Osman Tawfiqi to 'Al-Rai': Individual Financing to Approach Half of Local Credit Volume in Coming Years

- “Mortgage financing” is not merely a new banking product, but an important part of addressing the housing crisis.

- Increasing purchasing power without a corresponding expansion in housing supply may put upward pressure on prices.

- It is essential for citizens to understand their obligations, the cost, and the terms of their financing before making a decision that will accompany them for 25 years.

- The banking challenge extends beyond providing liquidity; it includes aligning maturities with funding sources, managing their costs, and mitigating risks.

- Housing finance is reshaping banks’ priorities, and its value is expected to quadruple the real estate portfolio within seven years.

- Profit margin alone will not build the two pillars of growth and enhance the competitiveness of banks in mortgage financing.

- Competition must not turn into laxity in credit standards or pricing that does not reflect risks.

- We aspire to be active players in the housing sector with a significant market share, not just a numerical increase.

- Kuwait’s wealthy are interested in sukuk, money markets, and equities, balancing returns and risks.

- At KIB, we rely on a real estate legacy spanning decades, alongside banking, digital, and investment expansion.

- We aim for a long-term customer relationship, starting from their youth through to the savings and investment stages.

Osman Tawfiq, General Manager of Personal Banking at Kuwait International Bank (KIB), sees no reason to dampen his optimism that “mortgage financing” will not be just another new banking product, but will play a crucial role in addressing the housing crisis. He emphasizes that citizens are the primary beneficiaries of the law, which will provide high-quality financing solutions to help them acquire suitable housing at a much faster pace.

In an interview with Al-Rai, Tawfiq stated that mortgage financing is reshaping banks’ priorities. He expects that within seven years, it will reach four times the current level of housing facilities granted to individuals, approaching personal facilities at around 40 billion dinars, equivalent to 50% of the weighted weight of banks’ portfolios by 2034, assuming real estate development proceeds as anticipated.

Tawfiq stressed that the banking challenge is not limited to providing liquidity, but also involves aligning maturities with funding sources, managing their costs, and mitigating risks. He highlighted the necessity for citizens to understand their obligations, financing costs, and terms before making a decision that may accompany them for 25 years.

Tawfiq noted that profit margin alone will not build the two pillars of growth and enhance competitiveness. He warned that banking competition must not lead to laxity in credit standards or pricing that fails to reflect risks. He explained that KIB’s management targets calculated growth and sustainable profitability, relying on resource efficiency and a specialized real estate legacy spanning decades, coupled with qualitative expansion in its banking, digital, and investment services. He did not hide his ambition for KIB to capture a significant share of the mortgage financing market, rather than just a numerical increase.

Tawfiq pointed out that Kuwait’s wealthy are interested in sukuk, money markets, and equities, balancing returns and risks. He observed that while Kuwaiti banks appear similar in structure, not all are capable of expanding and growing at the same rate, and that real differences emerge in customer experience.

• What is your view on the claim that banks are the biggest beneficiaries of the mortgage financing law?

- I disagree with this assertion. When viewing mortgage financing comprehensively, it becomes clear that banks will benefit from the expansion of financing activities. However, citizens will be the primary beneficiaries, through the provision of options that help them acquire suitable housing. Additionally, the national economy will benefit from the stimulation of real estate development, contracting, construction materials, and engineering services sectors.

Mortgage financing is not merely a new banking product; it can play a crucial role in addressing the housing crisis, provided it is integrated with the provision of land and residential units, as well as infrastructure development. I believe the success of the system should not be measured by the volume of financing granted by banks, but rather by the number of households that can afford to own their homes while keeping their financial obligations within their long-term financial capabilities.

Furthermore, increasing purchasing power without a corresponding expansion in housing supply may drive up prices, underscoring the importance of coordination among government bodies, regulatory authorities, banks, and developers. This coordination is essential to ensure the law achieves its housing objectives while maintaining financial stability. It is also vital that procedures are clear to beneficiaries from the outset, enabling citizens to understand their obligations, financing costs, and terms before making a decision that will accompany them for many years.

• With the approval of “Mortgage Financing,” we are witnessing a new banking era characterized by significant financing volumes. Is the bank’s liquidity sufficient to meet the expected housing boom?

Regarding KIB, it enjoys a strong financial position that supports its capacity to evaluate growth opportunities in mortgage financing. According to results from the first nine months of 2026, customer deposits amounted to approximately 3.08 billion dinars, the liquidity coverage ratio reached 238.1%, and the capital adequacy ratio stood at 20.32%. These indicators reflect the robustness of the bank’s financial position.

However, since residential financing is inherently long-term, the challenge extends beyond providing liquidity at the time of granting financing. It also involves matching financing tenors with funding sources, managing costs, and mitigating associated risks over several years. We will assess any potential expansion in light of regulatory frameworks, actual demand, and its impact on profitability, liquidity, and asset quality. We focus on achieving calculated growth in the financing portfolio, ensuring efficient resource utilization, meeting customer needs, and delivering profitable and sustainable growth. While financing capacity is important, maintaining this capacity throughout the financing cycle is paramount.

Certainly, individual mortgage financing is reshaping the priorities of the banking sector. This sector is poised, alongside personal financing, to capture nearly half of the credit market in the coming years. During this period, KIB targets profitable and sustainable credit growth, with digitalization serving as a cornerstone to enhance competitiveness and operational efficiency.

Digitally, based on studies and banking projections, the value of residential financing granted over seven years could reach four times the current real estate portfolio. With personal financing accounting for 50% of total bank portfolios by 2034, this equates to approximately 40 billion dinars, assuming optimistic growth in total credit value from the current 66 billion to 80 billion by 2034, driven by unprecedented government support and assuming real estate development proceeds according to optimistic expectations. In this context, it is worth emphasizing that while mortgage financing offers banks an opportunity to expand their business and build long-term customer relationships, profit margins alone will not serve as the sole pillars for growth and competitiveness. Residential financing is linked to one of the most significant financial decisions in a customer’s life, with obligations extending over many years. Therefore, bank competition will be determined by the consistency of offering the best possible pricing to customers, the speed of transaction processing, clarity of terms, flexibility of financing solutions, efficiency of property valuation, and quality of service post-financing. This competition also requires banks to develop tools for assessing creditworthiness and managing collateral, as well as investing in technology to streamline procedures.

Conversely, competition must not lead to lax credit standards or pricing that fails to reflect actual risks. For policymakers at KIB, market share growth is tied to portfolio quality, profitability, and the sustainability of customer relationships. Success does not end with contract signing; it continues through the customer’s ability to meet obligations and their trust in the bank. Therefore, clarity of information provided to customers from the outset and prompt handling of their inquiries during the financing period will be key elements in banking competition.

• Amid the anticipated fierce competition for residential customers and the availability of liquidity in the banking sector, as you mentioned, what will distinguish you in this customer acquisition battle?

- Its deep-rooted real estate expertise, dating back to its establishment in 1973 as Kuwait Finance House (KFH), represents one of KIB’s most important advantages. Over more than five decades, it has accumulated extensive experience in financing, real estate valuation, property management, and dealings with developers and contractors. After its transformation into a full-fledged Islamic bank in 2007, it preserved this legacy while expanding its banking services.

This expertise gives us a deep understanding of the Kuwaiti real estate market, from asset characteristics and factors influencing their value to associated risks. We aim to leverage this knowledge to deliver a comprehensive residential financing experience, beginning with assessing customer needs and financial capacity, proceeding through property valuation and procedural completion, and culminating in suitable solutions for purchasing or construction, in accordance with approved products and regulations.

We continue to invest in digital services to streamline procedures and enhance responsiveness. Thus, our differentiation does not rely solely on price, but on specialized expertise, quality advisory services, and a seamless banking experience. We believe that combining real estate knowledge with modern banking services enables us to offer more tailored solutions, particularly for first-time homebuyers.

• What market share do you expect KIB to capture in residential financing?

- Announcing a specific percentage before the operational details, maturity terms, and the volume of demand that will actually convert into eligible financing applications become clear would be premature. However, we aspire to secure a meaningful share of the residential financing market, commensurate with KIB’s real estate expertise, financial standing, and ability to provide Sharia-compliant solutions.

We evaluate this opportunity from the perspective of profitable growth and risk-adjusted returns, considering funding costs, credit portfolio quality, and the capacity to deliver competitive services. Our goal is to be an active player in this market, leveraging our real estate expertise to achieve qualitative growth that adds value to the bank’s business and its customers, rather than merely increasing market share numerically. We will ensure our participation is based on a clear assessment of available opportunities, not on preconceived assumptions about market size or growth speed.

- I do not believe that the slowdown in consumer or personal financing can be attributed to a single factor, as individuals’ decisions to obtain financing are influenced by a range of economic, behavioral, and regulatory variables.

On one hand, a segment of customers has become more cautious in evaluating their financial commitments, particularly amid shifting spending priorities and rising costs for certain living necessities.

On the other hand, financing costs influence purchasing decisions, particularly when it comes to large purchases that can be deferred. Additionally, some customers may prefer to wait until legislative developments become clearer or more suitable financing products emerge. However, it is also important to distinguish between a decline in financing demand and a shift in the nature of that demand. Customers may become more selective, seeking solutions that offer greater repayment flexibility or help them better manage their obligations, rather than opting for traditional financing that is not directly linked to the purchase purpose.

This is one of the areas we focus on at KIB, by developing solutions tailored to customers’ actual needs, including auto financing and purchase financing. We do not necessarily view the slowdown as inherently negative if it reflects more balanced financial decisions by customers. Healthy growth in financing is measured not only by the number or value of applications, but also by the quality of demand and the customer’s ability to meet their obligations.

- We aim to build long-term banking relationships with customers, starting from youth, progressing through working life and family formation, and then into saving and investment. Youth are a strategic segment for us, as they represent the future of banking relationships and are the fastest adopters of digital solutions. We also focus on salaried individuals, families, and customers seeking premium banking services. Our strategy is not to attract customers for a single product, but to build a relationship that grows with their evolving needs.

Regarding the youth segment, they constitute the fastest-growing group among KIB’s new customers, reflecting the success of our digital transformation strategy and the development of products aligned with their aspirations. I would like to emphasize here that we do not treat youth as a temporary age group, but as partners in a long-term banking relationship that begins by meeting their daily needs through our digital solutions and continues with them through various financial life stages.

- The foundation of our approach is evaluating each case based on income stability, existing obligations, credit history, and the customer’s repayment capacity, in compliance with regulatory guidelines. Risk levels may vary between two customers within the same segment, depending on the nature of their obligations and financial behavior.

Therefore, we work on enhancing evaluation and monitoring tools and leveraging data to support credit decisions. A bank’s responsibility extends beyond granting financing to ensuring its suitability for the customer and avoiding imposing obligations beyond their capacity. Sound credit decisions protect both parties and enhance portfolio stability.

• Notably, while banks compete to attract customers for credit, they also compete to attract customer deposits with returns approaching those of financing?

- Competition for deposits reflects the importance of stable funding sources and their cost, but comparing deposit yields with financing yields alone does not reveal a bank’s profitability. There are costs associated with liquidity, capital, operations, and risks, as well as differences in the maturities of assets and liabilities. High pricing may quickly attract funds, but it may pressure profit margins if it is not sustainable, especially when deposit costs rise faster than the returns achieved on financing.

At KIB, we focus on diversifying our deposit base and building long-term customer relationships by offering services that make customers choose the bank based on trust, ease of interaction, and integrated banking solutions, rather than yield alone, while ensuring product compatibility with Islamic Sharia principles.

- The focus on diversifying investments, managing liquidity, and balancing returns against risks has become more pronounced, particularly amid economic and geopolitical volatility. Real estate still holds a significant position in the portfolios of Kuwaiti investors, but its evaluation requires considering rental yields, occupancy rates, costs, and exit opportunities, rather than relying solely on expectations of price appreciation.

There is also growing interest in sukuk, money market instruments, and equities, depending on the investor’s objectives and investment horizon. Through Al-Dawli Invest, the investment arm of the group, we are working to expand the range of available investment solutions. However, it is incorrect to generalize a single sector or geographic destination for all high-net-worth individuals, as the appropriate portfolio varies from one investor to another based on their liquidity needs and risk tolerance.

- We believe that banking services will become more specialized to meet the needs of different customer segments, but establishing an independent bank or a digital branch is not an end in itself. The fundamental question is whether the new model will save customers’ time and deliver better service with higher operational efficiency. This value can be achieved through specialized platforms integrated with existing banking services, without necessarily creating a separate entity. We continuously evaluate available opportunities based on their feasibility and regulatory requirements, while preserving the role of human advisory in complex financial decisions. The key is to empower customers to choose the most suitable channel and receive a consistent experience, whether via phone or branch.

• All Kuwaiti banks speak of digitalization as an endless race to improve operational efficiency and exceed customer expectations. What is your approach in this regard?

- For us, digitalization is not merely transferring paper-based transactions to mobile devices, but redesigning services around what the customer aims to accomplish. The “KIB Now” strategy translates this approach through digital solutions tailored to customers’ daily needs. The “DriveNow” app combines car search and financing options within a clearer digital journey, while “BuyNow” offers purchasing, payment, and financing options suited to various needs, helping customers manage their purchases and financial obligations with greater flexibility. We also have expertise in digitizing real estate services through the “KIB Aqari” platform, which demonstrates how specialized real estate knowledge is leveraged to develop digital services. Operationally, we are working to reduce manual processes, enhance data utilization, and boost productivity. We do not measure the success of digital transformation by the number of apps we launch, but by their actual usage, the time saved for customers, and their impact on service quality and bank efficiency.

• Do you agree with the notion that Kuwaiti banks are somewhat similar in form, but not all are capable of expanding and growing at the same pace?

- While products and regulatory requirements may be similar, the real differences lie in execution speed, decision quality, resource and risk management efficiency, and the ability to develop customer experience.

At KIB, we rely on a specialized real estate legacy, alongside our expansion in Islamic, digital, and investment banking services, which enhances our ability to diversify income sources and respond to market changes.

The results for the first nine months of 2026 reflect progress in this direction, with net profit attributable to shareholders rising 30% to KD 26.6 million, assets growing 8% to KD 4.74 billion, and the financing portfolio reaching KD 3.48 billion.

From a banking perspective, these indicators are important, but the most crucial factor is the ability to preserve the quality and continuity of growth. Banking excellence is not determined by the size of the bank alone, but by its capacity to translate its strategy and expertise into tangible and sustainable results.

We believe that the coming phase will redefine the role of the retail banking sector within banks, such that success will no longer be measured solely by the size of the financing portfolio or market share, but by our ability to achieve profitable and sustainable growth, diversify revenue streams, and enhance operational efficiency through digital transformation. For us, digitalization is not merely a means of improving services, but a strategic tool to boost productivity, reduce service costs, and enhance the customer experience, thereby positively impacting both returns and risk simultaneously.