Banks' demand for funds matches loan interest
The Kuwaiti banking market is witnessing a rare phenomenon where deposit interest rates are equal to lending rates, both approximately reaching 4.8%. This is due to banks pricing large and medium-sized deposits at higher rates, especially for amounts starting from 15 million Kuwaiti dinars. This shift has resulted from the rise in interest rates on deposits from government institutions and distinguished individuals, while some banks continue to lend to customers at rates below 4%. Global monetary policies, particularly the Federal Reserve's decision to raise interest rates to 4%, have prompted banks to diversify their funding tools and enhance liquidity stability, while maintaining high deposit levels, which account for about 27.5% of total banking sector deposits. This approach aims to counter geopolitical pressures and achieve a balance between deposit and lending rates amidst expectations of interest rate hikes before the end of 2026, while strengthening banks' ability to finance economic activities in line with liquidity stability and capital adequacy requirements.
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