Kuwait credit growth accelerated in June, driven mainly by loans to personal facilities, the National Bank of Kuwait (NBK) said Wednesday, though it was not enough to increase money supply (M2), which contracted 0.1 percent (m-o-m) in June. Money growth continues to be held back by falling non-resident deposits. Quarterly, M2 growth in 2Q09 registered its slowest expansion since 4Q05. This contrasts with the strong expansion in the first quarter boosted by government injections to replace the outflow of foreign funds from local banks. Meanwhile, private resident deposits bucked their recent trend and dropped for the first time this year, partly due to seasonal influences. Declines in non-resident deposits continued in June. The Central Bank of Kuwait (CBK) cut its repo rate by 25 bps on July 21, aiming at supporting liquidity in the banking system. NBK noted that the discount rate was left unchanged. The earlier 50 bps cut in the discount rate, in mid-May, was followed by improved credit growth, loans. Loans grew for the second consecutive month, rising by 0.6 percent (+KD 138 million) m-o-m in June. Year-on-year (y-o-y) growth picked up from its May level, accelerating to 9.8 percent. Personal facilities for the purchase of securities maintained their growth in June at KD 46 million, whereas other personal facilities rose KD 65 million, their largest monthly increase since December 2007.
