Despite the negative economic repercussions imposed by the Coronavirus pandemic on the economic sectors in Kuwait, especially the credit granted by Kuwaiti banks, the domestic credit market maintained acceptable growth rates on an annual basis of 3.5% during the past year, to record the credit facilities portfolio As of December 31, 2020, about 39.7 billion dinars.
In general, the domestic credit market has been suffering from low growth rates since 2016, when it recorded an annual growth rate of 2.9% in that year, while the annual growth rate after that gradually increased to 4.3% in 2019 and it was possible to increase the growth rates further during 2020. But the Corona pandemic came and had a negative impact on economic activity.
On the level of the main and primary driver of the domestic credit market, the consumer and installment loans sector combined during the year 2020 maintained good growth rates despite the Corona pandemic, to record a growth rate on an annual basis of 6.8%, compared to a growth rate during 2019 of 5%.
As on December 31, 2020, consumer and installment loans together constituted about 36.5% of the total credit facilities portfolio of Kuwaiti banks, reaching 14.3 billion dinars, and it was the main engine for the growth of the credit market in Kuwait during previous years, especially between 2013 and 2015, where the annual growth rate exceeded 12%.
As for personal loans, they increased on an annual basis by 5% to record 17.25 million dinars, compared to a growth rate of 3.9% during the year 2019, and constituted about 42.8% of the total credit facilities as on 30 November 2020.
In terms of the credit portfolio, its distribution among sectors and its growth rates during the last 6 years, it is clear that the share of personal facilities in the total credit facilities portfolio increased from 40% in 2014 to 42.8% in 2020, to record 17.2 billion dinars, equivalent to a total increase of 4.7 billion dinars. With a compound annual growth rate of 5.5% in 6 years.
During the last 6 years, personal facilities were the main engine for the growth of the local credit market, as they contributed about 50% of the total increase in the credit facilities portfolio, which in turn amounted to 9.3 billion dinars during the same period, and its accumulated annual growth rate of 4.5%.
As for consumer and installment loans, which constitute about 85% of the personal loan portfolio, its growth accelerated during 2020 to 6.8% compared to 5% for 2019, to record 14.3 billion dinars by the end of last year.
As for the real estate sector’s share of the total credit facilities, it decreased in 6 years from 26% in 2014 to 23% in 2020, to record 9.2 billion dinars, with a cumulative annual growth rate in 6 years of 2.6%, while the trade sector’s share of credit facilities was unchanged. At 9%, with a compound annual growth rate of 3.5% in 6 years, to record the facilities trade portfolio of 3.28 billion dinars.
As for the significant decrease in credit facilities for investment companies, their share of the total credit facilities portfolio of the banking sector decreased from 5% for the year 2014 to 2.5% at the end of 2020 and it is noticeable that the facilities of investment companies decreased during the past year on an annual basis by 16% to record 990 million Dinars by the end of 2020, after it decreased by 0.3% during the corresponding period of 2019.
The share of loans to the construction sector decreased in 6 years, from 6% to 4.7% to record 1.8 billion dinars at the end of 2020, with a cumulative annual growth rate of 1% between 2014 and 2020, while loans to the industrial sector decreased their share of the credit market from 6% to 5.2% during the same period to record 2.06 billion dinars by the end of 2020, at a cumulative annual growth rate in 6 years of 2.9%.