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Friday 23 August 2024
#Kuwait’s rating at AA-, stable outlook: Fitch
Kuwait’s rating at AA-, stable outlook: Fitch
In its recent assessment, Fitch Ratings has highlighted the robustness of Kuwait’s banking sector, noting that banks in the country are well-capitalized, well-funded, and exhibit strong risk management practices, reports Al-Seyassah daily.
Fitch anticipates a modest credit growth of 3 percent to 4 percent in 2024, influenced by higher interest rates and limited real GDP growth. However, the agency maintains a stable outlook for Kuwait’s rating at “AA-”, acknowledging the sector’s resilience while noting constraints related to oil dependency and the large public sector. Fitch’s analysis underscores that while Kuwaiti banks are positioned well with adequate capital and strong practices, overcoming political and institutional barriers is essential for accelerating credit growth and realizing the sector’s full potential.
The agency views the recent uptick in banking mergers and acquisitions as a positive development for the sector, as it promotes business model diversification and enhances financial stability. Fitch’s report comes amid ongoing discussions about significant mergers within the Kuwaiti banking industry. Notably, the Boubiyan Bank, the nation’s second-largest Islamic bank, and Gulf Bank, the fifth-largest, are exploring a potential merger. If realized, this merger could create a formidable Islamic bank with assets totaling 16 billion dinars (approximately $53 billion) and a 15 percent market share in terms of consolidated assets.
However, Fitch does not anticipate the merger’s completion before 2025. The landscape of banking mergers in Kuwait has been active, with Burgan Bank announcing its acquisition of a 100 percent stake in Bahrain’s United Gulf Bank in June. This move is part of Burgan Bank’s strategy to optimize capital and concentrate on GCC markets. Previous attempts at consolidation, such as the planned merger between Gulf Bank and Al Ahli Bank of Kuwait in 2023, were canceled.
Meanwhile, Kuwait Finance House (KFH) expanded its regional footprint by acquiring Bahrain-based Ahli United Bank in 2022, extending its presence to Bahrain, Egypt, and the UK, though KFH-Bahrain was sold to Al Salam Bank in May 2024. Boubiyan Bank also diversified by acquiring a majority stake in the Bank of London and the Middle East in 2020. Despite these strategic moves, the Kuwaiti banking sector faces challenges. Political deadlock, institutional constraints, and delayed reforms– such as the stalled public debt and mortgage laws –are impeding growth.
In its recent assessment, Fitch Ratings has highlighted the robustness of Kuwait’s banking sector, noting that banks in the country are well-capitalized, well-funded, and exhibit strong risk management practices, reports Al-Seyassah daily.
Fitch anticipates a modest credit growth of 3 percent to 4 percent in 2024, influenced by higher interest rates and limited real GDP growth. However, the agency maintains a stable outlook for Kuwait’s rating at “AA-”, acknowledging the sector’s resilience while noting constraints related to oil dependency and the large public sector. Fitch’s analysis underscores that while Kuwaiti banks are positioned well with adequate capital and strong practices, overcoming political and institutional barriers is essential for accelerating credit growth and realizing the sector’s full potential.
The agency views the recent uptick in banking mergers and acquisitions as a positive development for the sector, as it promotes business model diversification and enhances financial stability. Fitch’s report comes amid ongoing discussions about significant mergers within the Kuwaiti banking industry. Notably, the Boubiyan Bank, the nation’s second-largest Islamic bank, and Gulf Bank, the fifth-largest, are exploring a potential merger. If realized, this merger could create a formidable Islamic bank with assets totaling 16 billion dinars (approximately $53 billion) and a 15 percent market share in terms of consolidated assets.
However, Fitch does not anticipate the merger’s completion before 2025. The landscape of banking mergers in Kuwait has been active, with Burgan Bank announcing its acquisition of a 100 percent stake in Bahrain’s United Gulf Bank in June. This move is part of Burgan Bank’s strategy to optimize capital and concentrate on GCC markets. Previous attempts at consolidation, such as the planned merger between Gulf Bank and Al Ahli Bank of Kuwait in 2023, were canceled.
Meanwhile, Kuwait Finance House (KFH) expanded its regional footprint by acquiring Bahrain-based Ahli United Bank in 2022, extending its presence to Bahrain, Egypt, and the UK, though KFH-Bahrain was sold to Al Salam Bank in May 2024. Boubiyan Bank also diversified by acquiring a majority stake in the Bank of London and the Middle East in 2020. Despite these strategic moves, the Kuwaiti banking sector faces challenges. Political deadlock, institutional constraints, and delayed reforms– such as the stalled public debt and mortgage laws –are impeding growth.
Bank of Singapore sees Middle East accounting for a fifth of assets over 3 to 5 years | Reuters
Bank of Singapore sees Middle East accounting for a fifth of assets over 3 to 5 years | Reuters
Bank of Singapore aims to grow its business in the Middle East with the region contributing up to 20% of its overall revenue and private banking assets over the next three to five years from around 10% currently, its top executive said.
One of Asia's biggest private banks, Bank of Singapore has grown its assets under management (AUM) to $116 billion as at end-September 2023 from about $20 billion in 2010, as per the latest financials available for the unlisted firm.
The private bank's Singapore and Hong Kong hubs currently make up the majority of its AUM.
"UAE and in particular Dubai have become key destinations for global millionaires post-COVID," Ranjit Khanna, the head of private banking for Europe and the Middle East and chief executive for Dubai hub at Bank of Singapore, told Reuters.
"This really has been spurred on the back of people looking for alternatives, really positive federal government strategies to attract wealthy to these parts of the world, ease of doing business, positive infrastructure, golden visa regime."
A growing number of wealth managers in Asia are expanding or setting up offices in Dubai, capitalising on warming diplomatic ties between China and the Middle East and betting on a surge in demand from clients for geographical diversification.
"I personally believe the next decade, in the context of wealth management, belongs to Asia and the Middle East to a great extent," Khanna said.
Global net wealth, comprising financial wealth, liabilities and real assets, rose 4.3% last year from 0.2% a year ago, with the Middle East and Africa posting 7.8% jump, according to Boston Consulting Group's Global Wealth Report 2024, opens new tab.
The United Arab Emirates (UAE) posted the biggest percentage growth as a booking centre at 8.9% in terms of cross-border wealth on inflow from Saudi Arabia and other prosperous Middle East markets, the report showed.
The growth also came with UAE's increased role as a cross-border hub for Asia and Africa, partly driven by building closer ties with China and attracting significant international investment in the luxury real estate market, BCG added.
Bank of Singapore would evaluate making Dubai one of its booking centres in the future, Khanna said. Its current booking centres are Singapore and Hong Kong.
Bank of Singapore, part of Singapore's second-largest lender Oversea-Chinese Banking Corporation (OCBC.SI), opens new tab (OCBC), is also looking to grow its presence in the Middle East by tapping on OCBC's presence in Southeast Asia, China and Britain.
OCBC's wealth AUM, including that of Bank of Singapore, rose 2% to a record S$279 billion ($213.5 billion) in the second quarter.
Besides tapping on the growing wealth from global South Asians, people in the oil rich Gulf states, and Europeans into Dubai, Bank of Singapore saw opportunity and rising interests from rich Chinese clients, Khanna said.
"I'm certainly seeing an increasing flow of mainland Chinese clients coming into Dubai and the region broadly," he said.
($1 = 1.3070 Singapore dollars)
Bank of Singapore aims to grow its business in the Middle East with the region contributing up to 20% of its overall revenue and private banking assets over the next three to five years from around 10% currently, its top executive said.
One of Asia's biggest private banks, Bank of Singapore has grown its assets under management (AUM) to $116 billion as at end-September 2023 from about $20 billion in 2010, as per the latest financials available for the unlisted firm.
The private bank's Singapore and Hong Kong hubs currently make up the majority of its AUM.
"UAE and in particular Dubai have become key destinations for global millionaires post-COVID," Ranjit Khanna, the head of private banking for Europe and the Middle East and chief executive for Dubai hub at Bank of Singapore, told Reuters.
"This really has been spurred on the back of people looking for alternatives, really positive federal government strategies to attract wealthy to these parts of the world, ease of doing business, positive infrastructure, golden visa regime."
A growing number of wealth managers in Asia are expanding or setting up offices in Dubai, capitalising on warming diplomatic ties between China and the Middle East and betting on a surge in demand from clients for geographical diversification.
"I personally believe the next decade, in the context of wealth management, belongs to Asia and the Middle East to a great extent," Khanna said.
Global net wealth, comprising financial wealth, liabilities and real assets, rose 4.3% last year from 0.2% a year ago, with the Middle East and Africa posting 7.8% jump, according to Boston Consulting Group's Global Wealth Report 2024, opens new tab.
The United Arab Emirates (UAE) posted the biggest percentage growth as a booking centre at 8.9% in terms of cross-border wealth on inflow from Saudi Arabia and other prosperous Middle East markets, the report showed.
The growth also came with UAE's increased role as a cross-border hub for Asia and Africa, partly driven by building closer ties with China and attracting significant international investment in the luxury real estate market, BCG added.
Bank of Singapore would evaluate making Dubai one of its booking centres in the future, Khanna said. Its current booking centres are Singapore and Hong Kong.
Bank of Singapore, part of Singapore's second-largest lender Oversea-Chinese Banking Corporation (OCBC.SI), opens new tab (OCBC), is also looking to grow its presence in the Middle East by tapping on OCBC's presence in Southeast Asia, China and Britain.
OCBC's wealth AUM, including that of Bank of Singapore, rose 2% to a record S$279 billion ($213.5 billion) in the second quarter.
Besides tapping on the growing wealth from global South Asians, people in the oil rich Gulf states, and Europeans into Dubai, Bank of Singapore saw opportunity and rising interests from rich Chinese clients, Khanna said.
"I'm certainly seeing an increasing flow of mainland Chinese clients coming into Dubai and the region broadly," he said.
($1 = 1.3070 Singapore dollars)