February 8, 2017
We expect Kuwait banks profitability to be muted in the coming years (2016 & 2017). Our expectations are underpinned by tightening liquidity and subdued credit off-take. Kuwait banks would maintain adequate capital and liquidity, while improving asset quality and lower provisions would boost profitability. Outstanding loans which are skewed towards real estate sector increase the vulnerability of the banking sector. Lower oil prices for longer and slower than expected execution of projects envisioned as part of KDP/NDP could act as downside risks to our outlook.