RIYADH: The standalone credit profiles of Islamic banks in Kuwait are expected to remain stable in 2025, supported by favorable operating conditions, according to a recent analysis by Fitch Ratings. 

The report highlighted that Islamic banking remains a significant sector in Kuwait, accounting for 49 percent of total banking sector assets by the end of the first half of this year.  

This follows a similar forecast from Moody’s in September, which predicted faster growth for Islamic financing compared to conventional banking. Moody’s cited rising demand for Shariah-compliant products and the inherent stability of Islamic banks’ net profit margins as key drivers. 

Fitch Ratings noted that capital at Kuwaiti Islamic banks remains adequate, supported by moderate growth and steady profitability in 2024 and 2025. 

“As for conventional banks, we view Islamic banks’ profitability to have peaked, and we expect earnings to slightly decline in 2025 following expected rate cuts,” said Fitch Ratings.  

The credit rating agency noted that funding at Kuwaiti Islamic banks remains strong, with 80 percent sourced from customer deposits. 

The report also highlighted a slight increase in the average impaired financing ratio among Islamic banks in Kuwait, rising to 2 percent by the end of the first half, driven by pressure from higher rates and slower financing growth. 

“The average financing impairment charges/average gross financing ratio increased slightly in the first half of 2024 but remains well below the pandemic level. Relatively high real estate exposure and concentration are key risks to the bank’s asset quality. Fitch expects asset quality to be stable in 2024-2025,” added Fitch.  

Oman’s Islamic finance sector expanding 

In a separate report, Fitch Ratings indicated that Omani Islamic banks are benefiting from favorable economic conditions, improving asset quality, stable profitability, and reasonable liquidity.  

The total assets of Omani Islamic banks stood at $21.3 billion by the end of the third quarter of this year, with the Islamic banking sector holding a market share of 18.7 percent of the country’s total banking assets. 

Fitch pointed to several factors driving the growth of Islamic finance in Oman, including increasing public demand, deeper distribution channels, the use of sukuk by both the government and corporates, and regulatory initiatives. 

“The Central Bank of Oman addressed a structural gap in October 2024 with the introduction of the Bank Deposit Protection Law, which would protect Islamic banks’ deposits,” said Fitch. 

“We expect this will aid confidence in Oman’s Islamic banking sector as the previous deposits insurance scheme only covered conventional banks’ deposits,” it added.  

The report forecast that Oman’s Islamic finance sector will surpass $40 billion in the medium term, with Fitch estimating its total value at $30.9 billion by the end of September 2024. 

According to the analysis, the Omani debt capital market reached $45 billion in outstanding debt by the end of the third quarter. There is no expectation of a significant short-term surge, as the government continues to prepay more of its debt using the budget surplus generated by high oil prices. 

Fitch also highlighted Oman’s growing sukuk issuance, which increased by 86 percent year on year to $2 billion in the first nine months of 2024, outpacing conventional bond issuance, which rose 53 percent to $5.6 billion during the same period.  

Fitch stated: “The Omani Islamic finance sector remains one of the smallest in the GCC (Gulf Cooperation Council),” and pointed out that it continues to face several challenges. 

These challenges include “the lack of Islamic liquidity-management instruments and smaller capital bases compared to the conventional banks,” which, according to Fitch, “could restrict their involvement in major government financing projects.” 

However, Fitch emphasized the sector’s long-term growth potential, citing recent regulatory developments and Oman’s predominantly Muslim population as key factors supporting future expansion.

RIYADH: The Saudi Ports Authority has signed an agreement with the UK’s Lloyd’s Register to unify and streamline operational and maritime procedures across Saudi ports.

The deal is set to enhance efficiency by developing comprehensive manuals and guidelines, including quality and environmental procedure manuals that align with International Organization for Standardization standards, the Saudi Press Agency reported.

The collaboration aligns with Mawani’s efforts to improve operational excellence at ports and strengthen Saudi Arabia’s connectivity with global markets, thus boosting national exports. As part of the partnership, the Saudi Ports Authority aims to double the container throughput capacity at its ports, from 20 million containers to over 40 million.

This goal is part of Saudi Arabia’s broader vision to modernize its logistics infrastructure under the National Transport and Logistics Strategy, which targets increasing the sector's contribution to gross domestic from 6 percent to 10 percent.

The deal also seeks to define clear responsibilities through a code of good practices, ensuring compliance with updated International Maritime Organization agreements.

Additionally, the partnership will help secure international certifications such as ISO 9001:2015 for quality management and ISO 14001:2015 for environmental management, further enhancing operational efficiency, customer satisfaction, and sustainability practices.

As part of the cooperation, comprehensive training programs will be offered to port employees, including courses on ISO standards, maritime certifications, and the latest inspection and safety protocols. Digital solutions and cutting-edge technologies will also be integrated to support sustainable operations and improve overall port competence.

Lloyd’s Register, a renowned maritime classification society established over 260 years ago, is one of the most prestigious organizations in the global maritime sector. The company operates in 81 offices worldwide and serves over 40,000 clients across the maritime and logistics industries.