KPMG publishes latest report comparing Kuwait's leading listed banks' financial performance; anticipates top trends for the banking sector

Al Bawaba

28-04-2025

In a first, KPMG published a Kuwait-specific banking report comparing the country's leading banks' financial performance, titled Kuwait listed banks' results 2025. The report offers a comprehensive analysis of Kuwait's nine listed commercial banks' financial results for the year-ended 31 December 2024 compared with the prior year (year-ended 31 December 2023) to predict future directions and trends of the country's banking sector.Banks in Kuwait closed the year (year-ended 31 Dec 2024) strong, with the country's average increase year-on-year in terms of total assets (8.49%) and net profit (12.63%) in the green. The report also pointed at the dip in the banks' overall cost-to-income ratio from 47.61% (2023) to 47.26% (2024). With the broader sentiment of the report portraying a positive outlook for the country's banking sector, Bhavesh Gandhi, Partner and Head of Financial Services, KPMG Kuwait, said:'Based on our analyses, the prospects for Kuwait's banking industry, supported by recent reforms such as the Public Debt Law and decline in interest rates, remains hopeful. If implemented, we expect the Mortgage Law to unlock newer investment opportunities for the banks that could help expand on lenders' credit portfolios. While it might be far-fetched to say how some of the initiatives may impact the sector on the long term, we are seeing some promise in bank-led initiatives, such as investments towards digitalization and refined cost management, that paints a buoyant picture for the future.' The KPMG publication probed deeper into the banks' performance based on eight key performance indicators (KPIs) to identify any underlying themes that could play a part in shaping Kuwait's banking industry. They were: (1) total assets; (2) net profit; (3) share price; (4) return on equity; (5) return on assets; (6) cost-to-income ratio; (7) loan by stage; and (8) non-performing loan ratio.Marking the significance of the newly implemented Public Debt Law in Kuwait, the report drew more attention to the strategic role the law could play in debt management by enabling banks to access the country's sovereign debt instrument. Although more remains to be seen and done regarding the proposed Mortgage Law, once implemented, KPMG analysts anticipate it to offer banks some sense of relief as it would enable them to offer mortgages up to KD 200,000 (approx. USD 649,000), with repayment periods extending to 25 years, and allow them to tap into alternate revenue pools. One of the primary findings from the report indicated that banking executives are divided by AI's transformative potential and the potential risks it brings with it. In Kuwait, larger strides with respect to the implementation of AI in banking remain to be taken, with one of the biggest challenges being convincing decisionmakers to view AI as a strategic rather a technology-based investment, underlined the report. It further emphasized that AI implementation in banks is not straightforward, given factors such as risk, compliance and regulatory complexities, security, and resistance to adoption continue to serve as headwinds.Addressing the role of AI in banking, Bhavesh added:'AI implementation calls for an all-round rethink that encompasses strategy, culture, operations and ethics, and banks should consider viewing it as a driver of sustainable growth to tap into its full potential. Embedding AI on a cross-functional level would allow banks to create more innovative consumer-focused solutions that can enhance profitability and deepen customer loyalty.' Additionally, KPMG professionals weighed in that considering banks in Kuwait face elevated regulatory, technological and operational costs, there is an increasing need to relook at how they can better manage expenses without compromising on their efficiencies. While there is no universal solution to how banks could go about cost reduction, the expectation is that banks might take a closer lens to their spendings and discern more ways to minimize them, concluded the report.
For more details, visit kpmg.com/kw