(MENAFN- Arab Times) Credit saw a small increase in January, with growth steady at 6.2% y/y. Credit was up a mere KD 18 million during the month, with solid household and business credit growth offset by a drop in securities lending. Growth in business credit excluding securities lending accelerated to 5.8% y/y, but remained below the pace seen during the first three quarters of 2014. Money supply contracted on the back of a drop in private deposits. Deposit and interbank rates eased during the month.
Household debt maintained a strong pace, gaining KD 83 million, though growth eased slightly to 12.5% y/y. Most of the growth in household debt continued to come from installment loans, whose growth stood at 15% y/y. The strong growth in this segment continues to be driven by robust employment and household income trends, as well as strong demand for home purchases.
Credit to non-bank financials declined by KD 12 million, as deleveraging in this sector resumed. Nonbanks continued to deleverage, though the pace has been declining, reflecting a stabilization in volume. Credit to nonbank financials currently stands at KD 1.4 billion, almost half of its January 2009 value. January credit to the sector was down by 9.2% y/y.
Meanwhile, remaining credit declined by KD 54 million, though business credit excluding securities lending was robust. Lending for the purchase of securities, volatile on a monthly basis, was the main source of weakness, declining by KD 165 million in January. This was offset by healthy gains in trade, real estate and "other sectors". While business credit excluding securities lending saw a good month in January, growth remained weaker than during the same period a year before.
Broad money supply (M2) growth eased further in January to 2.2% y/y as deposits saw a decline. Private deposits were down by KD 402 million, which was split between KD time deposits, which declined by KD 261 million, and KD sight, off by KD 219 million. Growth in the narrower M1 measure of money supply fell to 2.6% y/y, its slowest pace since early 2012.
Average customer deposit rates on dinar time deposits saw small declines in January, as did interbank rates. The average rates on the 1-month, 3-month, 6-month and 12-month time deposits declined by 2-4 bps to 0.58%, 0.76%, 0.95% and 1.18%, respectively. KD interbank rates declined for a fourth consecutive month, with the 1-month KIBOR offer rate dropping by 10 bps to 0.88%.
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