Adel Al-Majed: Development of Bond and Sukuk Market Supports Liquidity

Adel Al-Majid, Vice Chairman and Chief Executive Officer of Boubyan Group, affirmed that enhancing the competitiveness of the Kuwaiti banking sector in the coming years is linked to its ability to continue developing its business models, diversifying funding and revenue sources, improving operational efficiency, and leveraging opportunities provided by capital markets, modern technologies, and sustainable finance. This, he noted, will strengthen the sector’s role in supporting the national economy and consolidating financial stability in the long term.

He pointed out that recent economic and geopolitical changes have underscored the importance of maintaining strong capital and liquidity levels, diversifying credit portfolios across various sectors, and enhancing proactive risk planning. This includes stress-testing funding sources and deposit stability against different scenarios to support the sector’s readiness and ability to handle changes efficiently.

This statement was made during Al-Majid’s participation in a closed banking panel hosted by the Central Bank of Kuwait (CBK) in collaboration with Global Finance magazine. The panel featured H.E. Bassel Al-Haroun, Governor of the Central Bank of Kuwait, and a select group of senior executives from the Kuwaiti banking sector, who discussed the opportunities and challenges facing the Kuwaiti economy and financial sector, key transformations shaping the future of the banking industry, and the priorities necessary to further strengthen the sector’s resilience at global, regional, and local levels.

Regarding the structural and operational priorities for the Kuwaiti banking sector over the next three to five years, Al-Majid explained that the current phase requires improving the funding mix and diversifying revenue sources, alongside enhancing cost management efficiency and building broader capabilities to utilize capital market instruments. This will support banks’ ability to sustain growth amid economic and financial shifts. He added that raising sector efficiency necessitates continuing to strengthen operational and cyber resilience in cooperation with the CBK, accelerating automation, and expanding the use of artificial intelligence (AI) in customer-facing services, internal operations, and decision-making. This should run parallel to developing frameworks for Environmental, Social, and Governance (ESG) standards and sustainable finance.

On capital market development and liquidity financing, Al-Majid emphasized that developing a deeper and more diversified local market for sovereign bonds and sukuk is a crucial step toward supporting capital markets and enhancing liquidity management efficiency in the banking sector. These instruments provide banks with a local base of high-quality liquid assets, helping them meet regulatory requirements and reducing reliance on foreign sovereign instruments for liquidity management. He clarified that increasing the volume of sovereign issuances helps build a local yield curve, providing a clearer and more accurate basis for pricing bank issuances and supporting more efficient access to funding. It also expands the range of investment tools and opportunities available in the local market.

Furthermore, Al-Majid noted that developing the trading of sovereign debt instruments would support an effective local repurchase agreement market, thereby enhancing interbank liquidity and providing the CBK with more efficient tools for liquidity management and open market operations. He highlighted that Boubyan’s experience in the sukuk and financing issuance markets underscores the importance of a more efficient local market, which contributes to establishing a clear and specific pricing benchmark and supports banks’ ability to diversify funding sources and access a broader base of local and regional investors.

Regarding the impact of technology on the future of the sector, Al-Majid stated that AI has become a business agenda reshaping customer experience, productivity, growth, and risk management. He explained that the most significant opportunities for banks lie in offering more accessible, faster, and tailored services to meet individual customer needs, while boosting employee productivity, operational efficiency, and regulatory functions. He stressed that accelerating innovation requires secure technology platforms, robust governance frameworks, and regulated environments that allow for the testing and scaled deployment of new solutions in a measured manner, while maintaining cybersecurity, protecting customer data, and ensuring compliance with regulatory requirements and human accountability.

Al-Majid added that governance is a fundamental factor enabling financial institutions to expand the use of AI safely. He emphasized that Kuwait’s true opportunity lies in cultivating a market capable of innovating in AI technologies while maintaining customer trust and operational resilience. At Boubyan, he clarified that the bank has adopted a comprehensive institutional AI transformation program based on a multi-year roadmap guiding its transition from digital leadership to becoming an AI-powered institution. This initiative focuses on customer experience, employee empowerment, and operational efficiency, all within a clear governance framework for responsible AI use.

On sustainability, Al-Majid noted that the Kuwaiti banking sector is undergoing a clear shift toward integrating ESG standards and sustainable finance into its strategies and financial and investment decisions. This is evident in the growth of investments in sustainable assets and projects, as well as the progress made by several Kuwaiti banks in this field. He pointed out that Kuwait has promising opportunities to expand sustainable finance, particularly in renewable energy projects, financing for small and medium-sized enterprises (SMEs), and financing decarbonization pathways in the oil and petrochemical sectors. Additionally, developing a local sukuk market could help diversify capital sources and activate the secondary market.

Concluding his remarks, Al-Majid affirmed that the development of the banking sector in the coming phase requires a comprehensive vision that combines financial resilience, operational efficiency, and responsible innovation. It must also leverage opportunities in capital markets, AI, and sustainable finance to enhance the sector’s competitiveness and broaden its contribution to supporting economic growth and diversification in Kuwait.