NBK: Notable improvement in lending activity in Q3 2026
National Bank of Kuwait revealed that domestic credit growth accelerated by 1.7% in the third quarter, driven by consumer and commercial borrowing.
Translated by Qiyas from القبس — Original source
A report by National Bank of Kuwait revealed that domestic credit growth in Kuwait accelerated to a robust level of 1.7 percent quarter-on-quarter in the third quarter of 2026, up from 1.2 percent in the second quarter, indicating an improvement in lending activity despite ongoing regional uncertainty, and pushing year-to-date credit growth to 4.7 percent in September. 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, while credit growth for the purchase of securities remained unchanged in the third quarter. Credit extended to non-residents also recovered after the sharp decline recorded 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. Meanwhile, 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, although geopolitical developments remain a significant source of uncertainty during the fourth quarter.
Credit growth extended to businesses improved to 1.8 percent quarter-on-quarter in the third quarter, compared to approximately 1.3 percent in the second quarter, raising year-to-date growth to 6.1 percent in September. This improvement reflected stronger lending across several key sectors, particularly construction and building (5.2 percent quarter-on-quarter), the industrial sector (3.0 percent), and other services (4.2 percent). Credit growth also remained positive in the real estate sector (0.5 percent) and the crude oil and gas sector (1.0 percent), while the trade sector returned to modest growth (0.2 percent) after contracting by –1.4 percent in the second quarter. Credit extended to banks and financial institutions contracted more significantly by –5.2 percent, pushing year-to-date growth for the region into negative territory (–3.0 percent). Additionally, credit for the purchase of securities grew by 1.2 percent quarter-on-quarter, unchanged from the second quarter, raising year-to-date growth to 3.6 percent.
Household lending accelerated further, expanding by 2.8 percent in the third quarter compared to approximately 1.5 percent in the second quarter, indicating sustained strength in consumer borrowing demand. Credit extended to non-residents rose by 2.8 percent quarter-on-quarter, offsetting the –6.7 percent contraction recorded in the second quarter, largely due to increased lending to non-resident banks, which rose by 5.0 percent quarter-on-quarter after a sharp decline in the previous quarter.
Deposit Growth
On the liability side, resident deposit growth rose strongly by 2.4 percent 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 percent in September. Quarterly growth was supported by deposits of public sector institutions, which rose by 9.0 percent quarter-on-quarter after declining by –2.2 percent in the second quarter. Government deposits also remained a key source of support, rising by 5.5 percent following the exceptionally strong increase of 23 percent 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 percent quarter-on-quarter in the third quarter, compared with about 1.2 percent in the second quarter. Meanwhile, non-resident deposits fell by 0.7 percent quarter-on-quarter in the third quarter, following the sharpest contraction of 4.6 percent recorded in the second quarter, keeping year-to-date growth at -3.5 percent. While cross-border financing flows remained weak, the milder decline was primarily driven by a 5.3 percent quarter-on-quarter increase in private-sector foreign-currency deposits in the third quarter, compared with a 9.1 percent 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.
