NBK: Local Credit in Kuwait Continues Strong Growth.. 4.7% Since the Beginning of the Year

A report issued by National Bank of Kuwait stated that domestic credit growth in Kuwait accelerated to a robust 1.7% quarter-on-quarter in the third quarter of 2026, up from 1.2% in the second quarter, indicating an improvement in lending activity despite ongoing regional uncertainty. This credit growth pushed year-to-date growth to 4.7% in September.

The report added that this acceleration was driven by stronger credit extended to businesses and continued acceleration in household lending, which offset the contraction in lending to banks and financial institutions. Meanwhile, credit growth for securities purchases remained unchanged in the third quarter. Credit extended to non-residents also recovered after a sharp decline in the second quarter, providing additional support to overall credit expansion.

On the liability side, resident deposit growth remained stable in the third quarter, supported by strong growth in public sector deposits and continued, albeit more moderate, growth in private sector and government deposits. At the same time, non-resident deposits continued to contract, though at a slower pace compared to the second quarter.

Overall, credit growth held up slightly better than previously expected earlier in the year, amid pressures associated with ongoing conflicts. However, geopolitical developments remain a significant source of uncertainty during the fourth quarter.

The report noted that credit growth to businesses improved to 1.8% quarter-on-quarter in the third quarter, compared to approximately 1.3% quarter-on-quarter in the second quarter, raising year-to-date growth to 6.1% in September. This improvement reflected increased lending strength across several key sectors, particularly construction and building (5.2% quarter-on-quarter), the industrial sector (3.0%), and other services (4.2%). Credit growth also remained positive in the real estate sector (0.5%) and the crude oil and gas sector (1.0%), while the trade sector returned to modest growth (0.2%) after contracting by 1.4% in the second quarter.

Credit extended to banks and financial institutions contracted further by 5.2%, pushing year-to-date growth into negative territory (-3.0%). Credit for securities purchases grew by 1.2% quarter-on-quarter, unchanged from the second quarter, raising year-to-date growth to 3.6%. Household credit also accelerated further, expanding by 2.8% in the third quarter compared to approximately 1.5% in the second quarter, indicating sustained strength in consumer borrowing demand.

Credit extended to non-residents rose by 2.8% quarter-on-quarter, offsetting the 6.7% contraction recorded in the second quarter. This was largely attributed to increased lending to non-resident banks, which rose by 5.0% quarter-on-quarter following a sharp decline in the previous quarter.

Continued strong growth in resident deposits

On the liability side, resident deposit growth rose strongly by 2.4% quarter-on-quarter in the third quarter, in line with the pace recorded in the second quarter, raising year-to-date growth to 8.8% in September. Quarterly growth was supported by deposits from public sector institutions, which rose by 9.0% quarter-on-quarter after declining by 2.2% in the second quarter. Government deposits also remained a key source of support, rising by 5.5% following the exceptionally strong increase of 23% recorded in the second quarter.

Private sector deposits, which constitute the largest share of resident deposits, continued to expand, albeit at a slower pace, rising by 0.5% quarter-on-quarter, compared with around 1.2% in the second quarter. Meanwhile, non-resident deposits fell by 0.7% quarter-on-quarter in the third quarter, following the sharpest contraction of 4.6% recorded in the second quarter, keeping year-to-date growth at -3.5%.

While cross-border financing flows remained weak, the milder decline was primarily driven by a 5.3% quarter-on-quarter increase in private sector foreign currency deposits in the third quarter, compared with a 9.1% drop in the second quarter, indicating a degree of stability in non-resident private sector deposits relative to the heightened uncertainty witnessed in the second quarter.