In 2024, Kuwaiti banks have implemented stricter lending policies for expatriates compared to the previous year. This shift in credit focus towards Kuwaiti customers and a selective group of non-citizens, particularly elite professionals, indicates a change in the lending landscape.
According to banking sources, several financial institutions have tightened their credit criteria for expatriates by narrowing down eligible job categories for financing. This means that some individuals, such as those employed by non-listed companies or with salaries below 600 dinars per month, may no longer qualify for loans.
The preferred list for lending to expatriates has been streamlined, with a focus on sectors such as education and healthcare. This includes professionals like doctors, nurses, and technicians. Additionally, stable government positions with limited competition from Kuwaitis in the medium term, managerial roles in reputable companies, and professionals in secure positions are also included in the prioritized list.
Banks are now targeting customers with a robust credit history and adequate end-of-service benefits. For non-Kuwaitis, the consumer loan limit is capped at 25,000 dinars for those earning salaries around 1,250 dinars and possessing service periods exceeding 10 continuous years. This cautious approach extends to newly appointed expatriates, individuals over 55 years old with salaries below a thousand dinars, and those with non-university educational certificates. Loans to this segment are selective, with low-risk credit limits.
In the previous year, most banks refrained from issuing new loans to expatriates in the government sector, except for specialized banks. The decrease in the appointment of non-Kuwaitis in government roles during 2023 contributed to this scenario.
It is anticipated that slow credit growth for non-Kuwaiti individuals’ loans will persist until at least the end of the first quarter of the current year. However, some banks, unable to compete in the Kuwaiti retail sector, are more open to financing expatriates under favorable terms. These banks aim to expand lending to non-Kuwaitis to drive credit growth in their portfolios. Market studies indicate that the default rate among expatriates is not alarming, leading these banks to accept a broader risk, including considering individuals with salaries exceeding 300 dinars for borrowing, even with a shorter employment period.
While most banks practice strict lending policies with expatriates, there are a few banks that are more open to financing expatriates on favorable terms. These banks have a higher appetite for this segment as they do not find suitable credit space to meet their ambitious growth plans in the individual sector. This is due to the intense competition for the segment of Kuwaitis that the major banks opened last year under the title “Al-Qard Al-Hassan,” which acquired the largest segment of Kuwaitis eligible to borrow. As a result, these banks have to wait for 3 to 5 years, which is the required period by the Central Bank for the customer to move to another bank after 30 percent of the repayment period has passed.
The sources further report that banks unable to hope for a significant increase in their market share in the Kuwaiti retail sector due to strong competition are instead expanding lending to expatriates. This allows them to seek credit growth in their portfolios from any legitimate window, considering the requirements to combat the slowdown in credit growth due to the high cost of financing.
In conclusion, Kuwaiti banks have implemented stricter lending policies for expatriates in 2024. This has resulted in a more selective approach to lending, focusing on elite professionals and specific sectors. While some banks are more open to financing expatriates, the overall credit growth for non-Kuwaiti individuals’ loans is expected to remain slow. These changes reflect the evolving landscape of banking in Kuwait and the need for banks to adapt to market conditions and competition.
Source: TimesKuwait
