Summary:
- Kuwait’s banking sector experienced strong growth in 2023, highlighted by key performance indicators such as net provision charge on loans and capital adequacy ratio, according to a KPMG report.
In a testament to the enduring strength of Kuwait’s financial landscape, the banking sector experienced robust growth in 2023, marked by significant advancements in key performance indicators such as net provision charge on loans, capital adequacy ratio, and coverage ratio on stage 3 loans, as outlined by leading tax advisory firm KPMG.
Emphasizing the sector’s resilience within the region, KPMG unveiled the ninth edition of the GCC listed banks’ results, titled “Adaptation and Growth,” providing a concise overview of the financial performance of major commercial banks for the year ending December 31, compared to the previous year.
Despite global economic headwinds, the GCC economies demonstrated remarkable strength, with a notable 23.1% surge in net profit to reach $53.2 billion in 2023. Total assets and share prices also experienced significant upticks, rising by 8.1% and 7.7%, respectively.
Furthermore, key financial metrics including capital adequacy ratio, cost-to-income ratio, net interest margin (NIM), return on equity, and return on assets showed positive trends, albeit marginal.
The report attributes the decline in the overall non-performing loan (NPL) ratio to banks’ cautious credit risk management strategies.
KPMG’s analysis identified eight primary financial trends driving the sector’s performance, including robust asset growth, increased profitability, improved NIM, reduced NPL ratio, and strengthened capital adequacy.
Bhavesh Gandhi, Head of Financial Services at KPMG in Kuwait, highlighted Kuwait’s commendable year-on-year growth in various metrics, underscoring the effectiveness of the banks’ forward-thinking strategies.
On a bank level, National Bank of Kuwait demonstrated the highest year-on-year growth in net provision charge on loans, while Kuwait International Bank excelled in coverage ratios on loans.
Looking ahead, KPMG professionals anticipate effective NPL management, balanced growth, healthy NIMs, and continued focus on cost control in 2024. They also predict an increased emphasis on ESG initiatives, AI integration, Regtech adoption, and potential consolidation within the banking sector.
