Banking industry sources said several local lenders have revised credit policies to cap personal loans for expatriates at levels tied directly to accrued end-of-service indemnities, with some institutions cutting available financing by an additional 20 percent below those calculations. The measures reflect heightened risk assessments as authorities press forward with Kuwaitization initiatives that prioritize citizen employment in both public and private sectors. Sources indicated the shift has led banks to de-emphasize unsecured retail lending to non-Kuwaitis employed in vulnerable categories, redirecting focus toward clients with demonstrable stability.
Informed sources noted that financing has been curtailed or eliminated entirely for expatriates in professions flagged for localization, particularly within the private sector where job cuts have accelerated over recent months. The Central Bank of Kuwait’s earlier guidance on consumer credit has provided the regulatory backdrop, yet individual institutions have applied their own risk models to adjust exposure. This approach has coincided with broader economic caution stemming from regional geopolitical strains that have slowed overall lending momentum.
Lenders have also increased minimum salary requirements for expatriate loan eligibility to more than 500 dinars monthly at multiple banks, up from previous floors as low as 250 to 300 dinars, according to the same sources. Exceptions remain for professionals in specialized fields such as healthcare, engineering, education and oil operations, which face lower immediate localization pressure, along with high-net-worth clients holding strong credit histories. The selective criteria aim to preserve portfolio quality while aligning with Central Bank of Kuwait instructions that cap monthly installments at 40 percent of net salary.
Central Bank of Kuwait data places the balance of personal financing facilities at 20.595 billion dinars by July 2026, marking a 2.8 percent rise from the end of 2025 despite the measured slowdown in growth. A separate Central Bank of Kuwait assessment found that non-performing loans at the eight largest banks averaged 1.5 percent at the close of 2025, supported by provisioning coverage near 252 percent. These indicators have allowed institutions to absorb tighter underwriting without immediate asset-quality concerns.
The policy adjustments arrive as government entities and private firms have announced terminations affecting resident workers, prompting banks to scrutinize employment tenure, sector resilience and indemnity coverage more closely before approving credit. Sources stressed that approvals now require verified job stability at reputable employers, reducing exposure to potential defaults linked to sudden layoffs. This risk-management pivot forms part of a wider rebalancing within retail portfolios that have historically carried significant expatriate exposure.
Moody’s assessments previously placed consumer lending at roughly 39 percent of total local financing portfolios across Kuwaiti banks, underscoring the segment’s importance even as growth projections moderate. The Central Bank of Kuwait has projected a deceleration in overall lending expansion through the remainder of 2026 amid external uncertainties, consistent with the observed caution in expatriate retail credit. Industry participants expect the selective lending environment to persist until clearer signals emerge on labor-market stabilization.
