Bank credit eases to 5.3 pct - NBK

KUWAIT, July 28 (KUNA) - Growth of bank credit in Kuwait during May was relatively strong, but annual rate eased to 5.3 percent year-on-year ( y/y) on basis effects, the National Bank of Kuwait (NBK) said in an economic brief on Tuesday.
It added that lending was up by KD 175 million during the month supported by the household sector and some business sectors. One exception was real estate, which weighed on growth as the sector saw a net decline in credit.
Despite strong growth in private deposits, money supply growth eased on basis effects. Meanwhile, interbank rates held steady and deposit rates moved lower, the report noted.
Household borrowing remained robust adding KD 94 million, with growth accelerating to 12.2 percent y/y.
According to the NBK, growth in May came once more from installment loans, with consumer loans seeing another small decline. Growth in this segment is likely to ease in the coming months, as consumer activity moderates, though it will remain a key driver of growth.
Credit to non-bank financial companies resumed its decline, losing KD 7 million. While still in deleveraging mode, the net declines in this sector's credit have been diminishing over the last year. The decline in sector debt over the last year stood at 7.1 percent y/y. Meanwhile , all remaining credit rose by KD 88 million, though growth eased to 3.1 percent y/y on basis effects. Most gains were in construction, industry and trade. Not all business sectors did well, however, with real estate seeing a KD 13 million decline; growth in this sector dropped to 2.6 percent y/y. Credit extended for the purchases of securities was flat on the month following some volatility in the past few months. May saw another large increase in private deposits, though money supply (M2) eased to 5.0 percent y/y. Private deposits rose by KD 289 million, most of it going to KD sight deposits, up KD 265 million.
Gains were also seen in KD time deposits and KD savings, adding KD 54 million and KD 63 million, respectively. Foreign currency deposits declined by KD 93 million following a couple of months of strong increases. M1 growth picked up to 1.5 percent y/y.
Average customer deposit rates on dinar time deposits eased in May, while interbank were steady. The average rates on the 1-month, 3-month time deposits were down 1 basis point to settle at 0.61 percent and 0.77 percent, respectively, while rates on 6-month time deposits were unchanged at 0.97 percent.
12-month rates, on the other hand, saw a significant decline on the month, shaving off 6 bps, its biggest move in two years. KD interbank rates held steady at 1.00 percent, up 21 basis points year-to-date. (end) mfs.gk.msa