of the 200-metre-high Tuwaiq cliff in the new sports and entertainment district of Qiddiya City.

    Once completed, the stadium will be the home ground for Saudi Pro League football clubs Al-Nassr and Al-Hilal.

    US-based architect Populous is the project consultant.

    The stadium is one of the venues for the kingdom’s 2034 Fifa World Cup bid and will host events such as the Saudi King Cup, the Asian Cup and the 2034 Asian Games.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19501493/main.jpg
    Yasir Iqbal
  • Jordan tenders advisory for wastewater treatment plant

    9 September 2026

    The Water Authority Jordan (WAJ) has issued an invitation to prequalify for advisory services for the rehabilitation and expansion of the Shallala wastewater treatment plant in Irbid, northern Jordan.

    The Shallala plant was commissioned in 2013 with a design capacity of about 14,000 cubic metres a day (cm/d).

    The rehabilitation and expansion project will increase its treatment capacity to about 30,500 cm/d to meet projected wastewater flows through 2050.

    The PIU Support and Construction Supervision Consultancy Services tender was released on 19 August.

    The submission deadline is 21 September.

    The consultancy will support the project implementation unit and provide construction supervision services for the project. The project has an estimated value of $69m and is being financed by the European Bank for Reconstruction and Development.

    The planned works include rehabilitating the existing activated sludge and treatment units and constructing a new treatment train.

    The scope also includes installing biogas combined heat and power units, improving sludge handling and dewatering systems, and installing odour control and chemical containment systems.

    WAJ is also undertaking the upgrade and expansion of the Ain Ghazal wastewater treatment plant in Amman.

    The existing facility had a capacity of 330,000 cm/d and is being upgraded to 726,712 cm/d to accept and treat expected incoming flows until 2045.

    The local Arab Towers Contracting Company was appointed as the main contractor for the project last year.

    READ THE SEPTEMBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Nuclear power ambitions gather pace; Kuwait keeps dealmaking alive despite war; Region invests in raising gas processing capacity.

    Distributed to senior decision-makers in the region and around the world, the September 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/19498520/main.jpg
    Mark Dowdall
  • Consultants bid for Abu Dhabi light rail project management

    9 September 2026

     

    Register for MEED’s 14-day trial access 

    Abu Dhabi Transport Company (ADTC) has issued a request for prequalification (RFQ) notice to consultants for a contract for project management engineering consultancy services for the first phase of the light rail transit network, also known as ADT4.

    The notice was issued on 7 September, with a submission deadline of 9 November.

    The project’s first phase will span 19 kilometres (km) and include 23 stations, connecting Zayed International airport (AUH) with nearby areas, including Yas Island, Al‑Raha Beach and Khalifa City.

    The key sections of the tram are:

    AUH to Yas Island: The tram will start from Terminal A at AUH and run through the Yas tunnel to Yas Gateway Park. It will serve areas including Yas Bay, Media Zone, Yas Plaza, Yas Drive, Yas Mall, Sea World and Water Edge.

    This section covers 13km and includes 13 at-grade stations and one underground station.

    Al-Raha: This section will stretch for 4.3km and run along Al-Raha Street. It will serve areas including Al-Zeina, Al-Muneera and Al-Bandar, towards the Aldar head office. The section will include seven at-grade stations.

    Etihad Plaza: This section will pass the Etihad Aviation Training Centre and span about 1.7km. It will feature a main depot near the Etihad Airways headquarters, along with two at-grade stations.

    The tender also covers the procurement of 25 trams, each with a capacity of 270 people, along with associated systems.

    The project was officially launched at the GlobalRail exhibition in Abu Dhabi in October last year.

    Referred to as Abu Dhabi Tram Line 4, the project will be delivered in three phases.

    Construction of the first phase is expected to start next year. The tram is slated to begin operations by 2030.

    Future phases will extend towards Khalifa City and serve additional destinations across Yas Island.

    The project forms a key part of the recently announced AED170bn ($46bn) package of national transport and road projects to be implemented by 2030.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19493532/main.jpg
    Yasir Iqbal