The GCC banking sector had a good year in 2014, with net profit for the sector growing by 14 per cent, compared to 10 per cent the previous year.
This came on the back of sound growth in the region in 2014, with income levels remaining very high, and consistency in government investment and infrastructure projects. GCC economies also benefited through their currencies being tied to the US dollar.
The vast majority of GCC banks remain solidly capitalised with comfortable levels of liquidity – helped by growing customer deposits – and good profitability. Loan asset quality for the sector improved further in 2014 through a fall in non-performing loans and an increase in provision coverage.
Most banks now carry a low level of bad loans but maintain high loan loss provision coverage, while provisioning charges for loans and investments declined in 2014. Overall, Gulf banks have recovered well over the past few years and, the larger ones in particular continue to look for growth opportunities, both regionally and further abroad.
The outlook for the GCC banking sector in 2015 is certainly more challenging but stable. Due to the sharply lower oil price, growth in assets and net profit for banks is unlikely to match that of last year.
However, GCC economies remain in a good position to meet lower oil revenues with adequate growth expected, which will help maintain banks’ performances, despite lower GDP growth forecasts this year.
Although lower oil revenues will impact growth, non-oil economic growth is expected to be solid, including that in Abu Dhabi and Dubai. Qatar’s GDP growth will remain strong this year and next as the government increases spending on big infrastructure projects.
Reserves built up in Saudi will also help maintain spending. Kuwait is forecast to grow at less than two per cent in 2015 but the banking sector is in better condition to cope.
Oman and Bahrain, the two smallest GCC states are expected to see reasonable economic growth, although Bahrain is more exposed to lower oil prices.
| BANK | ASSETS | NET PROFIT($000) | RANK | COUNTRY |
|---|---|---|---|---|
| Qatar National Bank | 133,614,471 | 2,889,461 | 1 | Qatar |
| National Commercial Bank | 115,967,489 | 2,344,851 | 2 | KSA |
| National Bank of Abu Dhabi | 102,395,511 | 1,518,886 | 3 | UAE |
| Emirates NBD | 98,835,010 | 1,399,137 | 4 | UAE |
| Al Rajhi Banking Corporation | 82,056,415 | 1,822,979 | 5 | KSA |
| National Bank of Kuwait | 74,323,098 | 933,653 | 6 | Kuwait |
| Kuwait Finance House | 58,621,244 | 546,144 | 7 | Kuwait |
| Samba Financial Group | 57,973,021 | 1,334,687 | 8 | KSA |
| First Gulf Bank | 57,764,362 | 1,553,236 | 9 | UAE |
| Riyad Bank | 57,223,811 | 1,160,642 | 10 | KSA |
| Abu Dhabi Commercial Bank | 55,545,729 | 1,143,856 | 11 | UAE |
| Banque Saudi Fransi | 50,340,507 | 937,691 | 12 | KSA |
| Saudi British Bank | 50,029,138 | 1,137,616 | 13 | KSA |
| Arab National Bank | 43,911,561 | 767,241 | 14 | KSA |
| Dubai Islamic Bank | 33,729,202 | 763,334 | 15 | UAE |
| Ahli United Bank | 33,444,888 | 531,254 | 16 | Bahrain |
| Commercial Bank of Qatar | 31,772,623 | 533,026 | 17 | Qatar |
| Abu Dhabi Islamic Bank | 30,466,595 | 476,638 | 18 | UAE |
| Arab Banking Corporation | 29,356,000 | 318,000 | 19 | Bahrain |
| Mashreq Bank | 28,815,758 | 676,904 | 20 | UAE |
| Burgan Bank | 26,446,308 | 248,055 | 21 | Kuwait |
| Qatar Islamic Bank | 26,402,875 | 458,393 | 22 | Qatar |
| Saudi Hollandi Bank | 25,765,125 | 485,576 | 23 | KSA |
| Union National Bank | 25,446,023 | 550,102 | 24 | UAE |
| Bank Muscat | 25,268,333 | 423,966 | 25 | Oman |
By Darren Stubing
