Mubasher: Moody’s Investors Service has maintained a stable outlook for the Kuwaiti banking sector for the next 12 to 18 months, according to a report released on Wednesday.

This outlook was based on many factors on top of which was the expected increase in government spending, which will support the GCC country’s growth and allow for suitable credit environment.

"While credit conditions will remain solid in Kuwait itself, delinquencies at some banks' foreign subsidiaries will drive problem loans up to around 2% of gross loans in 2019 from 1.6% in 2018," vice president-senior credit officer at Moody’s Nitish Bhojnagarwala said.

However, the banking sector’s exposure to the unstable real estate sector could be a threat, Bhojnagarwala added.

Kuwaiti-based banks will retain the ability to withstand losses, while net income will stabilise at 1.3% in 2019.

“In addition, Kuwaiti banks will remain primarily deposit funded and liquidity buffers will stay robust with liquid assets representing around 35% of total assets,” Moody’s concluded.