Since the onset of the global downturn, the Islamic finance sector has attracted attention as a potentially profitable alternative to conventional banking. In Kuwait, the sector continues to grow.
The region is gradually pronouncing itself a centre of Islamic finance, along with other global centres such as Kuala Lampur, Dubai, Manama, Doha, London and Singapore.
Kuwait Finance House (KFH) has long been a local dominating force in the Islamic finance sector and represents 25% of Kuwait’s total deposits. The bank operates in both Arab and Middle Eastern countries, including Bahrain, Malaysia and Turkey.
The second largest Islamic bank in Kuwait (by market share) is Boubyan Bank.
Recently, competition between two of the region’s largest banks, KFH and the National Bank of Kuwait (NBK), has become even fiercer, and reports claim that NBK is to secure a stake in Boubyan Bank. NBK currently has 21.5% of the market share for deposits and represents 28.5 % of the market for attracting loans. Meanwhile, KFH represents 19.6% of the market for attracting loans.
KFH was also recently granted the Most Trusted Bank Award for 2009 by World Finance magazine.
Given NBK’s increasing dominance in Kuwait, it appears that the bank will soon become a close competitor of KFH in the Islamic finance sector.
Other notable banks include BKME and the Kuwait International Bank, which have both entered the Islamic finance market.
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