BME 100 2016

BME 100

2016 / ISSUE 06

BANKER MIDDLE EAST 100

Dubai Technology and Media Free Zone Authority

2016 www.cpifinancial.net

A CPI Financial Publication

Dubai Technology and Media Free Zone Authority

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CONTENTS

2016 | ISSUE 07

Published by

EAST 100

R MIDDLE E NKE AS BA T

1

BANKER MIDDLE

00

2014 | ISSUE

--------------------------------------------------

05

Chairman SALEH AL AKRABI Chief Executive Officer ROBIN AMLÔT robin@cpifinancial.net Tel: +971 4 391 3723

-------------------------------------------------Finance Director UMAIR AHMED KHAN, ACA umair@cpifinancial.net Tel: +971 4 391 3727

gy and Media

100 ST EA

Dubai Technolo

BANKER MID DL E

Free Zone Authority

ancial.net

www.cpifin

logy and

Dubai Techno

Media Free

Managing Editor GEORGINA ENZER georgina@cpifinancial.net Tel: +971 4 391 3728

ity

10/26/14

2:28 PM

Zone Author

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Contents page 3-4

Data Analyst NADINE ABOUZEID nadine@cpifinancial.net Tel: +972 4 433 5322

5

INTRODUCTION

6

BME 100 RANKINGS

8

METHODOLOGY

10

BME 100 MOVERS

12

CAPITAL ADEQUACY

16

DATA ENVELOPMENT ANALYSIS

20

RETURN ON ASSETS

22

RETURN ON EQUITY

24

Senior Designer FLORANTE MAGSAKAY florante@cpifinancial.net Tel: +971 4 391 3724

LOANS & ADVANCES: COUNTRIES

-------------------------------------------------

28

TOTAL ASSETS

31

Administration & Subscriptions enquiries@cpifinancial.net Tel: +971 4 391 4682 Tel: +971 4 391 3709

TOTAL INCOME

34

NET PROFIT–BY COUNTRY

38

FASTEST GROWING BANKS

www.cpifinancial.net

41

ISLAMIC BANKS

Printed by United Printing & Publishing – Abu Dhabi, UAE

46

GETTING RATED

48

CREDIT RATINGS

50

BLOOM MENA BANKING INDEX

Online Editor MATT AMLÔT matt@cpifinancial.net Tel: +971 4 391 3716 Online Content Manager SIYA PAINAYIL siya@cpifinancial.net Tel: +971 4 391 3722 ------------------------------------------------Sales Directors OMER HUSSAIN omer@cpifinancial.net Tel: +971 4 391 5419

JON DESPRES jon@cpifinancial.net Tel: +971 4 433 5321

------------------------------------------------Chief Designer BUENAVENTURA R. JALUAG, JR. jun@cpifinancial.net Tel: +971 4 391 3719

Head Office P.O. Box 502491 Dubai Media City Dubai, UAE Fax: +971 4 390 9756 Registered at the Dubai Media City

------------------------------------------------© 2016 CPI Financial FZ LLC All rights reserved. No part of this publication may be reproduced or used in any form of advertising without prior permission in writing from the Managing Editor.

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INTRODUCTION

Challenging times

T

he watchword going forward is ‘liquidity’. Perhaps, however, that should be ‘viscosity’. Certainly through 2015 and into 2016 the dominating factor governing the economic performance of the GCC nations in particular was what was happening to the price of oil. Black gold as some know it was performing as if was skiing down a black run!

For the record, the OPEC Basket Price had peaked 3 July 2008 at $140.73/barrel. On 2 January 2015 it was $51.78/barrel; a year later, on 4 January 2016, it stood at $31.79/barrel.

The low point came on 20 January 2016 when the price was $22.48. At the end of Q1 2016 on 31 March 2016, it had recovered to $34.33 and, indeed, since then it has moved further up to trade around $45/barrel. This would appear to be the ‘new normal’ in operation.

Despite valiant efforts over recent years, the energy complex—oil, gas and associated byproducts—continues to be the single most important part of the GCC economies. The downturn in revenues from this sector negatively impacted government incomes at a time when spending commitments remain high while at the same time damaging the broader economies down through job losses and closures within this key area, especially among oil services firms.

It has also led to a downturn in activity within the SME sector, which had been heavily promoted

by governments in the region as, rightly, the economic sector from which diversification would come.

That downturn has had direct impact on a number of financial institutions as a result of lending practices that, in hindsight, may be described gently as ‘optimistic’.

This is the seventh edition of the BME 100 and will be the second year that you will be able to find our tabular data online at www. cpifinancial.net/analytics as well as in print in this publication.

For the first time ever, three banks from the UAE occupy the top three slots in the BME 100: Emirates NBD, Abu Dhabi Commercial Bank and, celebrating its own 40th anniversary in 2015, Dubai Islamic Bank.

The data before you was prepared with a cut-off date for collection of the first week in April in order for the analysis to be completed in time for the Banker Middle East Industry Awards 2016. This did, in fact, result in a small handful of institutions not being included in our analysis because their results were not published until mid-April and even into May. This is an issue we will be addressing next year to improve our analysis still further.

What is clear from the research is the underlying soundness of the broader Middle East banking industry, with an average capital adequacy ratio in 2015 across the nine countries covered in our survey

of 18.2 per cent; well above the levels of capital required by the various regulatory regimes. Of course, it could be argued that this denotes a failure to deploy capital properly but this is not an proposition that stands up against the economic and political uncertainties that many parts of the region face.

However, there was a definite trend that showed larger banks increasing their share of total net profit among the BME 100 at the expense of smaller institutions. This may well be a direct reflection of the economic realities in which banking ‘muscle’ counted for more in the face of tough market conditions.

Nevertheless, our fastest-growing banks in this survey showed an average increase in assets of 16 per cent—a creditable performance albeit significantly down from the average growth rate of 24 per cent recorded in the previous year.

Finally, I would like to offer my thanks to my colleagues Nadine Abouzeid and Umair Ahmed Khan for their work in the compilation and analysis of the date on which this research is based.

ROBIN AMLÔT

Chief Executive Officer, CPI Financial

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BME 100 RANKINGS BME 100 2015 Rank

Institution

Country

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Emirates NBD Abu Dhabi Commercial Bank Dubai Islamic Bank Qatar National Bank First Gulf Bank National Commercial Bank Samba Financial Group Al Rajhi Bank Saudi Hollandi Bank Emirates Islamic Abu Dhabi Islamic Bank National Bank of Kuwait Alinma Bank Arab National Bank Banque Saudi Fransi BLOM Bank Bank Muscat Bank Audi Bank AlJazira Qatar Islamic Bank Ahli United Bank SABB National Bank of Abu Dhabi Mashreq Masraf Al Rayan Al Khalij Commercial Bank (al khaliji) Boubyan Bank National Bank of Umm Al-Qaiwain The National Bank of Ras Al-Khaimah (RAKBANK) National Bank of Oman Bank of Beirut Riyad Bank Burgan Bank Union National Bank National Bank of Bahrain National Bank of Fujairah BBK Ahli Bank Sharjah Islamic Bank Commercial Bank of Dubai Gulf International Bank Doha Bank Kuwait Finance House Bank Dhofar Bank AlBilad Ajman Bank Investcorp Bank The Housing Bank for Trade & Finance Oasis Capital Bank Kuwait International Bank

United Arab Emirates United Arab Emirates United Arab Emirates Qatar United Arab Emirates Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia United Arab Emirates United Arab Emirates Kuwait Saudi Arabia Saudi Arabia Saudi Arabia Lebanon Oman Lebanon Saudi Arabia Qatar Bahrain Saudi Arabia United Arab Emirates United Arab Emirates Qatar Qatar Kuwait United Arab Emirates United Arab Emirates Oman Lebanon Saudi Arabia Kuwait United Arab Emirates Bahrain United Arab Emirates Bahrain Qatar United Arab Emirates United Arab Emirates Bahrain Qatar Kuwait Oman Saudi Arabia United Arab Emirates Bahrain Jordan Bahrain Kuwait

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BME 100 RANKINGS Rank

Institution

Country

51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100

Qatar International Islamic Bank Ahli Bank Oman Oman Arab Bank Barwa Bank Jordan Commercial Bank The Commercial Bank of Qatar Al Ahli Bank of Kuwait Ahli United Bank Kuwait Arab Bank Byblos Bank Bank of Palestine The Saudi Investment Bank Jordan Islamic Bank Kuwait Finance House Bahrain Bank Al-Etihad Addax Bank Gulf Bank Lebanon & Gulf Bank Bank of Sharjah First National Bank Khaleeji Commercial Bank Invest Bank Jordan Warba Bank BMI Bank Bank Sohar Seera Investment Bank Cairo Amman Bank Arab Banking Corporation (Jordan) BLC Bank ABC Islamic Bank Banque Bemo Invest Bank Arab Jordan Investment Bank Eskan Bank Jordan Kuwait Bank Bahrain Islamic Bank Bank AlKhair Investors Bank HSBC Bank Oman Societe Generale de Banque Jordanie Bank Nizwa Bahrain Middle East Bank Commercial Bank of Kuwait Palestine Islamic Bank Bank of Jordan Arab Banking Corporation (Bank ABC) Al Baraka Islamic Bank Quds Bank alizz Islamic Bank Ithmaar Bank

Qatar Oman Oman Qatar Jordan Qatar Kuwait Kuwait Jordan Lebanon Palestine Saudi Arabia Jordan Bahrain Jordan Bahrain Kuwait Lebanon United Arab Emirates Lebanon Bahrain Jordan Kuwait Bahrain Oman Bahrain Jordan Jordan Lebanon Bahrain Lebanon United Arab Emirates Jordan Bahrain Jordan Bahrain Bahrain Bahrain Oman Jordan Oman Bahrain Kuwait Palestine Jordan Bahrain Bahrain Palestine Oman Bahrain

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METHODOLOGY

Data & tools The analytical framework of this report is based on the following headings: • Capital adequacy analysis • Management capability analysis • Earnings analysis • Data envelopment analysis

T

he study is based on secondary data drawn from the annual reports of the respective banks.

Banks with annual reports not published on their websites for the year are not included for analysis for that year. This data is related to the five years from 2011 to 2015. We thus incorporate the growing recovery from the global financial crisis of the previous decade and the slide in the oil price that has troubled regional economies in recent years.

CAPITAL ADEQUACY ANALYSIS Capital adequacy seeks to measure the level of ‘shock absorbing’ capacity available in a bank’s financial position. It is required as a buffer against unforeseen losses and is not a substitute for good management. Expressed as a percentage, the capital adequacy ratio shows the ability of a bank to withstand losses in the value of its assets. Realising the importance

of capital adequacy, the Bank of International Settlements through Basel II requires banks to maintain a minimum of eight per cent of total capital and four per cent of Tier-1 capital against risk-weighted assets.

It is customary for the central bank in each jurisdiction to issue specific guidelines in this regard and stipulate penalties for contravention of this requirement.

In the case of Saudi Arabia, banks are required to adhere to the levels set by Basel II. For computation of the capital adequacy ratio, capital is classified as Tier-1 and Tier-2 capital. Tier-1 capital comprises the equity capital and free reserves, while Tier-2 capital comprises subordinated debt of five to seven year tenure. The higher the institution’s capital adequacy ratio, the stronger the bank; however, a very high ratio indicates that the bank is

conservative and has not utilised the full potential of its capital.

MANAGEMENT CAPABILITY RATIOS The performance of management capacity is usually qualitative and can be understood through the subjective evaluation of management systems, organisation culture, control mechanisms and so on. However, the capacity of the management of a bank may also be gauged with the help of certain ratios. The capability of the management to deploy its resources, maximise the income, utilise the facilities in the bank productively and reduce costs, etc. can be evaluated using the following ratios: • Advances • Total Assets • Deposits • Total Income • Net Profit

EARNINGS OR PROFITABILITY Profitability is an indicator of a bank’s capacity to carry risk and/or increase its capital. It also indicates competitiveness and confirms the quality of management. Profit provides a cushion against short-term problems and is a good source of retained earnings, which increases capital and consequently, the capacity to grow the business.

Supervisors should welcome profitable banks as contributors to the stability of the banking system only after being assured of the quality of the earnings. An income statement, especially the

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METHODOLOGY

common size one, reveals the sources of a bank’s earnings, their quantity, quality and the profile of its expenditures. This statement should serve as a confirmation of a bank’s business orientation.

Return on assets and return on equity are conventional parameters of measuring earnings/profitability.

DATA ENVELOPMENT ANALYSIS In the banking sector, the quest for greater efficiency is neverending as management is always under pressure to improve organisational performance. Banks are constantly seeking better value for shareholders’ money, while the emergence of a more global economy has intensified competitive pressures.

The onus is on management to achieve better results from the resources available to them.

Data Envelopment Analysis (DEA) is a methodology for analysing data. Specifically, DEA is used to identify best practices when multiple performance metrics or measures are present for organisations. It is a ‘data oriented’ approach for evaluating the performance of a set of peer entities called Decision Making Units (DMUs) which convert multiple inputs into multiple outputs. This report employs the DEA model developed by Joe Zhu1.

A DMU can be said to be efficient relative to another if it can produce same level of output with fewer inputs or can produce more output with same or lesser inputs. The efficiency score lies between zero to one and the DMU with the maximum efficiency score of one is known as an efficient DMU.

CURRENCY CALCULATIONS Country

SWIFT CODE

2015 US $1

United Arab Emirates

AED

3.6725

Bahrain

BHD

0.376

Jordan

JOD

0.709

Kuwait

KWD

0.3034

Lebanon

LBP

Oman

OMR

0.3845

Qatar

QAR

3.64

Saudi Arabia

SAR

3.75

Palestine

USD

1.00

1507.5

Sources: Central Banks Of the nine countries covered by the BME 100, Palestine uses the US dollar (USD or $) as its currency while of the other eight all but one have pegged their currency value against the dollar. The Kuwaiti Dinar (KWD) is pegged to an undisclosed weighted basket of international currencies of Kuwait’s major trade and financial partner countries (Decree No. 147/2007). Although the make-up of the KWD basket peg has never been officially disclosed, it has been widely estimated to be roughly 70 per cent dollar with the rest made up of EUR (20 per cent), GBP (five per cent) and JPY (five per cent).

BANKS IN THE BME 100 Country

2015

2014

Movement

Bahrain

20

18

+2

UAE

17

21

-4

Saudi Arabia

12

12

0

Jordan

12

13

-1

Kuwait

10

10

0

Qatar

9

10

-1

Oman

9

8

+1

Lebanon

8

6

+2

Palestine

3

2

+1

Bahrain dominates the BME 100 by number of institutions, with 20 banks in the top 100. The UAE falls to second place with just 17, dropping from 21 the previous year. It should be noted that this loss of four UAE institutions from the index likely reflects the late publication of their results rather than absolute underperformance in comparison with their peers.

Zhu is Professor of Operations in the School of Business, Worcester Polytechnic Institute, Massachusetts, USA. He earned his PhD in Industrial Engineering from University of Massachusetts at Amherst in 1998. He is an internationally recognised expert in methods of performance evaluation and benchmarking, and his research interests are in the areas of operations and business analytics, productivity modelling, and performance evaluation and benchmarking. He has published and co-edited several books focusing on performance evaluation and benchmarking using Data Envelopment Analysis (DEA).

1Joe

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BME 100 MOVERS MOVERS AND SHAKERS Bank National Bank of Umm Al-Qaiwain Kuwait International Bank Bank AlJazira Jordan Islamic Bank Oasis Capital Bank Bank of Sharjah National Bank of Bahrain Ahli United Bank Bank of Palestine Invest Bank Jordan Al Khalij Commercial Bank (al khaliji) Bank Dhofar Al Rajhi Bank Emirates Islamic Jordan Commercial Bank BLOM Bank Masraf Al Rayan Ahli Bank Oman Al Ahli Bank of Kuwait Lebanon & Gulf Bank National Bank of Oman Ajman Bank Arab Banking Corporation (Jordan) BBK Khaleeji Commercial Bank Boubyan Bank Bank Al-Etihad Banque Bemo Alinma Bank Bank of Beirut National Bank of Kuwait Ahli Bank Bank Muscat Abu Dhabi Commercial Bank The National Bank of Ras Al-Khaimah (RAKBANK) Gulf Bank Samba Financial Group Saudi Hollandi Bank Bank Audi Qatar Islamic Bank Societe Generale de Banque Jordanie Bank Nizwa Abu Dhabi Islamic Bank Emirates NBD National Commercial Bank Sharjah Islamic Bank Investcorp Bank Oman Arab Bank Warba Bank Eskan Bank

Country United Arab Emirates Kuwait Saudi Arabia Jordan Bahrain United Arab Emirates Bahrain Bahrain Palestine Jordan Qatar Oman Saudi Arabia United Arab Emirates Jordan Lebanon Qatar Oman Kuwait Lebanon Oman United Arab Emirates Jordan Bahrain Bahrain Kuwait Jordan Lebanon Saudi Arabia Lebanon Kuwait Qatar Oman United Arab Emirates United Arab Emirates Kuwait Saudi Arabia Saudi Arabia Lebanon Qatar Jordan Oman United Arab Emirates United Arab Emirates Saudi Arabia United Arab Emirates Bahrain Oman Kuwait Bahrain

Rank 2015 28 50 19 63 49 69 35 21 61 72 26 44 8 10 55 16 25 52 57 68 30 46 78 37 71 27 65 81 13 31 12 38 17 2 29 67 7 9 18 20 90 91 11 1 6 39 47 53 73 84

Rank 2014 81 93 57 97 79 99 64 49 89 100 52 68 30 32 76 36 45 69 73 83 44 58 90 48 82 37 75 91 22 40 20 46 24 8 35 72 12 14 23 25 95 96 15 4 9 42 50 56 74 85

Change +53 +43 +38 +34 +30 +30 +29 +28 +28 +28 +26 +24 +22 +22 +21 +20 +20 +17 +16 +15 +14 +12 +12 +11 +11 +10 +10 +10 +9 +9 +8 +8 +7 +6 +6 +5 +5 +5 +5 +5 +5 +5 +4 +3 +3 +3 +3 +3 +1 +1

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BME 100 MOVERS

Bank Burgan Bank Qatar International Islamic Bank Bahrain Islamic Bank Dubai Islamic Bank Qatar National Bank Arab National Bank HSBC Bank Oman First Gulf Bank Ahli United Bank Kuwait The Housing Bank for Trade & Finance Jordan Kuwait Bank National Bank of Fujairah Banque Saudi Fransi Cairo Amman Bank Quds Bank SABB Kuwait Finance House Byblos Bank Doha Bank Bahrain Middle East Bank Barwa Bank Bank Sohar National Bank of Abu Dhabi Mashreq Union National Bank Bank AlBilad Arab Jordan Investment Bank Commercial Bank of Dubai Invest Bank Riyad Bank The Saudi Investment Bank The Commercial Bank of Qatar Ithmaar Bank Arab Bank Bank of Jordan Al Baraka Islamic Bank Commercial Bank of Kuwait Arab Banking Corporation (Bank ABC) Gulf International Bank Kuwait Finance House Bahrain Addax Bank First National Bank BMI Bank Seera Investment Bank BLC Bank ABC Islamic Bank Bank AlKhair Investors Bank Palestine Islamic Bank alizz Islamic Bank

Country Kuwait Qatar Bahrain United Arab Emirates Qatar Saudi Arabia Oman United Arab Emirates Kuwait Jordan Jordan United Arab Emirates Saudi Arabia Jordan Palestine Saudi Arabia Kuwait Lebanon Qatar Bahrain Qatar Oman United Arab Emirates United Arab Emirates United Arab Emirates Saudi Arabia Jordan United Arab Emirates United Arab Emirates Saudi Arabia Saudi Arabia Qatar Bahrain Jordan Jordan Bahrain Kuwait Bahrain Bahrain Bahrain Bahrain Lebanon Bahrain Bahrain Lebanon Bahrain Bahrain Bahrain Palestine Oman

Rank 2015 33 51 86 3 4 14 89 5 58 48 85 36 15 77 98 22 43 60 42 92 54 75 23 24 34 45 83 40 82 32 62 56 100 59 95 97 93 96 41 64 66 70 74 76 79 80 87 88 94 99

Rank 2014 33 51 86 2 3 13 87 1 54 43 80 29 5 67 88 11 31 47 28 78 39 59 6 7 17 27 65 21 61 10 26 18 62 19 55 53 38 34 new entry new entry new entry new entry new entry new entry new entry new entry new entry new entry new entry new entry

Change 0 0 0 -1 -1 -1 -2 -4 -4 -5 -5 -7 -10 -10 -10 -11 -12 -13 -14 -14 -15 -16 -17 -17 -17 -18 -18 -19 -21 -22 -36 -38 -38 -40 -40 -44 -55 -62 new entry new entry new entry new entry new entry new entry new entry new entry new entry new entry new entry new entry

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CAPITAL ADEQUACY

Capital adequacy ratios

O

ur capital adequacy analysis shows that Middle East banks have managed to keep an average margin of 17 per cent across the five years between 2011 to 2015, with the Bahraini banking sector continuously topping the list at 28 per cent in 2015 and an average of 31.1 per cent over the five year period, proving that regional banks are some of the safest in the world.

The table shows a mixture of both a stable and downward trend, with banks in Bahrain, Lebanon and Palestine increasing their average capital adequacy ratio (CAR). Banks in Jordan and Saudi Arabia saw their average CARs hold steady while banks in Oman, UAE, Kuwait and Qatar saw theirs drop.

It should be noted that the minimum requirement of BASEL II for capital adequacy is eight per cent. Under Basel III proposals, a bank’s tier 1 and tier 2 capital is required to be at least eight per cent of its risk-weighted assets while he minimum capital adequacy ratio (including the capital conservation buffer) is 10.5 per cent.

Capital adequacy ratios – country analysis Country

2015

2014

2013

2012

2011

Average

Bahrain

28.0 %

27.3 %

26.4 %

38.0 %

35.6 %

31.1 %

Oman

20.1 %

28.2 %

15.7 %

15.4 %

15.1 %

17.3 %

United Arab Emirates

19.1 %

19.4 %

20.1 %

22.1 %

21.4 %

20.4 %

Kuwait

18.1 %

19.1 %

18.9 %

19.7 %

19.6 %

19.1 %

Saudi Arabia

17.8 %

17.8 %

18.0 %

18.7 %

19.6 %

18.4 %

Jordan

17.4 %

17.4 %

16.5 %

16.9 %

16.3 %

16.9 %

Qatar

15.7 %

16.7 %

17.1 %

18.1 %

21.2 %

17.8 %

Lebanon

14.0 %

13.5 %

12.6 %

13.5 %

12.9 %

13.3 %

Palestine

14.0 %

13.1 %

N/A

10.0 %

19.1 %

14.9 %

Table 1: Average capital adequacy ratios (%) across Middle Eastern banks between 2011 – 2015

Average Capital Adequacy Ratios in 2015

Average Capital Adequacy Ratios in 2015 28%

14%

14%

Lebanon Palestine

16%

Qatar

17%

18%

18%

Jordan

Saudi Arabia

Kuwait

20%

19%

United Arab Emirates

Oman

Bahrain

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CAPITAL ADEQUACY

CAPITAL ADEQUACY RATIOS BEST BANKS

Only four of our nine ‘best banks’ showed CARs higher than the average CAR of their country of domicile. This broadly suggests that smaller banks are likely to maintain a higher level of capital when compared to larger institutions. It may also be indicative of the fact that larger institutions, simply by being larger, are more comfortable in deploying their capital.

Capital Adequacy Ratios (%) of Best Banks in Middle East 2015

Capital Adequacy Ratios (%) of Best Banks in Middle East 2015

20.7%

Emirates NBD

17.6%

BLOM Bank

17.2%

17.0%

16.8%

National The Housing Commercial Bank for Bank Trade & Finance

National Bank of Kuwait

2015

16.7%

Ahli United Bank

16.3%

Qatar National Bank

16.1%

14.5%

Bank Muscat

Bank of Palestine

5-year-Average

The table belows show the capital adequacy levels in per centage of the best banks in the Middle East by country since 2011:

Bank

Country

Bank CAR 2015

Average CAR

Qatar National Bank

Qatar

16.30%

15.73%

Difference 0.57%

Emirates NBD

United Arab Emirates

20.74%

19.08%

1.66%

National Commercial Bank

Saudi Arabia

17.20%

17.78%

-0.58%

National Bank of Kuwait

Kuwait

16.80%

18.06%

-1.26%

Bank Muscat

Oman

16.10%

20.14%

-4.04%

Ahli United Bank

Bahrain

16.70%

27.98%

-11.28%

BLOM Bank

Lebanon

17.64%

14.00%

3.64%

The Housing Bank for Trade & Finance

Jordan

17.03%

17.43%

-0.40%

Bank of Palestine

Palestine

14.46%

14.00%

0.46%

Bank

Country

2015

2014

2013

2012

2011

Qatar National Bank

Qatar

16.3%

16.2%

15.6%

21.0%

22.0%

Emirates NBD

United Arab Emirates

20.7%

21.1%

19.6%

20.6%

20.5%

National Commercial Bank

Saudi Arabia

17.2%

17.2%

17.1%

17.5%

18.2%

National Bank of Kuwait

Kuwait

16.8%

14.5%

17.3%

18.3%

18.3%

Bank Muscat

Oman

16.1%

15.9%

16.5%

16.3%

15.9%

Ahli United Bank

Bahrain

16.7%

15.5%

16.2%

15.6%

16.0%

BLOM Bank

Lebanon

17.6%

17.0%

16.8%

16.2%

12.9%

The Housing Bank for Trade & Finance Jordan

17.0%

18.1%

19.1%

18.8%

20.1%

Bank of Palestine

14.5%

13.1%

13.9%

-

-

Palestine

cont. overleaf

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CAPITAL ADEQUACY

cont. from pg13

Highest Capital Adequacy Ratios (%) – by Country Bahrain

Rank in BME 100

CAR %

Eskan Bank Bank AlKhair National Bank of Bahrain Investcorp Bank Seera Investment Bank

84 87 35 47 76

152 % 52 % 30 % 29 % 27 %

Kuwait

Rank in BME 100

CAR %

Warba Bank Kuwait International Bank Commercial Bank of Kuwait Ahli United Bank Kuwait Boubyan Bank

73 50 93 58 27

Oman

Rank in BME 100

Bank Nizwa alizz Islamic Bank HSBC Bank Oman National Bank of Oman Bank Muscat

91 99 89 30 17

26 % 22 % 18 % 17 % 17 %

CAR % 36 % 35 % 19 % 18 % 16 %

Saudi Arabia

Rank in BME 100

Alinma Bank Al Rajhi Bank Samba Financial Group Riyad Bank SABB

13 8 7 32 22

Qatar Masraf Al Rayan Qatar International Islamic Bank Barwa Bank Ahli Bank Qatar National Bank

Rank in BME 100 25 51 54 38 4

CAR % 19 % 17 % 17 % 16 % 16 %

UAE National Bank of Umm Al-Qaiwain The National Bank of Ras Al-Khaimah (RAKBANK) Sharjah Islamic Bank Bank of Sharjah Emirates NBD

Rank in BME 100 28 29 39 69 1

CAR % 35 % 24 % 22 % 21 % 21 %

Jordan

Rank in BME 100

CAR %

Societe Generale de Banque Jordanie Jordan Islamic Bank Arab Banking Corporation (Jordan) Jordan Kuwait Bank Invest Bank Jordan

90 63 78 85 72

Lebanon

Rank in BME 100

BLOM Bank Bank Audi

16 18

Palestine

Rank in BME 100

Bank of Palestine Palestine Islamic Bank

61 94

CAR % 23 % 21 % 20 % 18 % 18 %

26 % 21 % 20 % 18 % 17 %

CAR % 18 % 12 %

CAR % 14 % 14 %

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THE BUSINESS OF BANKING Banker Middle East is the MENA region’s most prestigious financial title. Read by senior bankers & financiers across the Middle East, for more than a decade it has been the most informative source of news, developments and strategic thought from within the financial community.

Banker Middle East is a controlled circulation publication.

You may apply to subscribe via our website or by emailing subscriptions@cpifinancial.net

CPI Financial FZ LLC • PO Box 502491 Al Shatha Tower, Office 1209 Dubai Media City, Dubai, U.A.E. Tel: +971 (0) 4 391 4681 • Fax: +971 (0) 4 390 9576 • www.cpifinancial.net BME_ June 2016.indd 1

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DATA ENVELOPMENT ANALYSIS

Benchmarking efficiency D

ata envelopment analysis compares the relative efficiency of organisational ‘units’ such as banks where units perform similar tasks. These units utilise similar resources, referred to as inputs, to generate similar outputs. DEA converts the multiple inputs and outputs into a single measure of productive efficiency. By doing so, it identifies those units (Decision making units or DMUs) which are operating relatively efficiently and those which are not.

The efficient units, those making best use of resources, are rated as being 100 per cent efficient (with a score of one) whilst the inefficient ones obtain lower scores (less than 1).

DMUs – Countries: Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, Lebanon, Jordan, Oman and Palestine.

DMUs – Best Banks in each country: National Commercial Bank, Emirates NBD, Qatar National Bank, National Bank of Kuwait, Ahli United Bank, BLOM Bank, The Housing Bank for Trade & Finance, Bank Muscat and Bank of Palestine.

DEA consists of a linear programming technique used to find the set of coefficients that will give the highest possible efficiency ratio of outputs to inputs for the service unit being evaluated. For space purposes, this report shall not detail the complex mathematical formulas used to arrive at the results.

In our report, we used the following as inputs, outputs and DMUs:

COUNTRY ANALYSIS

INPUTS: Total assets Equity Customer Deposits Operational Expenditure

Country

Saudi Arabia United Arab Emirates Qatar Kuwait Bahrain Lebanon Jordan Oman Palestine

VS.

OUTPUTS: Net Profit Net Profit Loans & Advances Operational Income

Total Assets (‘000 USD)

578,754,063 554,374,593 310,466,132 231,992,343 129,708,033 122,460,334 88,620,334 73,571,855 4,264,575

ANALYSIS 1 - Total assets vs. net profit We use total assets as input and net profit as output to analyse which country’s banks, on average most effectively utilised their assets in order to maximise net profit in 2015. Results show that Saudi Arabian banks were the most efficient (second most efficient last year) in utilising total assets to maximise net profit in 2015. The UAE was second while Qatar was third.

Net Profit (‘000 USD)

11,669,939 10,516,584 5,769,749 2,586,740 1,469,640 1,284,980 1,008,879 959,998 61,220

Rank 1 2 3 4 5 6 7 8 9

Country

Saudi Arabia United Arab Emirates Qatar Palestine Oman Jordan Bahrain Kuwait Lebanon

Efficiency

1.00000 0.94080 0.92165 0.71194 0.64712 0.56459 0.56191 0.55297 0.52039

ANALYSIS 2 - Total Equity vs. Net Profit We use total equity as input and net profit as output to analyse which country’s most effectively utilised their shareholders’ equity to maximise net profit in 2015. Results show that UAE banks were the most efficient in utilising shareholders’ equity to maximise net profit in 2015 with Saudi Arabia second and Lebanon third.

Country

Saudi Arabia United Arab Emirates Qatar Kuwait Bahrain Lebanon Jordan Oman Palestine

Total Equity (‘000 US$) Net Profit (‘000 US$) 83,640,346 75,139,868 86,703,124 28,925,821 25,086,447 11,086,870 16,258,344 9,786,856 820,526

11,669,939 10,516,584 5,769,749 2,586,740 1,469,640 1,284,980 1,008,879 959,998 61,220

Rank 1 2 3 4 5 6 7 8 9

Country

United Arab Emirates Saudi Arabia Lebanon Oman Kuwait Palestine Qatar Jordan Bahrain

Efficiency

1.00000 0.99689 0.82810 0.70085 0.63894 0.53309 0.47546 0.44336 0.41857

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DATA ENVELOPMENT ANALYSIS

ANALYSIS 3 - Customer deposits vs. loans & advances

We use customer deposits as inputs and loans & advances as output to analyse which country was the most efficient in utilising deposits (liabilities) to generate loans (assets) in 2015. Results show that Qatari banks remain the most efficient in turning customer deposits into loans and advances, followed by Kuwait and Oman, knocking Bahrain out of the top three for 2015.

Country Saudi Arabia United Arab Emirates Qatar Kuwait Lebanon Bahrain Jordan Oman Palestine

Customer Deposits (‘000 US$)

442,834,200 369,619,804 164,224,135 130,874,038 101,388,103 68,323,902 58,139,993 48,452,585 2,925,456

Loans & Advances (‘000 US$)

365,095,994 345,394,566 214,556,912 135,916,760 39,230,192 61,088,656 38,683,642 49,365,471 2,267,560

Rank 1 2 3 4 5 6 7 8 9

Country

Qatar Kuwait Oman United Arab Emirates Bahrain Saudi arabia Palestine Jordan Lebanon

Efficiency

1.00000 0.79490 0.77847 0.71524 0.68436 0.63105 0.59328 0.50927 0.29616

ANALYSIS 4 - Operational Expenditure vs. Operational Income We use operational expenditure as input and operational income as output to analyse which country was the most efficient in utilising operational expenditure (such as staff expenses) to generate income in 2015. In 2015, Qatari banks were the most efficient in employing their expenditure to maximise income.

Country United Arab Emirates Saudi arabia Kuwait Qatar Bahrain Jordan Lebanon Oman Palestine

Operational Operational Expenditures (‘000 US$) Income (‘000 US$) 11,266,048 9,803,218 5,646,500 4,574,513 2,655,543 2,598,029 2,225,856 1,528,324 150,581

21,782,631 21,473,156 8,233,240 10,344,262 4,125,183 3,606,907 3,510,837 2,488,322 211,801

Rank 1 2 3 4 5 6 7 8 9

Country Qatar Saudi Arabia United Arab Emirates Oman Lebanon Bahrain Kuwait Palestine Jordan

Efficiency 1.00000 0.96866 0.85504 0.72001 0.69752 0.68697 0.64482 0.62202 0.61395

OVERALL EFFICIENCY

We aggregated the results of all of the above efficiency tests to arrive at the final combined score of the most efficient country overall in the Middle East in 2015. The most efficient banks overall in the Middle East in 2015 were those of Saudi Arabia, with the Qatar in second and the UAE third.

Country

Assets Vs. Net Profit

Equity Vs. Net Profit

Deposits VS. Loans

Expenses VS. Income

Total

Saudi Arabia

1.00000

0.99689

0.63105

0.96866

3.59660

Qatar

0.92165

0.47546

1.00000

1.00000

3.39711

United Arab Emirates

0.94080

1.00000

0.71524

0.85504

3.51108

Oman

0.64712

0.70085

0.77847

0.72001

2.84645

Palestine

0.71194

0.53309

0.59328

0.62202

2.46033

Kuwait

0.55297

0.63894

0.79490

0.64482

2.63163

Jordan

0.56459

0.44336

0.50927

0.61395

2.13117

Lebanon

0.52039

0.82810

0.29616

0.69752

2.34217

Bahrain

0.56191

0.41857

0.68436

0.68697

2.35181 cont. overleaf

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DATA ENVELOPMENT ANALYSIS

cont. from pg17

PEER ANALYSIS OF BEST BANKS

ANALYSIS 1 - total assets vs. net profit We use total assets as input and net profit as output to analyse which bank most effectively utilised it assets in order to maximise net profit compared to its peers in 2015. Results show that Qatar National Bank is the most efficient in utilising its assets to maximise net profit in 2015, with last year’s leader, FGB out of the rankings completely. National Commercial Bank was second and Emirates NBD third.

Total Assets (‘000 US$) Net Profit (‘000 US$)

Bank Qatar National Bank National Commercial Bank Emirates NBD National Bank of Kuwait Ahli United Bank Bank Muscat BLOM Bank The Housing Bank for Trade & Finance Bank of Palestine

147,968,995 119,824,114 110,703,928 77,777,291 33,965,317 32,625,563 29,096,549 11,174,469

3,112,298 2,439,581 1,939,760 977,320 566,610 456,309 404,659 175,921

2,785,203

43,167

Rank Bank 1 2 3 4 5

6 7 8 9

Qatar National Bank National Commercial Bank Emirates NBD Ahli United Bank The Housing Bank for Trade & Finance Bank of Palestine Bank Muscat BLOM Bank National Bank of Kuwait

Efficiency

1.00000 0.96797 0.83306 0.79312 0.74848

0.73687 0.66495 0.66121 0.59741

ANALYSIS 2 - total equity vs. net profit We use total equity as input and net profit as output to analyse which country most effectively utilised their shareholders’ equity to maximise net profit in 2015. Qatar National Bank took first place by this measure, followed by National Commercial Bank and BLOM Bank.

Bank Qatar National Bank National Commercial Bank Emirates NBD National Bank of Kuwait Ahli United Bank Bank Muscat BLOM Bank The Housing Bank for Trade & Finance Bank of Palestine

Total Equity (‘000 US$)

Net Profit (‘000 US$)

17,048,186 14,812,149 13,818,523 10,517,877 4,360,214 3,633,183 2,723,009 1,465,924

3,112,298 2,439,581 1,939,760 977,320 566,610 456,309 404,659 175,921

305,756

43,167

Rank Bank 1 2 3 4 5 6 7 8

9

Qatar National Bank National Commercial Bank BLOM Bank Bank of Palestine Emirates NBD Ahli United Bank Bank Muscat The Housing Bank for Trade & Finance National Bank of Kuwait

Objective Value

1.00000 0.90218 0.81402 0.77335 0.76892 0.71183 0.68797 0.65736

0.50899

ANALYSIS 3 - customer deposits vs. loans & advances We use customer deposits as inputs and loans & advances as output to analyse which bank was the most efficient in utilising deposits (liabilities) to generate loans (assets) in 2015. National Bank of Kuwait proved to be the most efficient followed by Bank Muscat and Qatar National Bank.

Bank Qatar National Bank National Commercial Bank Emirates NBD National Bank of Kuwait BLOM Bank Ahli United Bank Bank Muscat The Housing Bank for Trade & Finance Bank of Palestine

Customer Deposits (‘000 US$)

108,568,764 86,208,606

Loans & Advances (‘000 US$)

106,673,662 67,074,941

78,211,547 39,746,878 24,958,352 23,495,227 19,150,710 8,194,293

73,677,565 44,663,698 7,193,668 19,353,181 19,064,278 4,929,035

2,153,617

1,388,805

Rank

Bank

1 2 3 4 5 6 7 8

National Bank of Kuwait Bank Muscat Qatar National Bank Emirates NBD Ahli United Bank National Commercial Bank Bank of Palestine The Housing Bank for Trade & Finance BLOM Bank

9

Objective Value

1.00000 0.88590 0.87438 0.83833 0.73303 0.69240 0.57388 0.53530 0.25650

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DATA ENVELOPMENT ANALYSIS

ANALYSIS 4 - operational expenditure vs. operational income We use operational expenditure as input and operational income as output to analyse which country’s bank was the most efficient in utilising operational expenditure (such as staff expenses) to generate income in 2015. Qatar National Bank was the most efficient in utilising expenditure to maximise income, followed by National Commercial Bank and Ahli United Bank.

Bank

Operational Operational Income Expenditures (‘000 US$) (‘000 US$)

National Commercial Bank Emirates NBD National Bank of Kuwait Qatar National Bank Bank Muscat Ahli United Bank BLOM Bank The Housing Bank for Trade & Finance Bank of Palestine

2,223,271

4,662,852

2,252,050 1,424,647 1,357,036 604,122 525,337 432,002 312,470

4,191,810 2,401,968 4,469,334 1,060,432 1,091,947 836,661 488,391

93,620

136,787

Rank Bank 1 2 3 4 5 6 7 8 9

Efficiency

Qatar National Bank National Commercial Bank Ahli United Bank BLOM Bank Emirates NBD Bank Muscat National Bank of Kuwait The Housing Bank for Trade & Finance Bank of Palestine

1.00000 0.63681 0.63112 0.58805 0.56516 0.53297 0.51193 0.47458 0.44364

OVERALL EFFICIENCY We aggregated the results of all of the above efficiency tests to arrive at the final combined score of the most efficient bank overall in the Middle East in 2015. The most efficient bank overall in the Middle East in 2015 was Qatar National Bank (for the second year running), with National Commercial Bank second and Emirates NBD third.

Banks Qatar National Bank National Commercial Bank Emirates NBD Ahli United Bank The Housing Bank for Trade & Finance Bank of Palestine Bank Muscat BLOM Bank National Bank of Kuwait

Assets Vs. Net Profits 1.00000 0.96797 0.83306 0.79312 0.74848 0.73687 0.66495 0.66121 0.59741

Equity Vs. Net Profits 1.00000 0.90218 0.76892 0.71183 0.65736 0.77335 0.68797 0.81402 0.50899

Deposits VS. Loans 0.87438 0.69240 0.83833 0.73303 0.53530 0.57388 0.88590 0.25650 1.00000

Expenses VS. Income 1.00000 0.63681 0.56516 0.63112 0.47458 0.44364 0.53297 0.58805 0.51193

Total 3.87438 3.19936 3.00547 2.86909 2.41572 2.52774 2.77179 2.31978 2.61833

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EARNINGS & PROFITABILITY

Return on assets Our analysis saw Bahrain top the list of highest ROA average across the Middle East in 2015, for the second year in a row.

B

ahrain’s banks managed to grow their ROA margins by over one per cent yearon-year, the highest in the region, and also had the highest five-year average at 2.10 per cent (1.71 last year). Elsewhere, with the exceptions of Saudi Arabia and Kuwait, returns declined slightly.

However, the Middle East annual average rose in 2015 to 1.59 from 1.50 per cent in 2014, dragged higher by the outperformance of Bahrain’s banking sector.

The return on assets ratio is one of the two main profitability ratios widely used by banks (the other is return on equity). In last year’s issue, we anticipated the decline in the region’s average ROA rate to stop, as banks in the region start to show signs of improvement in strength and profitability.

Country Bahrain United Arab Emirates Saudi Arabia Qatar Jordan Palestine Lebanon Kuwait Oman Average

2015

2014

2013

2012

2011

5-year average

3.46 1.95 1.92 1.74 1.35 1.34 0.96 0.95 0.63 1.59

2.25 1.97 1.85 1.88 1.44 1.37 0.97 0.92 0.83 1.50

1.33 1.79 1.87 1.81 -0.77 1.10 0.97 0.81 1.57 1.16

1.59 1.60 1.96 2.03 1.26 1.41 0.90 0.91 1.73 1.49

1.89 1.82 1.80 2.38 1.27 2.05 1.02 0.95 1.36 1.62

2.10 1.83 1.88 1.97 0.91 1.45 0.96 0.91 1.22 1.47

Return on assets (%) averages across the Middle East during 2011-2015

The table below shows the return on assets of the best banks in each country in 2015:

Best Bank

Country

ROA ( %) in 2015

Ahli United Bank Emirates NBD National Commercial Bank Qatar National Bank Bank Muscat National Bank of Kuwait Bank of Palestine The Housing Bank for Trade & Finance

Bahrain United Arab Emirates Saudi Arabia Qatar Oman Kuwait Palestine Jordan

1.67 % 1.75 % 2.04 % 2.10 % 1.40 % 1.26 % 1.55 % 1.57 %

BLOM Bank

Lebanon

1.39 %

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EARNINGS & PROFITABILITY Top banks by return on assets ratio (%) – by country Bahrain

Rank in BME 100

Oasis Capital Bank Addax Bank Investcorp Bank Investors Bank Bahrain Middle East Bank

49 66 47 88 92

Kuwait

Rank in BME 100

Burgan Bank National Bank of Kuwait Kuwait Finance House Commercial Bank of Kuwait Boubyan Bank

33 12 43 93 27

Oman

Rank in BME 100

National Bank of Oman Oman Arab Bank Ahli Bank Oman Bank Muscat Bank Dhofar

30 53 52 17 44

Saudi Arabia

Rank in BME 100

SABB Al Rajhi Bank Samba Financial Group Banque Saudi Fransi National Commercial Bank

22 8 7 15 6

Qatar

Rank in BME 100

Masraf Al Rayan Qatar National Bank Ahli Bank Qatar International Islamic Bank Doha Bank

25 4 38 51 42

UAE

Rank in BME 100

National Bank of Umm Al-Qaiwain The National Bank of Ras Al-Khaimah (RAKBANK) First Gulf Bank Dubai Islamic Bank Abu Dhabi Commercial Bank

28 29 5 3 2

Jordan

Rank in BME 100

Bank of Jordan Invest Bank Jordan Cairo Amman Bank The Housing Bank for Trade & Finance Arab Banking Corporation (Jordan)

95 72 77 48 78

Lebanon

Rank in BME 100

BLOM Bank Bank of Beirut Bank Audi Lebanon & Gulf Bank First National Bank

16 31 18 68 70

Palestine

Rank in BME 100

Bank of Palestine Palestine Islamic Bank Quds Bank

61 94 98

Return On Assets % 33.61 % 7.77 % 5.40 % 4.24 % 2.96 %

Return-on Assets % 1.29 % 1.26 % 1.15 % 1.14 % 1.12 %

Return-on Assets % 1.84 % 1.46 % 1.46 % 1.40 % 1.30 %

Return-on Assets % 2.31 % 2.26 % 2.22 % 2.20 % 2.04 %

Return-on Assets % 2.44 % 2.10 % 2.01 % 1.93 % 1.65 %

Return-on Assets % 4.06 % 3.47 % 2.65 % 2.56 % 2.16 %

Return-on Assets % 1.82 % 1.69 % 1.63 % 1.57 % 1.52 %

Return-on Assets % 1.39 % 1.20 % 0.95 % 0.86 % 0.85 %

Return-on Assets % 1.55 % 1.49 % 1.00 %

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EARNINGS & PROFITABILITY

Return on equity Our analysis saw Saudi Arabia top the list of highest ROE average across the Middle East in 2015, for the fourth year in a row.

B

ahrain’s banks managed to grow their ROA margins by over one per cent yearon-year, the highest in the region, and also had the highest five-year average at 2.10 per cent (1.71 last year). Elsewhere, with the exceptions of Saudi Arabia and Kuwait, returns declined slightly.

However, the Middle East annual average rose in 2015 to 1.59 from 1.50 per cent in 2014, dragged higher by the outperformance of Bahrain’s banking sector.

The return on assets ratio is one of the two main profitability ratios widely used by banks (the other is return on equity). The mixed performance of In last year’s issue, we anticipated the decline in the region’s average ROA rate to stop, as banks in the region start to show signs of improvement in strength and profitability.

Country Saudi Arabia United Arab Emirates Lebanon Jordan Palestine Qatar Kuwait Bahrain Oman Average

2015 2014 13.70 13.65 12.73 11.40 10.41 10.61 9.29 9.70 8.94 12.31 8.07 8.94 8.01 7.63 7.91 7.49 7.28 9.72 9.59 11.89

2013 2012 2011 5-year average 13.57 13.85 12.53 13.46 10.72 11.12 10.91 11.38 10.61 9.93 12.25 10.76 5.51 9.24 8.21 8.39 9.96 9.86 17.48 11.71 8.03 11.69 9.45 9.24 5.99 7.02 6.69 7.07 4.26 6.16 5.95 6.35 12.32 14.12 11.03 10.89 11.63 11.63 11.90 11.33

Return on Equity (%) averages across the Middle East during 2011-2015

Average Return on Equity 13.70

12.73 10.41

Saudi Arabia

United Arab Emirates

Lebanon

9.29

Jordan

8.94

Palestine

8.07

8.02

7.91

Qatar

Kuwait

Bahrain

7.28

Oman

2015

The table below shows the return on assets of the best banks in each country in 2015:

Best Bank Qatar National Bank National Commercial Bank BLOM Bank Bank of Palestine Emirates NBD Ahli United Bank Bank Muscat The Housing Bank for Trade & Finance National Bank of Kuwait

Country Qatar Saudi Arabia Lebanon Palestine United Arab Emirates Bahrain Oman Jordan Kuwait

ROE ( %) in 2015 18.26 % 16.47 % 14.86 % 14.12 % 14.04 % 13.00 % 12.56 % 12.00 % 9.29 %

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EARNINGS & PROFITABILITY

Top banks by return-on-equity ratio (%) – by country Bahrain Oasis Capital Bank National Bank of Bahrain BBK Bahrain Middle East Bank Addax Bank

Rank in BME 100

Kuwait Ahli United Bank Kuwait Boubyan Bank Burgan Bank National Bank of Kuwait Kuwait Finance House

Rank in BME 100

Oman Oman Arab Bank Bank Muscat Ahli Bank Oman Bank Sohar National Bank of Oman

Rank in BME 100

Saudi Arabia Bank AlJazira Saudi Hollandi Bank National Commercial Bank SABB Al Rajhi Bank

Rank in BME 100

Qatar Qatar National Bank Ahli Bank Al Khalij Commercial Bank (al khaliji) Doha Bank The Commercial Bank of Qatar

Rank in BME 100

UAE The National Bank of Ras Al-Khaimah (RAKBANK) Abu Dhabi Commercial Bank Dubai Islamic Bank First Gulf Bank Emirates NBD

Rank in BME 100

Jordan Cairo Amman Bank The Housing Bank for Trade & Finance Jordan Commercial Bank Bank of Jordan Arab Jordan Investment Bank

Rank in BME 100

Lebanon BLOM Bank Bank Audi Banque Bemo Bank of Beirut Lebanon & Gulf Bank

Rank in BME 100

Palestine Bank of Palestine Quds Bank Palestine Islamic Bank

Rank in BME 100

49 35 37 92 66 58 27 33 12 43 53 17 52 75 30 19 9 6 22 8 4 38 26 42 56 29 2 3 5 1 77 48 55 95 83 16 18 81 31 68 61 98 94

Return On Equity %

Return-on-Equity %

Return-on-Equity %

Return-on-Equity %

Return-on-Equity %

Return-on-Equity %

Return-on-Equity %

Return-on-Equity %

Return-on-Equity %

33.80% 15.15% 14.80% 14.40% 14.30% 11.86% 10.97% 10.51% 9.29% 9.23% 12.84% 12.56% 12.20% 10.96% 10.61% 17.36% 16.82% 16.47% 15.37% 15.29% 18.26% 14.27% 10.45% 10.40% 8.42% 18.21% 17.15% 16.84% 16.58% 14.04% 13.38% 12.00% 11.42% 10.92% 10.46% 14.86% 12.24% 9.98% 9.65% 9.58% 14.12% 10.42% 2.29%

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MANAGEMENT CAPABILITY RATIOS

Loans & advances Total Loans & Advances by country (US$ ‘000)

Country Saudi Arabia United Arab Emirates Qatar Kuwait Bahrain Oman Lebanon Jordan Palestine

2015

2014

2013

2012

2011

365,095,994 345,394,566 214,556,912 135,916,760 61,088,656 49,279,039 39,230,192 38,683,642 2,267,560

358,697,839 339,308,637 207,810,684 144,783,977 59,913,692 48,051,311 44,288,008 35,977,188 2,553,727

315,036,351 337,357,739 174,825,524 122,782,698 67,719,208 41,224,931 35,861,339 27,230,427 1,619,281

289,813,983 302,140,222 158,783,802 110,969,963 54,816,352 36,799,969 37,597,485 26,403,235 1,412,050

247,791,631 277,293,317 128,474,951 99,021,005 51,159,068 30,771,338 41,407,339 26,783,756 1,084,849

S

audi Arabia topped the list of total loans & advances for the second year running, knocking the UAE off the top spot, where it had been every year since 2009, until 2014. KSA banks have grown their loans & advances portfolios by $6.4 billion in 2015 compared to $6.1 billion by UAE banks. GCC countries have occupied the top five spots since 2011 and were joined by Oman in 2013 when the Omani banking sector overtook that of Lebanon, which witnessed a contraction in loans & advances that year.

Total Loans & Advances by country (US$ ‘000)

Country

2015

2014

2013

2012

2011

Saudi Arabia United Arab Emirates Qatar Kuwait Bahrain Oman Lebanon Jordan Palestine

29.2% 27.6% 17.1% 10.9% 4.9% 3.9% 3.1% 3.1% 0.2%

28.9% 27.3% 16.7% 11.7% 4.8% 3.9% 3.6% 2.9% 0.2%

28.0% 30.0% 15.6% 10.9% 6.0% 3.7% 3.2% 2.4% 0.1%

28.4% 29.7% 15.6% 10.9% 5.4% 3.6% 3.7% 2.6% 0.1%

27.4% 30.7% 14.2% 11.0% 5.7% 3.4% 4.6% 3.0% 0.1%

After falling into second place in 2014 to Saudi Arabia, the UAE remains there for a second year, accounting for 27.6 per cent of the region’s loans portfolio. Saudi Arabia took the top spot with 29.2 per cent, increasing its share 0.3 per cent year-on-year. The UAE still maintain the highest five-year average at 29.06 per cent, with Saudi Arabia second with a five-year average of 28.38 per cent.

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MANAGEMENT CAPABILITY RATIOS

Total Loans & Advances Per Country - 2011 to 2015 (USD Millions)

5-year Average

Millions

23% 1,400

Palestine

1,200

Jordan

14%

13%

Lebanon

1,000

Oman

800

10%

10%

9% 6%

5%

ab Ar es d at te mir i n E

n ai hr

Bahrain

600

Kuwait

400

Qatar

200

United Arab Emirates

0%

Saudi Arabia

2015

2014

2013

2012

2011

r a e ta bi in st ra Qa le iA d Pa u Sa

an

n da or

Om

J

t

i wa

Ku

U

Ba

n

no

ba

Le

In 2015, Qatar, Oman and Bahrain were the top three in terms of percentage growth, but all banks saw a massive contraction in growth rates year-on-year, with Palestine falling from 58 per cent in 2014, to a contraction of more than 11 per cent in 2015. Banks in Jordan saw the strongest growth in loans and advances.

Year-on-Year Average % increase by country

Country

2015

2014

2013

2012

5-Year Average

Saudi Arabia United Arab Emirates Qatar Kuwait Bahrain Oman Lebanon Jordan Palestine

1.8% 1.8% 3.2% -6.1% 2.0% 2.6% -11.4% 7.5% -11.2%

13.9% 0.6% 18.9% 17.9% -11.5% 16.6% 23.5% 32.1% 57.7%

8.7% 11.7% 10.1% 10.6% 23.5% 12.0% -4.6% 3.1% 14.7%

17.0% 9.0% 23.6% 12.1% 7.1% 19.6% -9.2% -1.4% 30.2%

10.3% 5.7% 14.0% 8.6% 5.3% 12.7% -0.4% 10.3% 22.8%

Loans & advances – by ‘Best Bank’

% of Total Loans of Best Banks Bank

Country

Qatar National Bank Emirates NBD National Commercial Bank National Bank of Kuwait Ahli United Bank Bank Muscat BLOM Bank The Housing Bank for Trade & Finance Bank of Palestine

Qatar United Arab Emirates Saudi Arabia Kuwait Bahrain Oman Lebanon Jordan Palestine

Loans & advances US$‘000 106,673,662 73,677,565 67,074,941 44,663,698 19,353,181 19,064,278 7,193,668 4,929,035 1,388,805

2015

2014

8.49% 5.86% 5.34% 3.56% 1.54% 1.52% 0.57% 0.39% 0.11%

8.15% 5.83% 5.17% 3.84% 1.49% 1.64% 0.81% 0.31% 0.14%

The major banks continue to account for a large part of the region’s loans portfolios. Individually, the percentages have barely changed year-on-year, with QNB topping the list at eight per cent for the second year in a row, Emirates NBD second and National Commercial Bank coming third.

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LOANS & ADVANCES – BY ‘BEST BANK’ Top banks by total loans & advances in 2015 – by country

Bahrain

Rank in BME 100

Ahli United Bank Arab Banking Corporation (Bank ABC) Gulf International Bank BBK Ithmaar Bank

21 96 41 37 100

Loans & Advances in 2015 – US$’000

Kuwait

Rank in BME 100

National Bank of Kuwait Kuwait Finance House Burgan Bank Gulf Bank Ahli United Bank Kuwait

12 43 33 67 58

Oman Bank Muscat Bank Dhofar National Bank of Oman Bank Sohar Oman Arab Bank

Rank in BME 100 17 44 30 75 53

Loans & Advances in 2015 – US$’000 19,064,278 7,098,325 6,590,635 4,284,294 3,952,070

Saudi Arabia National Commercial Bank Al Rajhi Bank Riyad Bank Samba Financial Group SABB

Rank in BME 100 6 8 32 7 22

Loans & Advances in 2015 – US$’000 67,074,941 56,058,098 38,579,688 34,618,369 33,446,481

Qatar

Rank in BME 100

Loans & Advances in 2015 – US$’000

Qatar National Bank Qatar Islamic Bank The Commercial Bank of Qatar Masraf Al Rayan Doha Bank

4 20 56 25 42

UAE Emirates NBD National Bank of Abu Dhabi Abu Dhabi Commercial Bank First Gulf Bank Dubai Islamic Bank

Rank in BME 100 1 23 2 5 3

Loans & Advances in 2015 – US$’000 73,677,565 56,069,041 41,845,442 40,780,411 26,472,321

Jordan

Rank in BME 100

Loans & Advances in 2015 – US$’000

Arab Bank The Housing Bank for Trade & Finance Jordan Kuwait Bank Bank Al-Etihad Cairo Amman Bank

59 48 85 65 77

Lebanon

Rank in BME 100

Bank Audi BLOM Bank Byblos Bank Bank of Beirut BLC Bank

18 16 60 31 79

Palestine

Rank in BME 100

Bank of Palestine Palestine Islamic Bank Quds Bank

61 94 98

19,353,181 13,958,000 9,161,400 4,693,614 3,549,443

Loans & Advances in 2015 – US$’000 44,663,698 26,787,993 13,222,297 11,976,239 10,043,319

106,673,662 23,962,063 21,052,082 17,104,795 15,278,897

22,180,987 4,929,035 1,936,230 1,817,417 1,613,879

Loans & Advances in 2015 – US$’000 17,943,313 7,193,668 4,932,285 4,250,496 1,907,605

Loans & Advances in 2015 – US$’000 1,388,805 446,358 432,397

26 www.cpifinancial.net

page 24-26_2016_B Loans&Advances-Banks.indd 26

05/09/2016 15:19

THE BUSINESS OF BANKING Read by senior banks, financiers and business leaders across the continent, Banker Africa is the most informative source of news, developments and strategic thought from within the financial community.

Banker Africa is a controlled circulation publication.You may apply to subscribe via our website or by emailing subscriptions@cpifinancial.net

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28/04/2016 10:19

MANAGEMENT CAPABILITY RATIOS

Total assets Total Assets by Country (US$’000)

Country Saudi Arabia United Arab Emirates Qatar Kuwait Bahrain Lebanon Jordan Oman Palestine Average

2015

2014

2013

2012

2011

578,754,063 554,374,593 310,466,132 231,992,343 129,708,033 122,460,334 88,620,334 73,571,855 4,264,575 232,690,251

559,606,305 498,016,547 278,281,530 233,216,221 126,417,619 117,844,547 85,831,615 62,549,994 3,689,396 218,383,753

499,464,813 476,958,816 257,503,520 200,584,723 146,067,730 106,855,215 60,003,168 54,331,646 3,409,774 200,575,489

457,465,927 426,464,924 214,547,393 179,921,379 115,384,398 96,302,727 58,087,862 50,103,870 2,836,291 177,901,641

401,410,064 404,585,929 180,636,799 159,580,253 106,856,669 88,836,956 57,062,888 41,986,370 2,369,040 160,369,441

S

Total Assets Per Country - 2011-2015 2,500 $bn

audi banks top the list in the total assets category, with total assets amounting to over $578 trillion in 2015. However, the rate of increase in the Saudi banking sector’s total assets slowed significantly from the average increase of $50 billion a year since 2010, to just under $20 billion. Since 2012, Saudi Arabia has outpaced the UAE. Growth in assets in third-placed Qatar outpaced growth in Saudi Arabia in both percentage and absolute terms but in overall size remains far behind the top two.

The combined total assets of Saudi Arabia and the UAE continued to account for 54 per cent of the region’s total in 2015, broadly unchanged from 2014.

Palestine 2,000

Jordan Lebanon

1,500

Oman Bahrain

1,000

Kuwait Qatar

500

United Arab Emirates Saudi Arabia

-

2015

2014

2013

2012

2011

Total Assets by Country (%)

Country

2015

2014

2013

2012

2011

Saudi Arabia United Arab Emirates Qatar Kuwait Bahrain Lebanon Jordan Oman Palestine

27.6% 26.5% 14.8% 11.1% 6.2% 5.8% 4.2% 3.5% 0.2%

28.5% 25.3% 14.2% 11.9% 6.4% 6.0% 4.4% 3.2% 0.2%

27.7% 26.4% 14.3% 11.1% 8.1% 5.9% 3.3% 3.0% 0.2%

28.6% 26.6% 13.4% 11.2% 7.2% 6.0% 3.6% 3.1% 0.2%

27.8% 28.0% 12.5% 11.1% 7.4% 6.2% 4.0% 2.9% 0.2%

28 www.cpifinancial.net

page 28-30_2016 Total Assets.indd 28

05/09/2016 15:24

MANAGEMENT CAPABILITY RATIOS

Total Assets 2015

3.5% 0.2% 4.2%

Saudi Arabia

5.8%

27.6%

United Arab Emirates

6.2%

Qatar Kuwait Bahrain Lebanon

11.1%

Jordan Oman Palestine

26.5%

14.8%

Percentage Increase in Total assets 2015

18% 16% 12%

11%

4%

3%

3%

3% -1%

Oman

Palestine

Qatar

United Arab Emirates

Lebanon

Saudi Arabia

Jordan

Bahrain

Kuwait

cont. overleaf

29 www.cpifinancial.net

page 28-30_2016 Total Assets.indd 29

06/09/2016 16:51

MANAGEMENT CAPABILITY RATIOS cont. from pg 29

Top banks by total assets – by country: Bahrain

Ahli United Bank Arab Banking Corporation (Bank ABC) Gulf International Bank BBK Ithmaar Bank

Kuwait

Rank in BME 100

Total Assets – US$ ‘000

21 96 41 37 100

33,965,317 28,195,000 24,192,400 9,697,981 8,138,641

National Bank of Kuwait Kuwait Finance House Burgan Bank Gulf Bank Al Ahli Bank of Kuwait

12 43 33 67 57

Rank in BME 100

Total Assets – US$ ‘000

Oman

Rank in BME 100

Total Assets – US$ ‘000

Rank in BME 100

Total Assets – US$ ‘000

Rank in BME 100

Total Assets – US$ ‘000

Rank in BME 100

Total Assets – US$ ‘000

Rank in BME 100

Total Assets – US$ ‘000

Bank Muscat Bank Dhofar National Bank of Oman Bank Sohar HSBC Bank Oman

Saudi Arabia

National Commercial Bank Al Rajhi Bank Samba Financial Group Riyad Bank SABB

Qatar

Qatar National Bank Qatar Islamic Bank The Commercial Bank of Qatar Doha Bank Masraf Al Rayan

UAE

National Bank of Abu Dhabi Emirates NBD Abu Dhabi Commercial Bank First Gulf Bank Dubai Islamic Bank

Jordan

Arab Bank The Housing Bank for Trade & Finance Jordan Islamic Bank Jordan Kuwait Bank Cairo Amman Bank

Lebanon

17 44 30 75 89

6 8 7 32 22

4 20 56 42 25 23 1 2 5 3 59 48 63 85 77

77,777,291 54,471,552 22,494,084 17,922,597 14,367,383 32,625,563 9,344,762 8,487,477 5,741,547 5,721,566

119,824,114 84,165,239 62,731,381 59,550,900 50,066,779 147,968,995 34,898,490 33,914,584 22,887,119 22,809,404

110,704,917 110,703,928 62,155,780 61,945,915 40,816,203 49,044,593 11,174,469 5,358,239 4,012,315 3,571,315

Bank Audi BLOM Bank Byblos Bank Bank of Beirut BLC Bank

18 16 60 31 79

Rank in BME 100

Total Assets – US$ ‘000

Palestine

Rank in BME 100

Total Assets – US$ ‘000

Bank of Palestine Quds Bank Palestine Islamic Bank

61 98 94

42,272,153 29,096,549 19,870,856 16,158,196 5,738,800

2,785,203 804,160 675,211

30 www.cpifinancial.net

page 28-30_2016 Total Assets.indd 30

05/09/2016 15:24

MANAGEMENT CAPABILITY RATIOS

Total income Country United Arab Emirates Saudi Arabia Qatar Kuwait Bahrain Jordan Lebanon Oman Palestine Average

2015

2014

2013

2012

2011

21,782,631 21,473,156 10,344,262 8,233,240 4,125,183 3,606,907 3,510,837 2,488,322 211,801 8,419,593

20,217,285 20,281,809 9,621,506 8,120,769 3,838,545 3,481,749 3,388,636 2,263,725 182,933 8,001,990

18,623,683 18,586,111 8,828,718 8,411,171 4,642,483 2,410,961 2,969,739 2,013,638 155,271 7,404,642

16,440,650 17,361,257 7,292,393 8,677,146 4,480,210 3,280,757 3,434,514 1,720,621 122,337 6,978,876

15,115,616 15,770,648 6,866,887 7,661,471 5,113,728 2,473,218 3,206,152 1,523,319 87,876 6,424,324

Total income by country – US$’000

Total Income 2011-2015 80 $ bn

T

he UAE pipped Saudi Arabia again in 2015, claiming the top spot in total income for the year for the third year in a row, growing its income to $22.8 billion compared to $21.5 billion by Saudi banks. The rest of the countries experienced only small growth year-on-year, except for Qatar which has had consistent growth year-on-year. Bahrain bounced back somewhat in 2015 from the contraction seen in 2014 but its banking sector is still showing total income almost $1 billion below the figure recorded in 2011.

Palestine

70

Oman

60

Lebanon

50

Jordan

40

Bahrain

30

Kuwait

20

Qatar

10

Saudi Arabia United Arab Emirates

2015

Country United Arab Emirates Saudi Arabia Qatar Kuwait Bahrain Jordan Lebanon Oman Palestine

2014

2013

2012

2011

2015

2014

2013

2012

2011

28.75% 28.34% 13.65% 10.87% 5.44% 4.76% 4.63% 3.28% 0.28%

28.32% 28.41% 13.48% 11.37% 5.38% 4.88% 4.75% 3.17% 0.26%

27.95% 27.89% 13.25% 12.62% 6.97% 3.62% 4.46% 3.02% 0.23%

26.18% 27.64% 11.61% 13.81% 7.13% 5.22% 5.47% 2.74% 0.19%

26.14% 27.28% 11.88% 13.25% 8.84% 4.28% 5.55% 2.63% 0.15% cont. overleaf

31 www.cpifinancial.net

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14/09/2016 09:10

MANAGEMENT CAPABILITY RATIOS

cont. from pg 31

With their total income combined, the UAE and KSA account for 57 per cent of the all banks’ income in the BME 100, a rate which has held broadly steady in recent years.

Qatar and Kuwait, combined, account for 24 per cent of the total income of the 100 banks, a rate which has been steadily increasing each year.

Total Income 2015

4.63% 4.76%

3.28% 27.6%

5.44%

United Arab Emirates

28.75%

Saudi Arabia Qatar Kuwait

10.87%

Bahrain Jordan Lebanon Oman Palestine

13.65% 28.34%

Top banks by Total Income– by Country Bahrain

Rank in BME 100

Total Income – US$’000

Ahli United Bank

21

1,091,947

Arab Banking Corporation (Bank ABC)

96

729,000

Investcorp Bank

47

381,126

BBK

37

322,181

Gulf International Bank

41

308,000

Kuwait

Rank in BME 100

Total Income – US$’000

Kuwait Finance House

43

2,440,906

National Bank of Kuwait

12

2,401,968

Burgan Bank

33

896,233

Gulf Bank

67

602,871

Al Ahli Bank of Kuwait

57

450,023

Oman

Rank in BME 100

Total Income – US$’000

Bank Muscat

17

1,060,432

National Bank of Oman

30

352,973

Bank Dhofar

44

299,678

Oman Arab Bank

53

207,423

HSBC Bank Oman

89

191,248

32 www.cpifinancial.net

page 31-33_2016 total income.indd 32

05/09/2016 15:29

MANAGEMENT CAPABILITY RATIOS

Saudi Arabia

Rank in BME 100

National Commercial Bank

6

Total Income – US$’000 4,662,852

Al Rajhi Bank

8

3,665,540

Riyad Bank

32

2,141,082

Samba Financial Group

7

2,067,887

SABB

22

1,802,926

Qatar

Rank in BME 100

Qatar National Bank

4

4,469,334

Qatar Islamic Bank

20

1,524,328

The Commercial Bank of Qatar

56

1,114,897

Masraf Al Rayan

25

916,701

Doha Bank

42

772,459

UAE

Rank in BME 100

Emirates NBD

1

4,191,810

National Bank of Abu Dhabi

23

2,874,295

First Gulf Bank

5

2,568,731

Abu Dhabi Commercial Bank

2

2,249,636

Dubai Islamic Bank

3

1,766,810

Jordan

Rank in BME 100

Arab Bank

59

1,908,360

The Housing Bank for Trade & Finance

48

488,391

Jordan Islamic Bank

63

189,673

Cairo Amman Bank

77

186,092

Jordan Kuwait Bank

85

180,395

Lebanon

Rank in BME 100

Total Income – US$’000

Total Income – US$’000

Total Income – US$’000

Total Income – US$’000

Bank Audi

18

1,410,807

BLOM Bank

16

836,661

Byblos Bank

60

459,685

Bank of Beirut

31

430,299

BLC Bank

79

163,447

Palestine

Rank in BME 100

Bank of Palestine

61

136,787

Quds Bank

98

39,326

Palestine Islamic Bank

94

35,688

Total Income – US$’000

33 www.cpifinancial.net

page 31-33_2016 total income.indd 33

14/09/2016 09:13

MANAGEMENT CAPABILITY RATIOS

Net profit Banks of Saudi Arabia have remained the most profitable in the Middle East despite the declining oil price. Combined, the net profit of Saudi and Emirati banks accounts for 63 per cent of the region’s total, increasing two per cent year-on-year.

Country

2015

2014

2013

2012

2011

Saudi Arabia

11,669,939

11,096,026

10,069,098

9,413,411

8,431,205

United Arab Emirates

10,516,584

9,426,661

7,889,852

6,448,176

5,823,765

Qatar

5,769,749

5,550,926

5,073,288

4,518,624

4,482,611

Kuwait

2,586,740

2,453,027

1,912,836

2,100,440

1,874,756

Bahrain

1,469,640

1,267,608

1,895,761

1,389,474

1,373,899

Lebanon

1,284,980

1,177,843

1,067,173

1,239,103

1,247,894

Jordan

1,008,879

1,145,191

713,569

838,596

767,728

959,998

874,886

878,447

755,217

559,052

61,220

54,993

48,779

44,173

33,981

3,925,303

3,671,907

3,283,200

2,971,913

2,732,766

Oman Palestine Average

T

Total Net Profit Per Country - 2011 to 2015 (USD Billions)

$Bn

he largest increase came from Palestine, whose banks in the BME 100 saw their net profit rise by 11 per cent in 2015.

Oman was second and Lebanon was third with 8.8 and 8.3 per cent increase respectively. However, there is a clear contrast between the year under study and past years; none of the countries saw the large increases seen in previous years of more than 25 per cent.

Qatar National Bank continues its dominance as the most profitable bank in the Middle East with $3.1 billion in net profit (up from $2.8 billion in 2014) and accounting for 31 per cent of total profit of the BME 100 banks in 2014 (down from 32 per cent in 2013).

40 35

Palestine

30

Oman Jordan

25

Lebanon

20

Bahrain

15

Kuwait

10

Qatar United Arab Emirates

5

Saudi Arabia

2015

2014

2013

2012

2011

34 www.cpifinancial.net

page 34-36 net profit-by country2016.indd 34

05/09/2016 15:35

MANAGEMENT CAPABILITY RATIOS

National Commercial Bank took the second position with $2.4 million in net profit (up from $2.3 million in 2014) and accounting for 24 per cent of the total profit of the BME 100 banks in 2015.

Almost all of the Best Banks in the Middle East increased their share of the total net profit of the BME 100 highlighting the fact that the stronger banks continue to compete for and manage to gain market share.

Net Profit 2015

2.9% 3.6% 4.2%

2.7%

0.2% Saudi Arabia

33.0%

7.3%

United Arab Emirates Qatar Kuwait Bahrain Lebanon

16.3%

Jordan Oman Palestine

29.8%

Net profit – by Bank Bank

2015 - Thousands Percent of total USD 2015

2014 -Thousands Percent of total USD 2014

Qatar National Bank

3,112,298 9%

2,889,461 9%

National Commercial Bank

2,439,581 7%

2,344,851 7%

Emirates NBD

1,939,760 5%

1,399,327 4%

National Bank of Kuwait

977,320 3%

934,930 3%

Ahli United Bank

566,610 2%

531,254 2%

Bank Muscat

456,309 1%

424,518 1%

BLOM Bank

404,659 1%

364,775 1%

The Housing Bank for Trade & Finance

175,921 0.5%

174,777 0.5%

43,167 0.1%

40,223 0.1%

Bank of Palestine

Top banks by Net Profit – by Country Bahrain Ahli United Bank Arab Banking Corporation (Bank ABC) National Bank of Bahrain BBK Investcorp Bank

Rank in BME 100 21 96 35 37 47

Net Profit – US$’000 566,610 237,000 146,968 141,992 116,711 cont. overleaf

35 www.cpifinancial.net

page 34-36 net profit-by country2016.indd 35

05/09/2016 15:35

MANAGEMENT CAPABILITY RATIOS cont. from pg 35

Kuwait National Bank of Kuwait Kuwait Finance House Burgan Bank Commercial Bank of Kuwait Ahli United Bank Kuwait

Rank in BME 100 12 43 33 93 58

Net Profit – US$’000 977,320 625,478 289,842 152,109 141,084

Oman Bank Muscat National Bank of Oman Bank Dhofar Oman Arab Bank Bank Sohar

Rank in BME 100 17 30 44 53 75

Net Profit – US$’000 456,309 156,322 121,625 75,451 72,161

Saudi Arabia National Commercial Bank Al Rajhi Bank Samba Financial Group SABB Riyad Bank

Rank in BME 100 6 8 7 22 32

Net Profit – US$’000 2,439,581 1,901,353 1,390,459 1,154,813 1,079,861

Qatar Qatar National Bank Qatar Islamic Bank Masraf Al Rayan The Commercial Bank of Qatar Doha Bank

Rank in BME 100 4 20 25 56 42

Net Profit – US$’000 3,112,298 557,786 556,631 400,420 377,393

UAE Emirates NBD First Gulf Bank National Bank of Abu Dhabi Abu Dhabi Commercial Bank Dubai Islamic Bank

Rank in BME 100 1 5 23 2 3

Net Profit – US$’000 1,939,760 1,638,999 1,424,593 1,341,612 1,045,408

Jordan Arab Bank The Housing Bank for Trade & Finance Jordan Islamic Bank Cairo Amman Bank Bank of Jordan

Rank in BME 100 59 48 63 77 95

Net Profit – US$’000 442,123 175,921 68,717 58,065 56,506

Lebanon BLOM Bank Bank Audi Bank of Beirut Byblos Bank BLC Bank

Rank in BME 100 16 18 31 60 79

Net Profit – US$’000 404,659 403,136 193,370 160,604 44,093

Palestine Bank of Palestine Palestine Islamic Bank Quds Bank

Rank in BME 100 61 94 98

Net Profit – US$’000 43,167 10,034 8,019

36 www.cpifinancial.net

page 34-36 net profit-by country2016.indd 36

05/09/2016 15:35

11th Islamic Business & Finance

Awards 2016

Excellence through innovation Rewarding pioneers in Islamic finance

23rd November 2016 The Godolphin Ballroom, Emirates Towers Hotel, Dubai 7pm cocktail reception followed by dinner and the awards ceremony

SUPPORTED BY:

www.cpifinancial.net

For sponsorship and nominations opportunities please contact: Nap Estampador, Business Development Manager Tel: +971 4 391 4680 or Email: nap@cpifinancial.net bleed guide.indd 1

For other information please contact CPI Financial’s events team Tel: +971 4 391 4682 or Email: events@cpifinancial.net 07/09/2016 09:47

FASTEST GROWING BANKS

Stand-out growth in a challenging year Despite a challenging year for the banking sector as the oil price continued its march downwards, 2015 still brought us stand-out growth performance on behalf of a number of institutions across the Middle East TOTAL ASSETS Bank

Country

Assets in 2015 US$ ‘000

Alinma Bank Al Khalij Commercial Bank (al khaliji) Emirates Islamic National Bank of Oman Warba Bank Jordan Commercial Bank Khaleeji Commercial Bank Banque Bemo The National Bank

Saudi Arabia Qatar UAE Oman Kuwait Jordan Bahrain Lebanon Palestine

23,659,875 15,558,800 14,486,638 8,487,477 2,558,032 2,098,114 1,739,295 1,621,556 820,269

T

his year’s fastest growing banks managed to increase their assets by an average of 16 per cent (24 per cent last year). Overall, Kuwait narrowly topped the list as the fastest growing country with 8.6 per cent, followed by Qatar at 8.5 per cent and Saudi Arabia at 8.4 per cent.

Among this year’s fastest growing banks, Jordan Commercial Bank took the top spot with the highest rate of asset growth at 28 per cent, followed by Warba Bank at 26 per cent and Emirates Islamic at 24 per cent.

Percentage increase in Assets

Country Average

10% 11% 24% 10% 26% 28% 10% 10% 21%

4% 11% 14% 25% 4% 9% -0.41% 6% 16%

Percentage increase in Assets 2015

21% 10%

10%

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38 www.cpifinancial.net

page 38-40 Fastest Growing BME 100 2016.indd 38

05/09/2016 15:38

FASTEST GROWING BANKS

TOTAL LIABILITIES Bank

Country

Alinma Bank Al Khalij Commercial Bank (al khaliji) Emirates Islamic National Bank of Oman Warba Bank Jordan Commercial Bank Khaleeji Commercial Bank Banque Bemo The National Bank

Saudi Arabia Qatar UAE Oman Kuwait Jordan Bahrain Lebanon Palestine

The average increase in liabilities of 17 per cent in 2015 was down by half from 34 per cent in 2014. Overall, the countries increased liabilities by an average of 11.9 per cent.

Among this year’s fastest growing banks, Warba Bank took the top spot with the highest rate of liabilities growth at 31 per cent.

Jordan Commercial Bank was the second fastest in liabilities growth at 29 per cent, and Emirates Islamic third at 25 per cent. In terms of country averages, the stand-out performance of Oman reflects a massive jump in liabilities in just one institution which skewed the figure higher.

Liabilities 2015 US$ ‘000

18,765,965 13,913,927 13,099,367 7,013,467 2,253,879 1,903,500 454,795 1,487,032 730,449

Percentage increase Country in Liabilities Average 12% 11% 25% 6% 31% 29% 13% 10% 22%

4% 21% 14% 73% 5% 9% -5% 6% 15%

Percentage increase in Liabilities

22% 10%

11%

12%

25%

29%

31%

13%

10%

National Bank of Oman

Banque Bemo

Al Khalij Alinma Bank Khaleeji Commercial Commercial Bank (al Bank khaliji)

The National Bank

Emirates Islamic

Jordan Warba Bank Commercial Bank

TOTAL INCOME This year’s fastest growing banks managed to increase their income by an average of 38 per cent, down from 77 per cent in 2014. Jordan Commercial Bank took the top spot in 2015 with 43 per cent income growth in the year, bringing in a total of $90 billion.

Bank

Country

Alinma Bank Emirates Islamic National Bank of Oman Al Khalij Commercial Bank (al khaliji) Jordan Commercial Bank Warba Bank Khaleeji Commercial Bank Banque Bemo The National Bank

Saudi Arabia UAE Oman Qatar Jordan Kuwait Bahrain Lebanon Palestine

Income 2015 $ ‘000 816,731 748,878 352,973 314,245 90,284 59,588 56,660 39,985 25,672

Percentage increase in Income 17% 22% 19% 13% 43% 29% 39% 5% 29%

Country Average 9% 11% 37% 9% 10% 8% 19% 3% 18% cont. overleaf

39 www.cpifinancial.net

page 38-40 Fastest Growing BME 100 2016.indd 39

06/09/2016 16:57

FASTEST GROWING BANKS

Percentage increase in Income 43%

39% 29% 17%

13%

29%

22%

19%

5% o

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cont. from pg 39

NET PROFIT Bank

Country

Alinma Bank Emirates Islamic Al Khalij Commercial Bank (al khaliji) National Bank of Oman Jordan Commercial Bank Khaleeji Commercial Bank Banque Bemo The National Bank Warba Bank

Saudi Arabia UAE Qatar Oman Jordan Bahrain Lebanon Palestine Kuwait

This year’s fastest growing bank was Warba Bank with a whopping 739 per cent increase in net profit, following a 103 per cent increase in 2014 which gave the institution second place that year. This kind of growth is indicative of the fact that Warba Bank is still a relatively small and fairly new bank (formed in 2010). This year the banks overall increased their net profit by an average of 116 per cent. The bank with the smallest increase this year was Al Khaliji Commercial Bank, which saw a still creditable increase of 11 per cent.

Net Profit 2015 Percentage increase Country US$ '000 in Net Profit Average 391,994 174,453 171,846 156,322 22,224 21,332 13,431 5,442 3,296

16% 76% 11% 20% 34% 110% 20% 33% 739%

13% 16% 2% 2% 3% 28% 10% 17% 77%

Percentage increase in Net Profit 2015

739%

11%

16%

Al Khalij Alinma Bank Commercial Bank (al khaliji)

20%

20%

National Bank of Oman

Banque Bemo

33%

34%

The National Jordan Bank Commercial Bank

76% Emirates Islamic

110%

Khaleeji Warba Bank Commercial Bank

40 www.cpifinancial.net

page 38-40 Fastest Growing BME 100 2016.indd 40

14/09/2016 09:17

ISLAMIC BANKS

Re-setting the Benchmark T

he number of Islamic Banks in the BME 100 has fallen to 31 with this new edition of our benchmark. One of the key reasons for this is that we have taken the decision to exclude from this calculation those institutions that are not purely Shari’ah-compliant. This accounts for the drop in representation of institutions in Saudi Arabia from 12 last year to four this year.

We will continue to monitor the evolution of the Islamic banking sector around the world in more depth in our sister publication Leaders in Islamic Finance, which will be available later this year.

Bahrain leads the table in terms of the number of Shari’ah-compliant institutions in the BME 100, with Kuwait and the UAE in joint second place. It is also, at this point, worth noting that the UAE may have been placed more highly had certain institutions not been excluded as a result of their not having published 2015 financials by our cut-off date.

At the other end of the table, both of Oman’s new Islamic banks make into the BME 100 while Palestine Islamic Bank returns to the index after two years’ absence. Lebanon continues to be unrepresented among Islamic institutions in the BME 100.

Bank

Dubai Islamic Bank Al Rajhi Bank Emirates Islamic Abu Dhabi Islamic Bank Alinma Bank Bank AlJazira Qatar Islamic Bank Masraf Al Rayan Boubyan Bank Sharjah Islamic Bank Kuwait Finance House Bank AlBilad Ajman Bank Kuwait International Bank Qatar International Islamic Bank

Country

United Arab Emirates Saudi Arabia United Arab Emirates United Arab Emirates Saudi Arabia Saudi Arabia Qatar Qatar Kuwait United Arab Emirates Kuwait Saudi Arabia United Arab Emirates Kuwait Qatar

Islamic Banks in the BME 100 – by Country Number of Islamic Banks in BME 100 In 2015 In 2014

Bahrain United Arab Emirates Kuwait Saudi Arabia Qatar Oman Jordan Palestine Lebanon

Rank 2015

3 8 10 11 13 19 20 25 27 39 43 45 46 50 51

9 5 5 4 4 2 1 1 0

5 6 2 12 4 0 1 0 0

Rank 2014

2 30 32 15 22 57 25 45 37 42 31 27 58 93 51

cont. overleaf

41 www.cpifinancial.net

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ISLAMIC BANKS

cont. from pg 41

Bank

Country

Barwa Bank Ahli United Bank Kuwait Jordan Islamic Bank Kuwait Finance House Bahrain Khaleeji Commercial Bank Warba Bank Seera Investment Bank ABC Islamic Bank Bahrain Islamic Bank Bank AlKhair Investors Bank Bank Nizwa Palestine Islamic Bank Al Baraka Islamic Bank alizz Islamic Bank Ithmaar Bank

Rank 2015

Qatar Kuwait Jordan Bahrain Bahrain Kuwait Bahrain Bahrain Bahrain Bahrain Bahrain Oman Palestine Bahrain Oman Bahrain

54 58 63 64 71 73 76 80 86 87 88 91 94 97 99 100

Rank 2014

39 54 97 82 74 86 96 53 62

LOANS & ADVANCES COMPARISON – ISLAMIC VS. CONVENTIONAL BANKS Entity

2015 - $’000

2014 - $’000

2013 - $’000

2012 - $’000

2011 - $’000

Islamic Banks

272,843,412

267,353,945

496,797,751

443,037,828

375,269,202

Conventional Banks

978,669,908

974,031,118

630,084,045

575,699,232

528,518,034

1,251,513,321

1,241,385,063

1,126,881,797

1,018,737,060

903,787,236

22%

22%

44%

43%

42%

BME100 Total Islamic Banks % of total Assets

Top 10 Islamic banks in loans & advances Bank

Al Rajhi Bank

Country

Saudi Arabia

Total Loans & Advances 2015 ($ ‘000) 26,787,993

Dubai Islamic Bank

26,472,321

Qatar Islamic Bank

Qatar

978,669,908

974,031,118

56,058,098

Kuwait Finance House Kuwait United Arab Emirates

Loans & Anvances Conventional Vs. Islamic Banks

630,084,045 496,797,751

23,962,063

Abu Dhabi Islamic Bank United Arab Emirates

21,348,735

Masraf Al Rayan

Qatar

17,104,795

Alinma Bank

Saudi Arabia

15,085,347

Bank AlJazira

Saudi Arabia

11,163,593

Ahli United Bank Kuwait

Kuwait

10,043,319

Emirates Islamic

United Arab Emirates

9,460,531

272,843,412

2015-$’000

575,699,232 443,037,828

528,518,034 375,269,202

267,353,945

2014-$’000

2013-$’000

Islamic Banks

2012-$’000

2011-$’000

Conventional Banks

42 www.cpifinancial.net

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05/09/2016 17:12

ISLAMIC BANKS

TOTAL ASSETS COMPARISON – ISLAMIC VS. CONVENTIONAL BANKS Entity

2015 - $’000

Islamic Banks

2014 - $’000

2013 - $’000

2012 - $’000

2011 - $’000

433,230,585

402,928,797

812,011,281

714,299,212

630,419,350

Conventional Banks

1,660,981,677

1,562,524,977

993,168,123

886,815,559

812,905,619

BME100 Total

2,094,212,262

1,965,453,774

1,805,179,404

1,601,114,770

1,443,324,968

Islamic Banks % of total Loans

21%

21%

45%

45%

44%

Bank

Country

Total Assets 2015 ($ ‘000)

Al Rajhi Bank

Saudi Arabia

Total Assets Conventional Vs. Islamic Banks

84,165,239

Kuwait Finance House Kuwait

54,471,552

Dubai Islamic Bank

United Arab Emirates

40,816,203

Qatar Islamic Bank

Qatar

34,898,490

Abu Dhabi Islamic Bank United Arab Emirates

32,233,536

Alinma Bank

Saudi Arabia

23,659,875

Masraf Al Rayan

Qatar

22,809,404

Bank AlJazira

Saudi Arabia

16,870,436

Emirates Islamic

United Arab Emirates

14,486,638

Bank AlBilad

Saudi Arabia

13,658,776

1,660,981,677

1,562,524,977

993,168,123

812,011,281 433,320,585

2015-$’000

402,928,797

2014-$’000

2013-$’000

Islamic Banks

886,815,559

714,299,212

812,905,619

630,419,350

2012-$’000

2011-$’000

Conventional Banks

TOTAL INCOME COMPARISON – ISLAMIC VS. CONVENTIONAL BANKS Entity

2015 - $’000

2014 - $’000

2013 - $’000

2012 - $’000

2011 - $’000

Islamic Banks

18,400,274

16,502,507

32,039,389

29,004,412

26,616,817

Conventional Banks

57,376,066

54,894,449

35,015,657

31,909,144

29,222,911

BME100 Total

75,776,340

71,396,956

67,055,046

60,913,556

55,839,728

24%

23%

48%

48%

48%

Islamic Banks % of total Income

Top 10 Islamic banks in income Bank

Country

Al Rajhi Bank

Saudi Arabia

Total Income 2015 ($ ‘000) 3,665,540

Kuwait Finance House Kuwait

2,440,906

Dubai Islamic Bank

United Arab Emirates

1,766,810

Abu Dhabi Islamic Bank United Arab Emirates

1,565,964

Qatar Islamic Bank

Qatar

1,524,328

Masraf Al Rayan

Qatar

916,701

Alinma Bank

Saudi Arabia

816,731

Bank AlJazira

Saudi Arabia

779,900

Emirates Islamic

United Arab Emirates

748,878

Bank AlBilad

Saudi Arabia

611,899

Total Income Conventional Vs. Islamic Banks

57,376,066

18,400,274

2015-$’000

54,884,449 35,015,657 31,909,144 29,222,911 32,039,389 29,004,412 26,616,817

16,502,507

2014-$’000

2013-$’000

Islamic Banks

2012-$’000

2011-$’000

Conventional Banks

43 www.cpifinancial.net

page 41-43_B Islamic banks 2016.indd 43

05/09/2016 17:12

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DATA ENVELOPMENT ANALYSIS

Getting rated A credit rating is assessment of credit-worthiness that can have significant bearing on the cost of capital to the institution being rated, we look at the top ratings agencies in MENA and what they do

A

credit rating, put in very basic terms, aims to give an indication of the ability of a person, company or financial institution to pay back debt and fulfil their financial commitments based on prior financial dealings.

Therefore, the lower the credit rating the greater the risk that any loan may default and, therefore, the higher the cost of capital to the institution in question; an institution with a lower credit rating will be required to pay more for its borrowing through higher interest rates—effectively a risk premium imposed by lenders.

Credit ratings are not investment advice, or buy, hold, or sell recommendations and do not indicate the market liquidity of a debt security or its price in the secondary market. They are just one factor investors may consider in making investment decisions. Credit ratings are not guarantees of credit quality or of future credit risk.

Not all of the financial institutions in the Middle East and North Africa (MENA) region have credit ratings. Indeed not all the institutions in the BME 100 have credit ratings. This, of itself, is not a sign of financial weakness on the part of a bank. It may, for example, simply be an indication that the financial institution in question has not been active in either the

domestic or international capital markets in terms of raising funds.

There are several ratings agencies around the world. As a complement to the BME 100, we have compiled a listing of the ratings measures of the financial institutions represented in our Index from three international ratings agencies: Fitch Ratings; Moody’s Investors Service; and Standard & Poor’s Ratings Services.

FITCH RATINGS Fitch Ratings is a global rating agency headquartered in New York and London and is part of the Fitch Group, which is jointly-owned by Fimalac SA, headquartered in Paris, France and the New York-based Hearst Corporation. Our table displays four key ratings provided by Fitch: Long Term Issue Default Rating; Short Term Issuer Default Rating; Viability Rating; and Bank Support Rating.

Issuer Default Ratings (IDR): Fitch generally assigns IDRs to rated entities. These opine on the institutions relative vulnerability to default on financial obligations.

The ‘threshold’ default risk is generally that of financial obligations whose non-payment would best reflect the uncured failure of that entity. As such they also address relative vulnerability to bankruptcy, administrative receivership or similar concepts. Short-term ratings are specifically assigned to obligations

whose initial maturity is viewed as ‘short term’ based on market convention—typically this means up to 13 months for corporate and structured obligations.

Viability Rating (VR): Viability Ratings measure the intrinsic creditworthiness of a financial institution (FI), and reflect Fitch’s opinion on the likelihood that the entity will fail. VRs are so named to be consistent with regulatory provisions referencing the ‘viability’ or ‘non-viability’ of banks, but are not explicitly calibrated to any regulatory or legislative definitions.

Just as an entity’s VR does not reflect extraordinary support, so it does not capture potential extraordinary constraints. In particular, a VR is not limited by the Country Ceiling of the jurisdiction in which the FI is domiciled, meaning a bank could be in default on foreign currency obligations because of transfer and convertibility restrictions, but not have ‘failed’ on the VR scale. In determining the VR, Fitch considers five broad factors: the bank’s operating environment, company profile, management and strategy, risk appetite and financial profile.

Bank Support Rating (Support): Support Ratings are Fitch’s assessment of a potential supporter’s propensity to support a bank and of its ability to do so. The former is a judgment made by Fitch Ratings while the latter is based

46 www.cpifinancial.net

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05/09/2016 15:46

DATA ENVELOPMENT ANALYSIS on the potential supporter’s own IDRs, both in foreign currency and, where appropriate, local currency.

MOODY’S INVESTORS SERVICE Moody’s Investors Service’s ratings and analysis tracks debt covering more than 110 countries, 12,000 corporate issuers, 25,000 public finance issuers, and 106,000 structured finance obligations. The firm is part of Moody’s Corporation, which is listed on the New York Stock Exchange.

Moody’s has updated its methodology, and while the factors that have been the basis of Moody’s approach to rating finance companies historically continue to remain at the core of its analytical framework, it has modified the way that it organises and communicates the various factors that comprise the framework. Most notably, the methodology now includes a rating scorecard that analysts use to generate an estimated stand-alone (unsupported) credit grade (stand-alone credit profile). The scorecard includes the key factors that a rating committee is likely to consider in determining a finance company’s stand-alone credit profile. This methodology is therefore organised into sections that correspond to the composition of the scorecard, as a means for discussing the overall rating framework.

Ratings assigned on Moody’s global long-term and short-term rating scales are forward-looking opinions of the relative credit risks of financial obligations issued by non-financial corporates, financial institutions, structured finance

vehicles, project finance vehicles, and public sector entities.

Long-Term Rating (LTR): Moody’s long-term obligation ratings are opinions of the relative credit risk of fixed-income obligations with an original maturity of one year or more. They address the possibility that a financial obligation will not be honoured as promised. Such ratings use Moody’s Global Scale and reflect both the likelihood of default and any financial loss suffered in the event of default.

Short-Term Rating (STR): ShortTerm Ratings are assigned to obligations with an original maturity of thirteen months or less and reflect both on the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default.

Baseline Credit Assessment (BCA): The Baseline Credit Assessment reflects Moody’s opinion of a bank’s intrinsic, or stand-alone, financial strength relative to all other rated banks. BCAs inputs used in Moody’s bank rating methodology that reflect opinions of a bank’s standalone intrinsic strength, absent any extraordinary support from an affiliate or government.

Counterparty Risk Assessment (CRA): The agency’s bank deposit ratings are opinions of a bank’s ability to repay punctually its foreign and/or domestic currency deposit obligations. They are intended to incorporate those aspects of credit risk that are relevant to the prospective payment performance of the rated bank with respect to its foreign and/or domestic currency

deposit obligations. The deposit ratings do not take into account the benefit of deposit insurance schemes that make payments to depositors, but they do recognise the potential support from schemes that may provide direct assistance to banks.

STANDARD & POOR’S RATING SERVICES Standard & Poor’s (S&P) is a division of The McGraw-Hill Companies publishing a variety of financial research and analysis. The company is probably best known for its range of stock market indexes but is also one of the credit rating agencies designated as a ‘Nationally Recognized Statistical Rating Organization’ by the US Securities & Exchange Commission—as indeed are both Moody’s and Fitch Ratings.

The tables on pages 48-49 display two ratings from Standard & Poor’s: Long Term Issuer; and Short Term Issuer.

Long Term Issuer (LT Issuer): S&P rates long-term debt on a scale from AAA to D. For some borrowers the firm may also offer guidance (termed ‘credit watch’) on whether the current rating is likely to be upgraded (positive), downgraded (negative) or appears uncertain (neutral).

Short-Term Issuer (ST Issuer): Short-term ratings are given between A-1 and D. Within the top category the ‘+’ qualifier may also be used to indicate that the debt issuer’s commitment to meet its obligation is ‘very’ strong. Both country and currency risk are also factored in to analysis and reflected in the rating.

RATING AGENCIES: RATING COMPARISONS S&P AAA AA+ Moody’s Aaa Aa1 Fitch AAA AA+

Investment Grade: Secure Speculative Grade: Vulnerable AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 Caa2 Caa3 Ca AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC+ CCC CCC- CC

C D C C D

47 www.cpifinancial.net

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06/09/2016 16:59

CREDIT RATINGS BME 100, 2016

CREDIT RATINGS OF CPI FINANCIAL 100 BANKS BME 100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 20 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 46 48

Bank

National Commercial Bank Qatar National Bank First Gulf Bank Ahli United Bank SABB Mashreq Abu Dhabi Commercial Bank Riyad Bank National Bank of Abu Dhabi Emirates NBD The Saudi Investment Bank Saudi Hollandi Bank Samba Financial Group Kuwait Finance House Abu Dhabi Islamic Bank Arab Bank Commercial Bank of Dubai Alinma Bank Al Rajhi Bank Arab National Bank Bank Dhofar United Arab Bank Bank Muscat Bank AlJazira Arab Banking Corporation Masraf Al Rayan BLOM Bank Commercial Bank of Qatar Union National Bank Ahli Bank Commercial Bank of Kuwait Noor Bank National Bank of Ras AlKhaimah (RAKBANK) Doha Bank Banque Saudi Fransi Barwa Bank Al Baraka Banking Group National Bank of Kuwait National Bank of Fujairah Qatar Islamic Bank Bank of Beirut Investcorp Bank Bank of Sharjah Bank AlBilad Gulf International Bank Bank Audi Dubai Islamic Bank Al Khalij Commercial Bank (al khaliji)

Fitch

Moody’s

LT IDR AAAA+ BBB+ AA A+ AAAA+ AAAA+ A+ BBBAAAABBBBBB+ ABBBA+ A+ BBB+ A+ ABBB+

ST IDR F1 F1+ F1 F2 F1 F1 F1 F1 F1+ F1 F2 F2 F1 F1 F1 F3 F2 F2 F1 F2 F2 F2 F2 F3 F1 F1 F2 F1 F2 F2

VR

SUPPORT LTR

aa bbb bbb a bb+ bb+ a abb+ bbbbbb abb bb bbbbb+ bbb aabb+ bbb bb+ bbbbbb bbb bbbbbb+ bb+

1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 5 1 1 1 1 2 2 1 3 1 1 2 1 1 2

A1 Aa3 A2 A2 A1 Baa2 A1 A2 Aa3 A3 A3 A3 A1 A1 A2 B2 Baa1 A1 A2 Baa2 Baa2 Baa1 Ba1 A2 B2 A1 A2 A3 Baa1

A+ AA+ AAA+ BB BBB+ ABA A+

F1 F2 F1 F1+ F1 B F2 F2 B F1 F1

bbb abbba bbb bb bb bbbb bb bbb-

1 1 1 1 1 5 2 1 5 1 1

A2 A1 A2 Aa3 Baa1 Ba2 A3 Baa1 B2 Baa1 A3

STR

S&P BCA

CRA A1 Aa2 A1 A1 A1 Baa1 Aa3 A1 Aa2 A2 A2 A2 A1 A1 A1 Ba2 A3 A1 A1 Baa1 Baa1 A3 Baa3 A1 B1 Aa3 A1 A2 A3

LT ISSUER BBB+ A+ A BBB

ST ISSUER A-2 A-1 A-1 A-2

P-1 P-1 P-1 P-1 P-1 P-2 P-1 P-1 P-1 P-2 P-2 P-2 P-1 P-1 NP NP P-2 P-1 P-1 P-2 P-2 P-2 NP P-1 NP P-1 P-1 P-2 P-2

baa1 baa1 baa2 baa3 a3 ba1 baa3 baa1 a3 ba1 baa2 baa2 a2 ba1 ba2 ba2 ba1 a3 baa1 ba1 ba1 baa3 ba2 baa3 b2 baa3 baa3 ba1 baa3

BBB+ A BBB+ AABBB BBB+ ABBBBB+ BBB+ BBBBBBB+ -

A-2 A-1 A-2 A-1+ A-2 A-2 A-2 B A-2 A-2 A-3 BA-2 -

P-1 P-1 P-1 P-1 P-2 P-2 P-2 NP P-2 P-2

baa3 a3 baa3 a3 ba1 baa2 Ba1 b2 ba3 ba1

A1 A1 A1 Aa2 A3 A2 Ba1 B1 A3 A2

ABBB+ BB+ A+ BBB+ ABBB+ B-

A-2 A-2 B A-1 A-2 A-2 A-2 C -

48 www.cpifinancial.net

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CREDIT RATINGS BME 100, 2016

49 50 51 52 53 54 55 55 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100

Qatar International Islamic Bank Burgan Bank Emirates Islamic Al Ahli Bank of Kuwait Capital Bank of Jordan Venture Capital Bank Sharjah Islamic Bank Boubyan Bank Bank Sohar BBK International Bank of Qatar National Bank of Bahrain National Bank of Oman Byblos Bank Al Hilal Bank Global Banking Corporation Bank Al-Etihad Gulf Bank National Bank of Umm AlQaiwain Bahrain Islamic Bank Alubaf Arab International Bank Ahli Bank – Oman Credit Libanais InvestBank Future Bank Bank AlKhair Bank of Palestine Securities & Investment Company (SICO) Jordan Kuwait Bank Oman Arab Bank Bank of Jordan HSBC Bank Oman Gulf One Investment Bank Lebanon & Gulf Bank Arab Jordan Investment Bank First Energy Bank BMI Bank Family Bank Commercial Bank International The National Bank Quds Bank Qatar Development Bank Fenicia Bank Al Salam Bank – Bahrain Eskan Bank Inovest Addax Bank Kuwait Finance House (Bahrain) Oasis Capital Bank Ajman Bank Ejada for Financial Investments Ithmaar Bank

A+ A+ A+ A+ BBB+ A+ BBB BBBA+ BBBBBBBA+ A+ BBAA-

F1 F1 F1 F1 F2 F1 F2 F3 F1 F3 F2 B F1 F1 -

bb+ bb bbbb+ bb+ bb+ bb bbbbbbbbbbbbb bb bbb -

1 1 1 1 2 1 2 2 1 2 2 5 1 1 -

A2 A3 A2 A3 Baa1 Baa3 A2 Baa3 Baa2 B2 A1 A3

P-1 P-2 P-1 P-1 P-2 NP P-1 NP P-2 NP P-1 P-2 -

baa3 ba2 baa3 baa3 ba1 ba2 baa3 ba2 Ba1 b2 ba2 ba1 -

A1 A2 A1 A2 A3 Ba1 A1 Ba1 Baa1 B1 A1 A2 -

BBB+ BBB+ A-

A-2 A-2 A-2 -

-

-

-

-

-

-

Ba3 -

NP -

b3 -

Ba2 -

-

-

B F1 F1 -

bbbbbb+ -

4 1 1 -

Baa2 Baa1 -

P-2 P-2 -

ba1 ba1 -

Baa1 Baa1 -

-

-

-

-

-

-

-

-

49 www.cpifinancial.net

page 48-49 credit ratings BME 100 2016.indd 49

06/09/2016 17:03

EQUITY INDEX 31/12/2015

BLOM MENA Banking Index INDEX 6,233.89

Country

Weight

1-Day 1-Week 1-Month 1-Quarter 1-Year 5-Years

Qatar Saudi Arabia Saudi Arabia UAE Kuwait Saudi Arabia UAE UAE UAE Saudi Arabia Saudi Arabia Saudi Arabia Kuwait Qatar Morocco Qatar UAE Saudi Arabia Suadi Arabia Jordan Egypt Kuwait Saudi Arabia Qatar UAE Morocco Morocco UAE UAE Saudi Arabia

10.33% 8.36% 6.93% 4.76% 4.08% 3.82% 3.47% 3.44% 3.09% 3.05% 3.04% 2.76% 2.61% 2.38% 2.13% 2.13% 2.04% 1.93% 1.81% 1.79% 1.72% 1.37% 1.35% 1.27% 1.22% 1.19% 1.15% 1.08% 1.04% 1.01%

-0.12% -1.33%

-1.79%

10.42%

2.14%

9.93%

MENA BANKING INDEX

Market Capitalisation Weighted 9000 8500 8000 7500 7000 6500 6000 5500 5000 4500 4000 3500 3000 2500 2000 1500 1000

1-Jan-16

1-Jan-15

1-Jan-14

1-Jan-13

1-Jan-12

1-Jan-11

1-Jan-10

1-Jan-09

1-Jan-08

1-Jan-07

1-Jan-06

1-Jan-05

1-Jan-04

1-Jan-03

MENA BANKING INDEX 1-Yr Moving Average 1-Jan-02

Qatar National Bank National Commercial Bank Al Rajhi Bank First Gulf Bank National Bank of Kuwait Samba Financial Group National Bank of Abu Dhabi Emirates NBD PJSC Abu Dhabi Commercial Bank Riyad Bank Saudi British Bank Banque Saudi Fransi Kuwait Finance House Masraf Al Rayan Attuariwafa Bank Qatar Islamic Bank Dubai Islamic Bank Arab National Bank Alinma Bank Arab Bank PLC Commercial International Bank Ahli United Bank B.S.C. Saudi Hollandi Bank Commercial Bank QSC Mashreq Banque Marocaine Du Commerce Banque Centrale Populaire Union National Bank/Abu Dhabi Abu Dhabi Islamic Bank Bank Albidad

1-Jan-01

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

1-Jan-00

Top 30 Name

MENA BANKING INDEX COMPARATIVE CHART 1000.5 1000.4 1000.3 1000.2 1000.1

Losses -26.00% -30.11% -30.11% -35.30% -41.67%

31-Dec-15

Country Saudi Arabia Qatar Qatar Oman UAE

31-Oct-15

Biggest Losers (52 Weeks) Alinma Bank Bank Albidad Saudi British Bank National Bank of Abu Dhabi Bank Al-Jazira

31-Aug-15

35.70% 25.74% 19.06% 10.91% 9.94%

30-Jun-15

Saudi Arabia UAE Jordan Morocco Jordan

30-Apr-15

Country

Credit Agricole Egypt Commercial Bank of Dubai Blom Bank Khaleeji Commercial Bank Boubyan Bank K.S.C

MOROCCO 5.12%

28-Feb-15

Biggest Gainers (52 Weeks)

JORDAN 2.20%

31-Dec-14

-3.63% -2.34% -2.04% -1.23% -0.96%

31-Oct-14

Losses

Kuwait Qatar Morocco Lebanon UAE

999.7 31-Aug-14

Country

Kuwait Finance House Qatar Islamic Bank Attijari Bank Byblos Bank Ajman Bank PJSC

999.8 30-Jun-14

Biggest Losers (Weekly)

Arab Markey Index SP Global 1200 Financials MENA BANKING INDEX

30-Apr-14

11.59% 10.96% 8.27% 5.93% 5.70%

28-Feb-14

UAE Bahrain Tunisia UAE Saudi Arabia

31-Dec-13

Bank of Sharjah Khaleeji Commercial Bank Banque Nationale Agricole National Bank of Ras Al-Khaimah Saudi British Bank

1000 999.9

31-Oct-13

Gains

31-Aug-13

Country

30-Jun-13

Biggest Gainers (Weekly)

EGYPT 1.97% OMAN 1.57% TUNISIA 0.05% BAHRAIN 0.32%

Gains QATAR 8.82%

SAUDI ARABIA 35.52%

KUWAIT 13.19%

UAE 20.90%

50 www.cpifinancial.net

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