Commercial bank of kuwait (CBK) Essay Example | Topics and Well Written Essays - 1000 words

Commercial bank of kuwait (CBK) - Essay ExampleCharacteristics of the industriousness in which the bank operates Commercial Bank of Kuwait operates in the Kuwaits banking industries whose environmental features are identifiable. The application is one of the strongest in the region and this identifies positive prospects much(prenominal) as sustainability and a business profit making interests. The industry is in addition free from unfavorable competition from international fiscal institutions. It comprises of about ten local anesthetic banks and nine foreign banks, a number that identifies oligopolistic market. This means that the market players have significant potentials to dictate market factors but competitors can at the same clipping use such powers to gain competitive advantage over the firm. This further identifies banks fears of customer manipulation and leads to significant level of stability in the industry. The industry is also in its developmental stage in which comp etition is increasing as each bank seeks to expand its market control. Developments in the industry also invest diversification into new products and application of technology for developing new products as well as for efficiency. Innovation has been another characteristic feature of the industry and is a factor to increased level of competition. Favorable political environment has also been reported within the industry with policies that support commercial banks stability and operations. The policies indicate stability of the industry, regardless of possible entry by more foreign banks, because of the government policies that focuses on protecting the industry. Further, the minimal market size helps in protecting the industry from further venture by foreign banks because of risks of failing to reach breakeven points by new entrants and the fields small population explains this (Capital Standards 1). The Industry however faces risks from capriciousness in two industries that are significant to its sustainability. The industries dynamism affects performance and profitability of the banking industry that is also susceptible to brats of concentration. The role of Islamic banking that is gaining momentum in the country is another threat to the banking industry because of its ability to reduce the market base. Islamic banking is a significant threat because of the countrys dominant faith that is in all likelihood to induce bias towards the religious banks (Capital Standards 1). The Kuwaits banking industry is also susceptible to global economic factors as global deferral was witnessed during the global recession in the stratum 2009. Other significant sectors to the banking industry such as the construction sectors are also susceptible to the global economy and affect banks conditions. The industrys financial indicators such as gross loans and non-performing loans also offer a basis for its analysis. Amount of gross loans has been increasing and this indicate s increasing demand for financial services. Increasing trend in nonperforming loans in the industry also indicates increasing advanced services to customers that culminates to increased defaults and threats of defaults. The increasing volume on non-performing loans is however, a threat to the industry as defaults constrains liquidity. Policies to improved asset quality have however promised to reduce the threats of growing volume of nonperforming loans with positive results being reported in the year 2010. The industry also relies on low cost deposits as sources