The National Bank of Kuwait (NBK) reported Wednesday that growth in local bank credit accelerated to 8.1 percent year-on-year despite the relatively moderate gain in last December. Credit closed the year on a solid note, reflecting the gradual recovery in lending. Base effects pushed growth higher due to a weak figure a year ago in December 2012, according to the latest NBK monthly economic update. "The gain in bank credit in December was a soft KD 73 million, which followed November's modest figure. It was the non-financial business sector which again pulled the numbers down with a drop in credit. "However, there has been a clear acceleration in business credit during 2013. Meanwhile, consumer lending recorded a stronger gain than in recent months, though we expect the sector to maintain a moderating growth trend," the report said. "Household debt (personal facilities ex-securities) was up KD 128 million, its strongest gain in three months. Growth accelerated slightly to 16.2 percent year-on-year. The sector has seen growth moderate from the middle of 2013, a trend we expect to continue during 2014. "Non-bank financials saw an unusual but small gain in credit following months of deleveraging; credit to the sector was up by KD 11 million. Still, deleveraging is likely to continue this year despite the positive figure during the month, albeit at a slower pace. "All remaining credit was down KD 66 million in December, though year-on-year growth gained thanks to the base effects. Growth in 2013 rose to 6.9 percent (7.9 percent if credit for securities trading is excluded). "The real estate sector was the only source of growth in December with a KD 99 million gain. Industry, trade and other sectors all saw declines. Credit for the purchase of securities was also down KD 24 million. "Money supply (M2) growth slowed to 9.5 percent year-on-year despite a healthy gain in private deposits of KD 233 million driven by strong gains in foreign currency deposits and more modest KD deposit gains. M1 growth eased to 12.4 percent," the report pointed out. "Deposit rates on dinar time deposits remained mostly unchanged in December though they are down compared to the end of 2012. During the year, the sector average 12-month deposit rate saw the largest decline of 157 basis points (bps) to 1.12 percent. "The average rate on six-month deposits was 105 bps lower than a year before at 0.94 percent. Shorter term deposits saw smaller declines in rates with the one-month and one-week down by only 15 bps and 17 bps, respectively," it went on. "By contrast, local interbank deposits saw rates rise during 2013 after hitting record lows in 2Q-13. The average one-week and one-month interbank rate (KIBOR) rose by around nine bps during the year to 0.46 percent and 0.57 percent, respectively. The overnight rate gained four bps," the report added.