Interview: Shaheen Al Ghanem
How would you describe the current performance of the banking sector in Kuwait?
SHAHEEN AL GHANEM: The banking sector in Kuwait has demonstrated commendable resilience and a positive trajectory. We have observed consistent growth in both total assets and profitability – a promising trend that can be traced back to a combination of robust consumer demand and an influx of government projects in the market. The latter serves as a pillar of support, given the extensive role that public initiatives play in bolstering the sector.
However, it is essential to view this growth against the backdrop of recent developments. The banking sector has managed to navigate recent disruptions due in part to the nation’s significant trade surplus, which is driven largely by booming oil export revenue. This allows the government to actively invest in various development projects.
Additionally, there has been a marked improvement in the political landscape, which has fostered a conducive environment for growth. The recent changes in the Cabinet have generated a renewed sense of optimism. With the introduction of new figures from the private sector – including a new prime minister, minister of oil and minister of finance – there is an expectation of a more streamlined approach to policy-making and execution. Their experience and background are expected to bring fresh perspectives, potentially paving the way for reforms that could further boost the economy and, by extension, the banking sector.
Although external factors such as a global recession or geopolitical tensions pose challenges, the banking sector is primarily driven by local dynamics. A significant portion of banking assets in the country are locally based, offering a buffer against external economic shocks. While it is important to recognise that some local banks with international operations might feel the impact more, the long-term outlook is optimistic.
In what ways is Kuwait’s banking sector adapting to digital developments?
AL GHANEM: The banking sector has undergone a period of significant evolution with the advent of digital banking. There has been substantial investment in digital banking and services in Kuwait, and this has paved the way for collaboration, particularly with telecommunications operators. In the case of Warba Bank, our strategic partnership with telecommunications operator Ooredoo has expanded access to a wide customer base, particularly expatriates. Ooredoo is a prominent player in this segment, and our association with them should grant us exposure to this demographic.
Partnerships such as these not only unlock a wider customer base, but also enhance the overall consumer experience. Given consumers’ reliance on mobile interactions, seamlessly integrating banking services into daily routines can significantly boost engagement, which should lead to greater customer loyalty and satisfaction.
Which factors are enabling Kuwait to compete in the global market?
AL GHANEM: If I were to present Kuwait to an international audience, I would emphasise its role in the history of Islamic banking and as a trading centre. However, other jurisdictions, such as Dubai and Abu Dhabi, have received greater government support, putting them at the forefront of Islamic banking. Kuwait can reclaim its leadership in this space by channelling support and innovation.
Kuwait’s geographic position provides a distinct opportunity, especially concerning trade with neighbouring countries such as Iraq. There are already success stories of Kuwaiti businesses exporting products like cars to Iraq and leveraging Kuwait’s infrastructure for efficient trade. Such endeavours can be expanded to other sectors, further boosting the economy and solidifying Kuwait’s position as a vital trading centre.
