Focus Report

Kuwait’s banks are among the largest and most robust in the region. Asset growth has defined the sector’s trajectory in recent times, as Kuwaiti banks continued to recover from the disruptions of the Covid-19 pandemic.

Supply chain constraints initially saw global oil prices tumble in 2020 – a major issue for a country in which around half of GDP is accounted for by hydrocarbons – however, as prices rose in 2021 and 2022, the country’s economic fortunes rebounded, as did those of its banks, with 2022 seeing the highest credit growth since 2015.

The sector has seen some consolidation in recent years, as banks with significant levels of government ownership have been combined to confront growing local and global competition. The year 2022 saw the completion of the acquisition of Bahrain-based Ahli United Bank (AUB) by Kuwait Finance House (KFH), both of which feature significant government participation in their shareholder structure.

Competition is also increasing in the digital banking segment. The drive for digitalisation is now at full speed, as banks try to cut costs, improve efficiencies and deliver more flexible services to customers. This in turn is driving the growth of financial technology (fintech), supported not only by the private sector, but also by new regulations from the Central Bank of Kuwait (CBK). Although global uncertainties remain, Kuwait’s banking system remains a solid foundation for the country’s economy, as well as for the wider regional and international financial system.