ShareKUWAIT: Credit saw a moderate gain in August, with growth easing slightly to 5.2 percent y/y. Total credit rose by a net KD 102 million during the month. Household borrowing saw an exceptionally strong month, which coincided with the reintroduction of loan rebooking. This helped make up for a drop in business credit, much of it in the real estate sector. Deposits continued to see declines related to the summer season, easing growth in money supply. Meanwhile, interbank and deposit rates held steady.
Household borrowing saw a strong gain in August of KD 185 million, with growth accelerating to 12.8 percent y/y. Installment loans, used primarily to finance housing, continued to be the only source of growth; consumer loans, used to finance cars and other consumer durables, saw a small decline and registered growth of a mere 0.2 percent y/y.
Credit to nonbank financial companies saw a relatively small decline of KD 1.6 million, though this came on the heels of a relatively large drop in July. Nonbank financial companies continued to deleverage, with the sector's credit declining 8.1 percent y/y.
All remaining credit declined by KD 81 million, with growth easing to 2.6 percent y/y. The bulk of the decline was in real estate, industry and "other" sectors. By contrast, construction and oil & gas did well. Real estate and securities lending remained key sources of weaker credit growth, having seen an increase of 0.4 percent and a decline of 2.6 percent y/y, respectively. Excluding them, business credit was somewhat stronger at 6.0 percent y/y in August.
Private deposits saw another large KD 743 million decline in August on seasonal factors. Money supply (M2) growth eased to 3.4 percent y/y. The decline in deposits was across the board, both in dinar and foreign currency, down KD 654 million and KD 89 million, respectively. In KD deposits, all types saw declines including time deposits, KD sight and savings deposits. Growth in narrower money supply (M1) remained relatively low at 0.1 percent y/y due to a basis effect from last year's introduction of the new currency, which temporarily increased the amount of currency in circulation.
Customer interest rates on dinar time deposits and interbank rates were steady in August. Average rates on the 1-month and 6-month time deposits were steady at 0.61 percent and 0.97 percent, while 3-month and 12-month rates added one basis point to settle at 0.78 percent and 1.22 percent. KD interbank rates held steady at 1.00 percent, though they are up 21 basis points year-to-date.
