Kuwait’s Banking Sector in 2017 – Overview and Forecasts by Commercial Bank of Kuwait (CBK)

“At the beginning of 2016, the management predicted that it would be a tough year. We knew it would be very difficult for us to achieve our targets. Our budget would have to be conservative. We have been watching the figures every month and every quarter, as well as the developments in the sector. 2016 was a very good year for us,” says Elham Mahfouz, CEO of Commercial Bank of Kuwait (CBK).

“Across the board, the sector has flourished. Fees and commissions have improved 9.3 percent. Foreign exchange, which is income coming from foreign currencies, was about 37 percent. Dividends were also above 20 percent. Interest income used to be on the negative side because of the cost of funding and the need to go to Basel III in order to borrow longer term. Even this aspect has done relatively well, showing a 1.2 percent increase, in spite of all the factors externally as well as within the region. It was also a good year because we participated in media projects. These media projects are very important for the bank’s income, whether it is interest income or fees and commissions, which accounts for the majority. First and foremost, it is within the country, so it is the Kuwait that we know. These media projects are related to the country itself in terms of services, utilities, the oil sector, clean fuel, and also related to projects like hospitals and education. 2016 also saw private-public partnerships. This is a new idea to Kuwait and new to the GCC. There are two projects that we have participated in, but the bidding is not yet open. There have been some changes to some of the terms and conditions. Any meaningful project that is presented to us in Kuwait, even for the long-term tenure of 15 to 20 years or longer, is not a problem for us. We will participate. All this collaboration and business was very good. This was true even for international business. Although we do not have branches or subsidiaries outside of Kuwait, we were able to conduct international business from here. We participated through correspondent banking relationships on many of our projects, such as trade financing, participating in syndications, and working with Chinese companies that are top notch in leasing and telecommunication. We have branched out, but in a very cautious and selective manner. We have already started talking about our figures for 2017. Again, it will be a tough year. But, we did very well in 2016, even though it was very tough, and this year we will do the same, if not better. The motivational level is already there across the board in the bank. We have done it before and we can do even better.”