Slower deposit mobilisation, a reluctance to lend and concerns over loans quality are expected to make 2009 a "challenging" year for the Kuwait banking system, research released this week has indicated.
Loan quality has deteriorated in 2008 and further erosion is expected, Kuwait-based Global Investment House said.
"The second largest bank by asset size, Kuwait Finance House, exhibited a manifold increase in its non-performing loans while the largest bank by the same criterion, National Bank of Kuwait, has taken very high general provisions, presumably bracing itself for worse to come," the report said.
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