Gulf banks’ profit up 14.9%
Led by UAE banks, GCC lenders recorded strong growth in profits in the last 2012 quarter on robust volumes and lower provisions, a banking study revealed.
Profits of 22 major banks across the GCC tracked by Kuwait-based Global Investment House, or GIH, surged 14.9 per cent in the fourth quarter to $4 billion, with UAE-based banks registering the strongest growth of 43.1 per cent, followed by Kuwait with 25.4 per cent, GIH analysts Faisal Hasan and Naveed Ahmed said in the report.
Profits of banks in Saudi Arabia and Qatar increased by 7.5 per cent and 2.1 per cent, respectively.
Among UAE banks, profits of National Bank of Abu Dhabi, or NBAD, surged 54.7 per cent during the last quarter on a strong increase in investment income and a significant decline in provision costs. Net profits of Emirates NBD soared three times during the period.
Other banks in the GCC region that reported strong growth in profits include Abu Dhabi Commercial Bank (19.2 per cent), Banque Saudi Fransi (22.2 per cent), Saudi British Bank (24.4 per cent), Saudi Hollandi Bank (35.5 per cent), Kuwait Finance House (23.4 per cent) and Commercial Bank of Qatar (18.9 per cent).
Those which reported a decline included Qatar Islamic Bank (56.6 per cent) and Samba Financial Corporation (7.9 per cent).
The GIH analysts said loan book growth among GCC banks remained strong, with net loans increasing 14 per cent to $590.2 billion.
Qatar witnessed the highest increase in loan book growth at 26.5 per cent, followed by Kuwait (19.2 per cent) and Saudi Arabia (15 per cent). The growth in Qatar-based banks was due to a significant increase in public sector spending in the run-up to the 2022 Fifa World Cup. On the other hand, a large part of loans growth in Kuwait was on account of consolidation of Boubyan Bank into the National Bank of Kuwait and that of EFG Tefken into Burgan Bank. However, growth in loan book for UAE-based banks remained subdued at 4.3 per cent during the quarter.
Despite strong growth in loan book, net interest income, or NII, of GCC banks increased just 2.5 per cent, as interest spreads remained under pressure. All markets witnessed a modest increase in NII, except the UAE, where it declined by one per cent.
Non-interest income of GCC banks increased significantly on higher investment income and fees and commission income. Non-interest income surged 15.5 per cent, while fees and commission income increased 8.9 per cent. UAE banks posted the strongest growth in non-interest income (up 57.4 per cent) during the quarter. This was due to strong increase in investment income which can be ascribed to better performance of financial markets during the quarter, the GIH report said.
Provision expenses across GCC markets declined, with banks in Kuwait (down 28 per cent) and the UAE (down 27.7 per cent), reporting the highest fall during the quarter. Total assets of GCC banks under GIH’s coverage rose 12.7 per cent to $938.3 billion. Qatar-based banks witnessed the strongest increase in total assets (up 18.1 per cent to $174.8 billion). The asset base of UAE banks expanded by 9.1 per cent despite a subdued growth in loan book.
Saudi Arabia’s Al Rajhi Bank maintained its position for the second year running as the largest Gulf bank by market capitalisation while banks from Qatar, Kuwait and the UAE were among the fourth-largest.
At the end of 2012, Al Rajhi’s market capitalisation stood at around $25.9 billion while Qatar National Bank had the second largest cap of $25.58 billion.
NBK registered a market cap of $14.7 billion at the end of 2012, while NBAD had a cap of around $12.65 billion. Abu Dhabi-based First Gulf Bank came fifth with about $10.9 billion, followed by Saudi American Bank Group with nearly $10.8 billion.
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