THE BUSINESS GCC Top 50 Banks
Bottomed out? After a very difficult 2008 and equally painful 2009, it would seem the worst of the banking slump has passed and 2010 should offer a slight recovery, DARREN STUBING reports.
2009
proved to be another difficult year for the Gulf Cooperation Council (GCC) banking sector with the aftermath from the global financial crisis still heavily impacting income lines and balance sheets. Banking profitability in the region was once again weaker, mainly due to much higher provisioning charges connected to loan assets as well as securities, investments and real estate assets. Loan credit defaults continued to rise due to both corporate and retail exposures whereas asset values for some banks
had to continue to be written down, particularly those linked to the property sector. The latter was again under pressure in 2009, as demand remained extremely weak and many prominent developments remained on hold. In a circular connection, companies could not continue their development activities as many were not able to renew existing facilities or obtain new credit as banks reined in their exposures. Generally, the economies of the GCC states remained robust, with the price of oil improving from the sharp falls in
the previous year, and the oil price was at a high average level for 2009. This helped to support government and business positions during the year. For the second consecutive year, net profit for the top 50 GCC banks fell in 2009. The Gulf’s largest banks recorded a fall of 12.5 per cent last year, although the fall was lower than the significant decrease of 26 per cent in aggregated net profit in 2008. Once again, very large losses were notable at a handful of banks, including Gulf Finance House and Ithmaar Bank, as well sharp falls May 2010 gulfbusiness.com
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