Kuwait Banking

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Pages 52
table
Tables 31
Chart
Charts 14
Price $250

We expect Kuwait banks profitability to be muted in the coming years (2016 & 2017). Our expectations are underpinned by tightening liquidity and s.....

Summary

We expect Kuwait banks profitability to be muted in the coming years (2016 & 2017). Our expectations are underpinned by tightening liquidity and subdued credit off-take. Kuwait banks would maintain adequate capital and liquidity, while improving asset quality and lower provisions would boost profitability. Outstanding loans which are skewed towards real estate sector increase the vulnerability of the banking sector. Lower oil prices for longer and slower than expected execution of projects envisioned as part of KDP/NDP could act as downside risks to our outlook. 

​The report analyses the status of Kuwait banking sector under numerous parameters and financial metrics. Publicly listed commercial banks in the country have been profiled, benchmarked along various categories and ranked. Impact of the lower oil prices, latest regulatory developments, and expectations for the future (2016 & 2017) has been dealt with. Sustainable, long-term growth drivers have been identified and provided along with challenges to portray the industry dynamics. Data and analysis has been supplemented with statistics from Kuwait Central Bank, corporate annual reports, and websites of respective banks.”

TOC

  1. Executive Summary
  2. Operating Environment
    • Expansionary fiscal policy to sustain economic growth
    • Accelerated implementation of NDP presents plethora of opportunities for banks
    • Oil prices being lower for longer and impediments to implementation of NDP pose downside risks
  3.  Asset Quality and Capital
    • Asset quality has visibly improved in recent years
    • What drove the improvements in asset quality?
    • However, higher exposure to Real Estate sector pose a threat
    • Robust balance sheets a reflection of strength
  4. Funding and Liquidity
    • Deposits predominantly funded by private sector
    • Deposits are pre-dominantely short-term in nature as real rates are negative
    • Ability of Banks to fund KDP is uncertain
    • Liquidity level remains high among Kuwait banks
  5. Profitability and Efficiency
    • Net Income has witnessed stable growth
    • Operational Efficiency is Stabilizing
    • Net Interest Margins have been on the downtrend
  6. Profitability expectations remain muted
    • Net Interest Margins to be compressed
    • Commissions & fee generating businesses to lend support to bottom-line
    • Lower provisioning could aid profitability
  7. Implications of Lower Oil Price
    • Liquidity Squeezed, NIMs to be pressurized
    • Government plans to issue bonds to fund deficit
    • Would the Private sector be ‘Crowded Out’?
    • Opportunities offered by Sovereign Debt
  8. What could banks do? Strategies for 2016 & beyond
  9. Regulatory Developments
    • Basel Accords: Move towards adequate capital buffers
    • Limits and Governance
    • Foreign Account Tax Compliance Act (FATCA): Collaboration with the US
    • Restrictions on foreign bank to open more than one branch lifted
    • ‘Expected Loss Model’ to be adopted in the Coming Years
  10. Kuwait Commercial Banks
    • National Bank of Kuwait
    • Kuwait Finance House
    • Burgan Bank
    • Gulf Bank
    • Commercial Bank of Kuwait
    • Ahli United Bank
    • Al Ahli Bank of Kuwait
    • Boubyan Bank
    • Kuwait International Bank
  11. Appendix
    • Forecasting Model: A Mathematical Approach

Tables & Charts

Tables:
1.1    Kuwait Banking Expectations
2.1    Kuwait – Key Macroeconomic Indicators
2.2    Key Metrics for Kuwait Banking Sector
3.1    Peek into loan book composition
6.1    Credit growth is expected to be lower than its peers
6.2    Kuwait Banking Expectations
7.1    Loans-to-Deposit Ratio for GCC Banks, May , 2016
8.1    NBK has expanded footprint through either joint ventures or subsidiaries
9.1    Central Bank of Kuwait regulates the entire banking industry in the country
9.2    Overview of Basel III Implementation
9.3    New maturity limits for funding sources
9.4    Limits on Banking Activity
9.5    Central Bank Governors - GCC
10.1    Financial Highlights, National bank of Kuwait
10.2    Financial Highlights , Kuwait Finance House
10.3    Financial Highlights, Burgan Bank
10.4    Financial Highlights, Gulf Bank
10.5    Financial Highlights, Commercial Bank of Kuwait
10.6    Financial Highlights, Ahli United Bank
10.7    Financial Highlights, Al Ahli Bank of Kuwait
10.8    Financial Highlights, Boubyan bank
10.9    Financial Highlights, Kuwait International Bank
10.10    Financial Highlights, Warba Bank
11.1    Rankings by Loans  
11.2    Rankings by Deposits
11.3    Rankings by Assets
11.4    Rankings by Equity
11.5    Rankings by RoE
11.6    Rankings by RoA
11.7    List of Foreign Banks operating in Kuwait
11.8    Banks under our analysis
 
Charts:
2.1    Phase-wise classification of Top 15 Ongoing Projects (KD 33.3 bn)
2.2    Credit Growth could accelerate further if KDP implementation materializes
3.1    Bad loans largely contained, likely to remain low
3.2    Real estate sales has slowed down
3.3    Capital in Kuwait banking system
4.1    Predominantly funded by private sector deposits
4.2    Government deposits to total funding across GCC banks
4.3    Real 1-year bank deposit rates have been negative for a long time
4.4    Deposit growth has outpaced loan growth in the past
5.1    Net Income (USD mn)
5.2    Operational Efficiency is Stabilizing
5.3    Net Interest Margins (NIMs) have decreased over the years
7.1    Kuwait Money supply is deteriorating (YoY, % change)
7.2    3-month Bank interest rates (in %) have doubled in the past year

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