The Gulf’s sovereign wealth funds have grown in size and influence, adapting to market forces and taking advantage of the global financial crisis. But just how are they generating returns in the current economic climate?

Mohammad Al-Hashel is settling into his role as Kuwait’s central bank governor, taking over responsibility for a banking sector that is well capitalised and highly liquid. 

Kuwait’s banks are looking to external markets as they pursue growth, a strategy that has the potential to strengthen Kuwait’s economic relationships with the countries in which it operates.  

In the past year, political turbulence has dented Kuwait's otherwise healthy economy, with political infighting effectively blocking the government's $130bn economic development plan (EDP). But a new government, elected in December 2012, looks set to put an end to the country's political problems and kick-start the EDP.

Largely unaffected by the political and economic turbulence outside the country, Kuwait's banks recorded strong growth in 2012, and are looking to improve on this in 2013, by seeking growth abroad and taking advantage of the opportunities offered by the government's $130bn national development plan.

The steady growth of sharia-compliant assets suggests banks believe in the future of the sector, but the dismantling of the largest cross-border Islamic window raises questions about whether global banking groups can make a success of the business.

Arab banks offset the turmoil of the Arab Spring and offered a robust performance in 2011 with impressive growth across the key financial indicators. And with minimal exposure to the eurozone crisis, the region's banks are expected to continue their recovery from the global financial crisis.

Efforts by the Kuwaiti government to boost the country’s sluggish economic growth have so far proven ineffective, leaving its banks to look towards the rest of the Middle East and north Africa for growth opportunities.

Armed with deep pools of liquidity, many Middle Eastern banks are exploring new avenues of growth, from expanding their regional presence to concentrating on innovation within the Islamic finance sphere.