Fitch Ratings opined this week that Kuwaiti banks’ indirect exposure to the stock market, in the form of loans to troubled investment companies and lending for the purchase of shares, is “significant” and may lead to future asset quality problems, rising impairment charges and declining profitability. Moreover, a slowdown in the real estate and construction sectors in Kuwait also has the potential to undermine asset quality, Fitch said. The warning comes on the heels of Fitch’s decision last month to downgrade the Long-term Issuer Default Rating (IDR) of Global Investment House, the largest investment company in Kuwait, to D, following an announcement by the firm that it had defaulted on the majority of its financial obligations.

Kuwait Finance House, Commercial Bank of Kuwait and National Bank of Kuwait reported a decline in net income of 46.3pc, 16.3pc and 6.7pc respectively in the fourth quarter of last year.