In a career that has spanned more than 50 years, Ibrahim Dabdoub has transformed the National Bank of Kuwait from a small local player into a global force. Now that he has chosen to step down from his position as chief executive, The Banker reflects on the legacy that he will leave behind.
Islamic banking already has a strong presence in Kuwait. With a number of innovative lenders competing in the sector, and support and regulatory oversight from the country's central bank, it looks as though the industry can only become a more prominent fixture on the country's financial landscape.
Kuwait may lay claim to more than 5% of the world's total oil reserves, but without the expertise and equipment needed to tap into the bulk of this, and with strict rules prohibiting foreign help, the country is struggling to realise its energy potential.
With performance starting to pick up again in the Kuwaiti banking sector, and strong growth potential both in the domestic market and in neighbouring Iraq, the small country is finding itself the focus of a growing number of lenders, with competition among them growing fierce.
With the country's well-capitalised banking sector set to transition smoothly to Basel III standards and a positive macroeconomic outlook, central bank governor Mohammad Al-Hashel is able to concentrate on Kuwait's longer term prospects. He tells The Banker how he expects more growth in the Islamic banking sector and an increase in government spending, both of which will prove beneficial to the country's economy.
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.
Kuwait's central bank governor says that maintaining an effective regulatory framework is a difficult and time-consuming task that requires constant attention and frequent fine-tuning. As the global economic crisis has shown, however, there is little alternative.
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.
Now Kuwait has joined many other Gulf states in pushing through private financing across a range of sectors and overhauling its infrastructure, it boasts one of the Middle East's largest and most diverse public-private partnership programmes. But as the country's government opts for PPPs, will the banks follow?
Home to an estimated 9% of the world’s total oil reserves, Kuwait posted its 12th consecutive budget surplus of $18.9bn in 2011. But while the country's coffers are flush with cash, continued political infighting has stymied development, leaving the economy overly reliant on the oil sector and the country's basic infrastructure in need of improvement.