Business in Kuwait
The GCC nation has a large pipeline of planned projects worth about $166 billion and its banks, topped by NBK, have robust liquidity and capital positions, Al Fulaij highlighted in an interview with MEED.
“There is an abundance of liquidity,” as the Central Bank of Kuwait (CBK) introduced several regulatory changes to the banking sector following the global financial crisis in 2008, he explained.
Banks in Kuwait have higher levels of capital provisions than what is required by Basel III and IFRS9 regulations.
The CBK was “proactive in securing solid capital and high provisions in Kuwait’s banking system,” he affirmed.
At the end of September, NBK Group’s assets amounted to $95 billion and its deposits stood at $51.9 billion.
Nevertheless, several major projects in the GCC nation, including Al-Zour North 2 and 3 and Al-Khiran independent water and power projects (IWPPs), have been delayed due to political turmoil.
Spending on projects was lower than expected as “the government budgeted a 17% increase in spending year-on-year. But the current level is only 4% up,” the CEO of Kuwait’s largest bank noted.
He expressed his hope for an increase in capital expenditure between now and April.
Al Fulaij stressed on the important role of diversification, noting that NBK “is uniquely placed to be able to provide Islamic or conventional services because of its subsidiary Boubyan Bank and NBK.”
He, then, referred to the government’s efforts towards economic diversification through launching Kuwait Vision 2035 in 2017 which includes economic and fiscal reforms with the aim of private-sector investment growth and economic diversification.
Between 2017 and 2021, Vision 2035 aims to deliver nearly $100 billion worth of investments in Kuwait, one third of which to be delivered from the private sector.
“The banks have a major development role and are key partners in Vision 2035. But they need government support in facilitation and execution,” Al Fulaij noted.
NBK – Kuwait’s CEO said that there are three changes that need to be implemented to achieve Vision 2035 goals: improving privatisation, increasing pace of execution, and activating public-private partnership (PPP) projects.
Growing energy sector
The oil and gas sector in Kuwait is “moving ahead”, with expectations to grow further in 2020, giving a major opportunity for companies and lenders in Kuwait.
Earlier in 2019, NBK and Kuwait Finance Housing co-arranged a five-year syndicated loan and Murabaha facility worth KWD 350 million ($1.2 billion) for Kuwait Petroleum Company (KPC).
“NBK is the main financier for the energy sector,” he affirmed.
Al Fulaij affirmed the importance of digital transformation, noting that mobile transactions rose by 70% year-on-year during the first nine months of 2019, whereas online transactions dropped by 30%.