Total bank credit in Kuwait rose by a strong KD290 million ($1.01 billion) in May to KD27.8 billion, with year-on-year (y/y) credit growth accelerating to 6.4 per cent, the fastest pace since the slowdown of late-2009, a report said.

Monthly credit gains thus far this year have averaged around KD200 million, double its average for the comparable period last year, added the latest Economic Update, released by the national Bank of Kuwait (NBK).

Credit gains were led by the non-financial business sectors, which maintained a streak of healthy monthly gains. Household borrowing also remained strong.

NBK expects credit to register growth of 7 per cent or more in 2013, the strongest showing since 2009.

Personal facilities (ex-securities) rose by KD104 million, maintaining the relatively healthy growth seen in the sector. Year-on-year growth accelerated to 18 per cent boosted by strong demand and a healthy household sector.

The coming months are likely to see this trend continue, said the NBK update.

Borrowing for the purchase of securities saw a noticeable drop in May, the largest in more than three years.

The decline coincided with a correction in the KSE index. Facilities for the purchase of securities dropped KD51 million, with y/y growth falling to -1.4 per cent. Meanwhile, credit to non-bank financials was up a small KD 6 million in May, in contrast to the deleveraging trend seen in this sector. Credit is still down 17.3 per cent from a year ago, noted NBK in the update.

Non-financial business activity saw a big jump in May (KD181 million), further supporting the recent accelerating growth trend. Y/y growth reached 4.9 per cent. Gains during the month were primarily in the “other” category. Construction and real estate also recorded noticeable gains.

Private sector deposits saw yet another big jump in May. Deposits were up a total of KD584 million, exclusively in local currency. But contrary to recent trends, the bulk was in time deposits, which added a noticeable KD 652 million. Sight deposits were also up a good KD 156 million.

Meanwhile, saving and foreign currency deposits declined (KD148 million, KD76 million respectively).

As a result, broad money (M2) expanded strongly in May adding KD664 million (2.1 per cent), with y/y growth accelerating to 10.8 per cent. The narrower measure (M1) increased by a smaller KD236 million.

Deposit rates on dinar time deposits remained steady at current low levels. Average rates for the 1-month, 3-month remained unchanged at 0.56 per cent, 0.75 per cent.  The 6-month and 12-month deposit rates fell 1 basis point and 2 basis points and averaged 0.95 per cent and 1.14 per cent respectively. – TradeArabia News Service