Banks are getting ‘stricter’ in giving loans to expats – ARAB TIMES
“New limits set for acceptable wages for granting credit”
KUWAIT CITY, January 10: The Central Administration of Statistics has released a report which shows that the number of expatriates who receive monthly salaries of more than 480 dinars is around 13.48% among the 2.39 million workers working in Kuwait, 96% of whom work in the private sector and the rest in the government, reports the daily Al-Rai. Sources told the Daily that the outlook for lending to expats has changed significantly given the severity of the pandemic’s repercussions, and some banks that were historically known for lending money to expats without reservations have become more strict in their behavior and some banks have returned to adopting a stricter policy in granting loans to this category of people by raising the limits of their salaries – no less than 700 dinars – in addition to fulfilling other traditional conditions.
The sources pointed out that these banks are setting new limits for acceptable salaries for granting credit, which stipulate not to grant expatriates whose salary is less than 700 dinars new consumer loans, as well as not to schedule existing finance for these customers, in addition to stopping financing. newly hired expatriates, unless the client falls within a guaranteed functional scope or an elite clientele. These banks have been excluded from the new salary cap for expatriates who have sufficient end-of-service pay to repay the loan and work in departments such as health, education and endowments.
Of course, respecting the new salary ceiling in some banks does not mean guaranteeing the financing of its owner, since it is required for non-workers of the ministries that the customer benefits from an end-of-service indemnity covering the entirety of their bonuses, and that they belong to a stable employment sector preferably falling within the scope of secure employment. With the new bank limits for salaries, the segment of residents deprived of financing increases, until further notice, knowing that other banks, even before the “Corona” crisis, tended to reduce their share of resident customers, focusing on Kuwaitis. and residents with salaries starting at one thousand dinars.
At the same time, other banks also known to take in residents have kept their salary caps unchanged, with the sources revealing that the behavior of these banks does not include raising salary caps and is content with the stringency of other conditions. lending, including the quality of the client, whether its credit history or the results of the analysis of its professional situation, and other considerations that classify it. The sources said some banks are still lending to residents within normal salary limits, whether in the public or private sector, provided the eligible worker has job stability and maintains a challenging credit record, indicating that banks generally converge on selecting the resident eligible for financing although some loan terms differ from bank to bank.
It should be noted that many banks have raised their ceilings for the financing of resident salaries, especially after the spread of “Corona”, and although they still allow the financing of residents with salaries starting at 400 dinars, the news Financing opportunities for residents with low salaries, precisely below 350 dinars, have decreased significantly in the portfolios of most banks. It should be noted that a previously published study indicated that the share of Kuwaitis in consumer loans is around 60%, compared to 40% for non-Kuwaiti, while the share of Kuwaitis in “housing” is 72%, compared to 28% for non-Kuwaiti. .
According to official data, personal equipment increased last November by around 353 million dinars (+1.87%) compared to October, reaching 19.22 billion, while it increased by 1.97 billion (+11.42%) since the start of 2021, and they have risen to 2.068. billion (+12.06%) compared to November. 2020. Installment loans (housing) saw an increase of around 194 million (+1.38%) on a monthly basis, reaching 14.252 billion at the end of last November, while they increased by 1.541 billion (+12 .12%) since the start of 2021, and has seen an increase of around 1.624 billion (+12.86%) on an annual basis. As for consumer loans, they increased by 24 million last November, compared to October (+1.34%), to reach 1.819 billion, and reached 212 million since the start of 2021 (+13.19%) , and recorded growth of 215 million (+13.4%) compared to November 2020. Loans for the purchase of securities increased by 178 million over one month (+6.9%) to reach 2.76 billion at the end of November, and increased by 181 million (+7.02%) compared to their level at the start of the year, and increased by 209 million (+8.19%) compared to November 2020.