Banking sector passes successfully first year of Covid-19 pandemic - CBK

KUWAIT, Feb 24 (KUNA) -- The banking sector has managed to overcome successfully the first year of the novel coronavirus (COVID-19), Governor of Central Bank of Kuwait (CBK) Mohammad Al-Hashel said on Wednesday. In a press statement regarding the outcomes of studying financial statements of Kuwaiti banks in 2020, Al-Hashel said that the last year witnessed an unprecedented global crisis in terms of its depth, length and impact on the financial and economic aspects, in addition that it is a health crisis.
He noted that the strict lockdown measures implemented by countries made an economic shock and led to a decline in economic growth and the entry of global economies into a stage of recession as well as a rise in unemployment rate.
He pointed out that the CBK was the first to implement accommodative monetary policies supported by supervisory policies aiming to expand lending to banks and enhancing their financing capabilities.
Of the most prominent axes on which macro-precautionary policies and tools have focused over the past years were increasing the quality of risk management in the banking sector, strengthening capital rules, forming precautionary provisions, and applying a set of Basel standards, known as the Basel III reform package that came as an integrated package, he pointed out.
The reform package aims at enhancing the durability of the financial soundness indicators of banks, strengthening their positions and consolidating maintaining financial stability by raising the capital adequacy ratio (CAR), improving its quality and ability to absorb shocks with setting additional margins, he stressed.
The Governor said that Kuwaiti banks maintained the strength of their financial soundness indicators in terms of capital adequacy and liquidity standards. At the end last December, the CAR hit 19 percent, higher than the minimum requirements of the CBK's instructions standing at 13 percent and higher than the requirements of Basel Committee on Banking Supervision (BCBS) reaching 10.5 percent, he elaborated.
The CAR listed a rise reaching 18.5 percent, compared with 2019, he said, pointing to a surplus in liquidity at the CBK. He explained that the liquidity coverage ratio hit 184.2 percent, while the minimum rate is 100 percent.
The net stable funding ratio reached 115.3 percent, higher than the requirements of the minimum level of 100 percent, he mentioned.
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