A specialized report issued by the National Bank of Kuwait (NBK) said on Monday that credit growth exceeded expectations in October, recording the largest monthly gain in five years. The non-financial sector drove the increase while household credit was weaker than in recent months. Money supply continued its healthy expansion following gains in time and foreign deposits, according to the report. Bank credit increased by 391 million Kuwaiti dinars in October, pushing year-on-year (y/y) growth to 7.8%. October's data confirms the accelerating trend in credit growth which exceeded previous expectations. October's strength was particularly visible in growth of non-financial business credit which accelerated to its most rapid pace since the financial crisis, it noted. The report pointed out that household credit grew at a more moderate pace gaining by KD 47 million. Growth eased to 16.7% y/y from the 18% pace maintained over the past five months. Despite this, the sector remains the largest contributor to credit growth accounting alone for 29% of total credit and about half of all credit gains year-to-date. The non-financial business sector's strong gain of KD 365 million was behind October's exceptional performance. Growth in credit to the sector accelerated to 7.3%. An unusual increase of KD 71 million in credit to the oil gas sector coupled with strong increases in lending to the trade and real estate sectors helped propel the sector in October, it added. Meanwhile, the non-bank financial sector remained in deleveraging mode, registering a KD 21 million drop in credit. Year-on-year, the sector's debt to the domestic banking sector shrank by 19%. Private sector deposits saw a second consecutive month of sizeable gains, adding KD 468 million on the month. KD time deposits (+KD 171 mn) and foreign deposits (+KD 209 mn) drove the increase, while dinar sight deposits and savings deposits experienced modest growth. As a result, money supply saw another strong month. Broad money (M2) expanded by KD 466 million, leading year-on-year growth to accelerate to 10.6% from 9.6% in October. The narrower M1 measure increased by only KD 72 million, with growth slowing to 19% from a month ago. Deposit rates on dinar time deposits remained steady at relatively low levels. Average rates remained unchanged for 1-month, 3-month, 6-month, and 12-month time deposits at 0.56%, 0.74%, 0.94%, and 1.12%, respectively, the report concluded.