New Kuwait laws will stimulate banks, says Fitch

• Debt law could lead to growth
• Mortgages should be in demand
• Ratings agency positive on prospects

Kuwait’s approval of a debt law and the easing of housing curbs on foreigners is likely to stimulate banks after a period of subdued activity, according to a US rating agency.

Fitch said it expects 8-9 percent growth in 2025 if planned large government projects are awarded, following last month’s approval of the debt law. 

Credit growth in the banking sector, which was a low 2 percent in 2023, accelerated to 7 percent last year as the Gulf emirate pushed ahead with reforms, the agency said.

Approval of the residential mortgage law could also bolster growth by unleashing demand for housing loans, Fitch said.

“Key new laws in Kuwait are set to drive growth and diversification in the country’s banking sector. These reforms, including public debt and residential mortgage laws, will create new lending opportunities and support economic expansion following a period of fairly subdued conditions,” a Fitch report said.

It said that the residential mortgage law, if approved, could transform Kuwait’s housing finance landscape.

For the first time banks would be allowed to offer mortgage loans, potentially up to  KD200,000 ($660,000) and with a term of up to 25 years.

• Law change enables Kuwait to tap global debt markets
• Kuwait prepares banks ahead of potential new bond sales
• High hopes for Kuwait reforms lift its stock market

Given Kuwait’s population of 1.5 million, even modest uptake could generate a substantial volume of new loans, expanding the banking sector and stimulating the construction industry, Fitch said.

Kuwaiti banks were the most profitable within the listed companies in Kuwait last year, with profits exceeding 63 percent of the total.