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NBK: Bank reserves to USD 5 bln in Dec.

KUWAIT, Feb 19 (KUNA) -- Kuwaiti bank reserves (cash, deposits with the CBK, and CBK bonds) increased by KD 271 million (USD 849 million) to KD 5 billion (USD 16.5 billion) or 7.9 percent of bank assets, according to Central Bank of Kuwait (CBK).
This coincided with the absence of public debt issuance in December; in fact, outstanding domestic public debt instruments (PDIs) were steady at KD 4.77 billion, or an estimated 12 percent of GDP, the CBK said in a report.
Bank credit contracted for the third consecutive month in December, with growth slowing to 3.2 percent y/y. Outstanding credit declined by KD 65 million, despite the usual end-of-quarter spike in lending for the purchase of securities, it showed.
Business credit was particularly weak, registering its largest monthly decline in over a year. By contrast, private deposits rose for the second consecutive month, pushing money supply growth to its most rapid pace in 13 months. Meanwhile, interest rates were higher on the month, pricing in the CBKآ’s repo rate increase.
Business credit (excluding nonbanks and securities lending) dropped by KD 225 million (USD 743 million), with growth slowing to 3.4 percent y/y. The declines were in the industrial, construction, trade and other sectors, it added.
The only sector to see a noticeable gain was oil & gas, which added KD 52 million (USD 171.6 million) and grew by 25 percent y/y in December. Separately, lending for the purchase of securities rose by KD 100 million (USD 330 million): a smaller jump than the usual endof-quarter increases seen in the past. Meanwhile, the non-bank financial sector saw a small gain.
Household lending saw a moderate gain during the month, with growth steady at 7.3 percent y/y. The KD 53 million net increase in household debt (personal facilities excluding securities lending) came from a KD 60 million (USD 198 million) increase in installment loans, which are used primarily for financing a home, while consumer credit shrank during the month. The contraction in consumer loans continued to widen to -4.9 percent y/y while installment loan growth was steady at 8.8 percent y/y, the report noted.
Private deposits rose by KD 383 million (USD 1.26 billion) in December, on gains in KD time and foreign currency deposits. Money supply (M2) growth accelerated to 3.8 percent y/y. Meanwhile, government deposits, which have been weakening over the last year, saw a small KD 51 (USD 168.3 million) million gain, with growth at just 0.9 percent y/y.
Domestic rates were higher in December, pricing in the CBKآ’s 25 basis point increase in the repo rate. Customer deposit rates were up 8-11 basis points across the board. The average 3-month interbank rate rose one basis point in December to settle at 1.80 percent. Rates have moved higher since, with the 3-month Kibor now at 1.88 percent, the report concluded. (end) ht.yms.mt