Provisions as a percentage of total loans at banks in the country will reach 5.6 per cent this year and 6.7 per cent in 2013, according to Dubai-based investment bank Arqaam Capital.
That compares to 5.5 per cent and 6.5 per cent respectively for lenders based in the United Arab Emirates, it said.
Some Kuwaiti companies, including Global Investment House, have defaulted since the onset of the global financial crisis after the value of their assets collapsed and frozen credit markets prevented them from raising new loans.
The average yield on Kuwaiti debt was 5.28 per cent on Monday, JPMorgan Chase's CEMBI Broad Kuwait Blended Yield index shows. That's above 1.92 per cent in Saudi Arabia, 3.75 per cent in the United Arab Emirates and 2.86 per cent in Qatar.
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