The Kuwaiti banking sector has learned a great lesson in the immediate aftermath of the global crisis. Financial challenges began in the third quarter, when the central bank decided to increase banks’ reserve requirements. This stipulation limited liquidity and curbed inflation, which had reached an approximate 10.7% by July 2008 — almost 100% higher than 12 months before, when it stood at 5.6%. Global Investment House (GIH) reported that in the first nine months of 2008 profitability of the listed banking sector grew by 14% year-on-year. This was somewhat lower than GIH’s expectations of 16% but, with limited exposure to the infectious subprime crisis, Kuwaiti banks have stayed “relatively immune to the worst that the sub-prime mortgage crisis and what the ensuing debacle had to offer,” GIH said. Aftershocks of the sinking global markets took quite a toll on the Kuwaiti bourse, “which has lost substantial ground as yet,” noted
