(MENAFN - Arab Times) Money supply (M1) jumped by 4.9% in March, rising by KD 337 million. Broader liquidity (M2) also increased by KD 863 million.
Strong growth in both KD and foreign currency deposits (KD 557 million and KD 265 million, respectively) was behind the increase in M2. These developments are likely related to annual bank dividend payments and a second month of strong credit growth.
March saw a second month of strong credit growth, as total credit facilities rose by a healthy KD 158 million. The increase was smaller than last month's impressive KD 242 million, but remains an improvement on the levels of growth seen in 2011.
The rise in total credit stems primarily from notable increases in loans extended to the trade sector (KD 60 million) and "other business credit" (services, telecom, transportations, etc.), which saw its second consecutive monthly increase of KD 93 million. Personal facilities excluding loans extended for the purchase of securities, which were the driver of credit growth last year, rose by KD 86 million, with y/y growth rising to 12.1%.
These continued to be supported by steady consumer confidence and finances.
These gains in credit helped outweigh the ongoing contraction in credit extended to nonbank financials. Credit to that sector (primarily investment companies), dropped by KD 58 million in March, and by KD 162 million during 1Q2012. Loans for the purchase of securities were also down by KD 44 million following an unusually strong month in February.
Private sector deposits exhibited an increase of KD 822 million in both local and foreign currencies, with the bulk of this gain coming from KD deposits, notably sight and time deposits (KD 296 million and KD 148 million, respectively). The average rates offered on private KD deposits remained unchanged across maturities in March averaging 0.81%, 1.04%, 1.30%, and 1.54%, for the 1, 3, 6 and 12-month maturities, respectively.
Finally, bank reserves rose by KD 308 million during March mostly due to time deposits at the Central Bank of Kuwait (CBK). Accordingly, the reserve ratio was up 70 basis points to 14%. Total bank assets increased KD 722 million as all categories (credit facilities, liquid and foreign assets) rose.
