The Central Bank of Kuwait has instructed banks, investment companies, and financing firms to expand their audit scope on all personal financing transactions.

The new measures aim to identify modified loan terms, ensure compliance with installment regulations, and track restructuring arrangements for employees and retirees seeking new loans. This data will now form part of quarterly audits on consumer and housing loan portfolios.

Under the directive, banks and financing firms must assign external auditors to review consumer and installment loan portfolios—worth nearly 20 billion dinars. Audit reports will include a dedicated section outlining compliance with rules for granting loans to individuals. The move is part of the Central Bank’s broader regulatory push to improve loan book quality and minimize violations.

Sources revealed that financing entities must subject all consumer and housing loans to quarterly independent reviews. The inspections cover adherence to regulations on personal loans, housing finance, and credit card issuance. Personal loans typically range from 25,000 dinars for consumer needs to 70,000 dinars for housing, with repayment terms spanning 5–15 years.

From the second quarter of 2025, financing entities must include compliance data in their reports, listing the number of loans and adherence to re-granting and restructuring terms. Regulators expect this will raise transparency and strengthen Kuwait’s banking sector.

Bankers emphasized that personal loans have been a primary avenue for credit growth since the 2008 global crisis, making them a natural target for closer scrutiny. Anticipated growth in personal—especially housing—loans has further motivated the Central Bank to ensure early detection of violations, which helps reduce costs tied to corrective provisions.

A recent Moody’s report projected non-performing loans in Kuwaiti banks’ portfolios to remain between 1.2% and 2% by 2025—the second-lowest rate in the Gulf. This underscores the resilience of Kuwait’s banking system, though regulators remain cautious.

Central Bank figures show domestic consumer loans fell by 0.9% (19 million dinars) in the first five months of 2025, reducing the portfolio to 2.05 billion dinars. Housing loans, however, climbed 1.6% (265.6 million dinars) to 16.8 billion dinars. Conversely, private housing loans dropped 7.07% to 227.4 million dinars.

By May 2025, personal facilities totaled 19.557 billion dinars —up 235.9 million dinars since December—making up 33% of Kuwait’s overall loan portfolio. Total credit across residents and non-residents reached 59.06 billion dinars, up 3.3% since year-end 2024, supported by broad lending growth across economic sectors.