During November-11, credit facilities extended by local banks maintained the upward trend for the sixth consecutive month to add around KWD 100 mn and stand at KWD 25.6 bn. During the first 11 months of 2011, credit facilities saw a marginal increase of 1.53 per cent of around KWD 387 mn, indicating the challenging business environment for enterprises along with banks’ conservative lending policies and the low appetite for credit. Currently, there is no clear sign of potential revival in credit in the short-term as demand for credit by the private sector is not picking up and the continuous delay in implementing the development plan is having an adverse impact on the credit market. The slowdown in credit growth is expected to continue through Q1-12 on the back of tight credit conditions, insolvency problems suffered by local firms, scarce investment opportunities in the local market along with a rise in default risk by distressed and highly indebted firms.
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