Kuwaiti Bank Deposits Grow 8.45 Percent as Banking Association Affirms Sector Strength
Customer deposits in the local operations of Kuwaiti banks reached 56,882.6 million dinars at the end of August, up 8.45 percent on a year earlier, on our calculation from the monthly banking statistics. The banks ended June 2026 with a capital adequacy ratio of 18.2 percent, gross nonperforming loans at 1.5 percent of total lending and provisions worth 2.44 times those loans, according to the latest financial soundness indicators from the Central Bank of Kuwait. The figures frame a statement issued on Friday by the Kuwait Banking Association, whose chairman said the sector’s liquidity and capital stand above supervisory requirements by comfortable margins.
Hamad Al-Marzouq, chairman of the association, said in a press statement carried by KUNA that the banks’ strong positions show in liquidity and capital adequacy levels that exceed regulatory requirements, as the central bank had said when it announced its stimulus and precautionary measures in March 2026. He said temporary adjustments to some supervisory requirements reflect the flexibility of prudential tools. Oversight rests on an advanced supervisory system that covers capital adequacy requirements, the liquidity coverage ratio, the net stable funding ratio, stress testing and continuous assessment of asset quality and funding stability, he said. Liquidity, in his account, is assessed across total liquid assets, funding sources and their stability. He added that credit and deposits continue to grow according to the latest official data, and that any future change to prudential requirements would follow the approved supervisory framework. The statement carried no figures.
Capital Ratio Sits Between Its Last Two June Readings
The 18.2 percent capital adequacy ratio for June is the capital base measured against risk-weighted assets under Basel III, on a consolidated basis. That places it between the readings for the same quarter of the previous two years, 18.1 percent in June 2024 and 18.3 percent in June 2025. In both 2024 and 2025 the ratio was higher at the year end than in June, at 19.4 percent and 19.1 percent respectively. At the close of each year from 2021 to 2025 the ratio stood between 19.1 and 19.9 percent.
Most of that capital is Tier 1, which made up 87.5 percent of the capital base in June. Shareholders’ equity rose to 13.1 percent of total assets from 12.5 percent in March. Asset quality improved on the quarter: gross nonperforming loans eased to 1.5 percent of total loans from 1.6 percent in March, and net nonperforming loans fell to 1.0 percent of net loans from 1.1 percent. Provision coverage rose to 243.7 percent from 235.2 percent in March and 242.1 percent a year earlier.
Profitability firmed on the quarter. Return on average equity rose to 10.7 percent in the second quarter from 10.5 percent in the first, with return on average assets steady at 1.4 percent and the net interest margin at 2.8 percent.
Kuwaiti banks’ financial soundness indicators
| Indicator | Jun 2026 | Mar 2026 | Jun 2025 |
|---|---|---|---|
| Capital adequacy ratio | 18.2% | 18.5% | 18.3% |
| Tier 1 to capital base | 87.5% | 87.7% | 87.3% |
| Equity to total assets | 13.1% | 12.5% | 13.3% |
| Gross NPLs to total loans | 1.5% | 1.6% | 1.6% |
| Net NPLs to net loans | 1.0% | 1.1% | 1.1% |
| NPL coverage ratio | 243.7% | 235.2% | 242.1% |
| Regulatory liquidity ratio | 20.7% | 22.0% | 21.5% |
| Return on average equity | 10.7% | 10.5% | 11.2% |
| Net interest margin | 2.8% | 2.8% | 2.9% |
Consolidated data of Kuwaiti banks and their subsidiaries, quarter ends, from the quarterly financial soundness indicators; the regulatory liquidity ratio is on a standalone basis. The capital ratio is on a Basel III basis; coverage is all provisions against gross nonperforming loans.
Deposits Rise 4.43 Billion Dinars in a Year
Private sector, government and public institution deposits at local banks totalled 56,882.6 million dinars at the end of August, on our calculation from the local banks’ liabilities table. That is 4,431.3 million dinars, or 8.45 percent, more than a year earlier, 7.62 percent more than at the end of December, and 28.14 percent more than five years earlier in August 2021. August alone added 404.2 million dinars, a monthly gain of 0.72 percent. An official reading published on 16 September put growth in residents’ deposits with local banks at 9.8 percent and in credit facilities to residents at 4.8 percent in the year to July.
Public-sector money led the increase. Government deposits rose 35.69 percent to 5,852.4 million dinars and public institutions’ deposits 32.80 percent to 9,922.7 million, together supplying 90.04 percent of the annual gain. Private deposits reached 41,107.5 million dinars, and 78.12 percent of them are quasi-money deposits rather than dinar sight deposits, on our calculation.
Credit facilities to residents grew 5.18 percent over the year to 49,751.3 million dinars, and 3.37 percent since December. Because deposits grew faster, credit equalled 87.46 percent of customer deposits in August, against 90.18 percent a year earlier, on our calculation. That is a simple ratio of the two balances, not a regulatory ratio, and it puts more deposit funding behind each dinar lent than a year earlier.
Local banks’ balance sheet, million dinars
| Item | Aug 2026 | Aug 2025 | Change |
|---|---|---|---|
| Customer deposits | 56,882.6 | 52,451.3 | 8.45% |
| of which government | 5,852.4 | 4,313.2 | 35.69% |
| of which public institutions | 9,922.7 | 7,472.1 | 32.80% |
| of which private sector | 41,107.5 | 40,666.0 | 1.09% |
| Credit facilities to residents | 49,751.3 | 47,300.3 | 5.18% |
| Own funds | 17,504.2 | 17,006.1 | 2.93% |
| Total assets | 104,751.7 | 99,920.6 | 4.83% |
Local activity of local banks and their branches in Kuwait, end of month, from the monthly banking statistics. Customer deposits are the sum of private, government and public institution deposits; deposits and changes are our calculation.
Balance Sheet Tops 104 Billion Dinars
Total assets of local banks reached 104,751.7 million dinars in August, 4.83 percent more than a year earlier and 38.68 percent more than in August 2021, on our calculation. The balance sheet has stayed above 100 billion dinars in every month since October 2025, with the highest of those months at 105,192.4 million in April 2026. Foreign assets rose 5.59 percent over the year to 34,240.0 million dinars, 32.69 percent of the total. Own funds in the banks’ local operations rose 2.93 percent to 17,504.2 million dinars, and 63.77 percent over five years, lifting their share of total assets to 16.71 percent from 14.15 percent in August 2021.
Some ratios were lower than earlier readings. The capital adequacy ratio of 18.2 percent was below the 19.1 percent of December 2025 and the 18.5 percent of March. The regulatory liquidity ratio, measured on a standalone basis, was 20.7 percent in June against 22.0 percent in March and 21.5 percent a year earlier. Against the second quarter of 2025, return on average equity was 10.7 percent against 11.2 percent, the net interest margin 2.8 percent against 2.9 percent, and shareholders’ equity 13.1 percent of total assets against 13.3 percent. In the local operations, own funds eased to 16.71 percent of assets from 17.02 percent in August 2025, and private deposits rose 1.09 percent over the year.
In the money market, the discount rate has stood at 3.50 percent since 11 December 2025. Overnight KIBOR for value on 19 October is 2.6875 percent, 0.8125 points below it on our calculation, and three-month KIBOR is 3.6875 percent.
Why it matters: Kuwait’s banks pair capital above 18 percent of risk-weighted assets and nonperforming loans covered more than twice by provisions with deposits that are growing faster than credit. The association said credit and deposits continue to grow; in the year to August, deposits rose 8.45 percent and credit facilities to residents 5.18 percent.
Outlook: The next readings are the September monthly banking tables and the third-quarter soundness indicators. The September tables will show whether deposits keep growing faster than credit, as they did in the year to August.
Sources: Central Bank of Kuwait, KUNA, The Edge.
