...Stable and Mature Islamic Banking Sector with Near Best-in-Cycle Asset Quality Key Message on 1H17: Asset-quality metrics for Kuwaiti Islamic banks improved in 2016 and 1H17, with only one exception. Concentration risk remains the biggest risk. Asset Quality: Impaired financing ratios have been improving since the financial crisis as Islamic banks have been cleaning up their financing books; nevertheless, the average impaired financing ratio rose slightly in 1H17. FICs/average gross financing ratios have been falling due to better underwriting standards, but also showed a slight increase in 1H17 due to provisioning of some non-domestic exposures and strict Central Bank of Kuwait (CBK) provisioning requirements, but remain lower than at conventional banks. Performance: Operating profitability metrics have improved due to lower financing impairment charges and remain slightly above conventional banks'. The average cost/income ratio has also slightly improved due to good cost control but is...
