Industrial financing in Kuwait drops by 53.5%

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KUWAIT CITY - Local banks’ financing for the industrial sector experienced a significant decline in June 2024, dropping by KD 40.7 million or 53.5% every month, to settle at KD 35.3 million, compared to KD 76 million in May.

On an annual basis, the sector saw a decrease of KD 8.8 million or 19.9%, from KD 44.1 million in June 2023. Despite these declines, total financing for the industrial sector during the first half of 2024 amounted to KD 333 million.

The accumulated balance of industry financing from local banks fell by 0.9% or KD 26 million in June, bringing the total down to KD 2.657 billion, compared to KD 2.683 billion in May.

Every year, this represents a 5.1% decrease, equivalent to KD 143 million, down from KD 2.8 billion in June 2023. Data from the Central Bank of Kuwait indicates that overall monthly financing for the industrial sector in 2023 decreased by 31% or KD 466 million, falling from KD 1.499 billion at the end of 2022 to KD 1.033 billion. The sector reached its highest monthly financing levels in December 2023, at KD 198.9 million.

Challenges
Facing the Industrial Sector The industrial sector has been grappling with several challenges over the past three years, making it one of the most impacted by the COVID-19 pandemic. Disruptions in supply chains, production halts, and reduced demand have all contributed to a decline in financing. The sector continues to face difficulties such as a lack of developed industrial plots, bureaucratic hurdles, limited reliance on national products, and the absence of export facilities for Kuwaiti goods. These factors have led to higher factory rents and a reduction in the financing available for industrial projects.

Despite these challenges, monthly credit facilities provided by banks across all sectors increased by 3%, or KD 359.5 million, in the first half of 2024, rising from KD 11.708 billion in the same period in 2023 to KD 12.067 billion.

However, every year, credit facilities dropped by 11%, equivalent to KD 239.4 million, from KD 2.171 billion in June 2023 to KD 2.099 billion in June 2024. Personal facilities saw a notable increase of 22%, growing from KD 1.789 billion in the first half of 2023 to KD 2.185 billion in 2024.

However, they decreased monthly by 20.8%, falling from KD 443.7 million in May to KD 351.1 million in June 2024.

Credit Facility Balances and Deposits
Cash credit facilities (loans) with banks increased by 4.2%, from KD 53.557 billion at the end of December 2023 to KD 55.8 billion in June 2024. Every month, the balances rose by 0.9% or KD 510.7 million, up from KD 55.297 billion in May, and grew by 5.3% annually, compared to KD 52.983 billion in June 2023. Central Bank data also revealed a 1.16% increase in deposits at local banks during the period, rising by KD 569.2 million, from KD 48.727 billion in December 2023 to KD 49.29 billion in June 2024. On an annual basis, deposits increased by 3%, equivalent to KD 1.457 billion, up from KD 47.839 billion in June 2023. Private sector deposits in local banks grew by 3.1%, or KD 1.15 billion, from KD 37.33 billion in December 2023 to KD 38.49 billion in June 2024. Public institution deposits, however, saw a 13.4% decrease, equivalent to KD 909.9 million, dropping from KD 6.766 billion in December 2023 to KD 5.856 billion in June 2024.