Mubasher: Moody's Investors Service stated that the outlook for the Kuwaiti banking system remains ‘Stable’, bolstered by a robust economic growth, which will support credit conditions for the country's banks.

Kuwait's non-oil GDP growth is predicted to remain strong, levelling up by 0.5% to reach nearly 3% in 2020 compared to 2.5% last year, the rating agency said in a report on Wednesday.  

In this regard, VP-Senior credit officer at Moody's, Nitish Bhojnagarwala, said, “High lending concentration to single borrowers and to the volatile real-estate sector pose substantial risks to Kuwait's banks, but these are mitigated by very large loan-loss reserves, robust capital, and sound liquidity.”

As the Gulf state is committed to its national development plan, annual credit growth is likely to stand at approximately 5%, according to the report.

Furthermore, problem loans will gradually increase to around 2% of gross loans this year, compared to 1.6% in 2018, due to delinquencies at some banks' foreign subsidiaries.

The banking system in Kuwait has sound credit conditions and strong capital, Moody’s said, expecting the tangible common equity ratio to remain stable at around 14.5%.