Makkah police arrest Yemeni and Egyptian suspects of fake Hajj campaign    400-800 year old giant coral colony discovered within AMAALA waters in the Red Sea    HR Ministry launches 'Ajeer Al-Hajj' service for seasonal work during Hajj 2025    Kafalah grants 1,900 loan guarantees worth over SR4.8 billion to SMEs during 1Q 2025    Council of Senior Scholars reaffirms performing Hajj without a permit is a sinful act    Syria thanks Saudi Arabia and Qatar for settling World Bank dues    King and Crown Prince offer condolence to Iranian president over the deadly port explosion    stc reports strong first-quarter 2025 results with 11% rise in net profit    Virgin Atlantic celebrates one month of nonstop service between London and Riyadh    Saudi Awwal Bank records SR2.1 billion net profit after zakat and income tax for 1Q25    Mahmoud Abbas appoints Hussein Al-Sheikh as PLO vice president in key succession move    Duran leads Al Nassr past Yokohama Marinos into AFC Champions League Elite semi-finals    Al Ahli cruise past Buriram into AFC Champions League Elite semi-finals    Saudi Arabia offers condolences to Iran following deadly Bandar Abbas port explosion    Saudi orchestra to perform at Sydney Opera House in May    Al Hilal thrash Gwangju to reach AFC Champions League Elite semi-finals    Saudi Theater Commission launches its Work and Learn Project in UK    The season has begun — and one comment shook us all    Average life expectancy in Saudi Arabia rises to78.8 years    Famed Philippine film star Nora Aunor dies at 71    Pakistani star's Bollywood return excites fans and riles far right    Veteran Bollywood actor Manoj Kumar dies at 87    Bollywood actress vindicated over boyfriend's death after media hounding    Grand Mufti rules against posting prayers and preaching in mosques on social media    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



GCC banks remain resilient, long-term outlook still positive
Published in The Saudi Gazette on 27 - 04 - 2016

GCC regional banking sector has entered a new paradigm where we see margin compression, tightening liquidity, moderate asset and profit growth, limited capital market activity, greater focus on cost reduction and a widespread need for greater capital and funding, KPMG said in its first GCC-listed bank results report titled "GCC Listed Bank Results: A New Paradigm", analyzing the published financial statements of 56 leading listed commercial banks across Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. However, banks have on the whole, fared well during 2015 and the outlook for the coming years remains relatively positive given the expectation of continued government support for the sector and committed infrastructure investment.
Omar Mahmood, Head of Financial Services for KPMG in the Middle East & South Asia, said "the banking sector in the region has moved a long way from the days of excess capital and liquidity. Our report reveals that the sector is no longer growing at double-digit growth rates. Banks are experiencing new challenges as a result of the current economic environment, greater regulatory oversight, supervision and stiffer competition. However the sector is still growing, although at a slower pace than previous years."
Despite the impact of margin compression caused by an increase in the cost of funds and greater competition for assets, both profitability and assets rose across the region (by 6.8 percent and 6.3 percent respectively on simple average). The continued rise in profitability and assets is largely due to the careful planning and the cautious approach adopted by banks. The report suggests that the coming year is likely to see further capital and fundraising activity to support growth and to manage Basel III capital and liquidity requirements, particularly given that capital adequacy and liquidity levels fell in 2015 compared with the previous year. The report also suggests that consolidation in the form of mergers and/or reorganizations could possibly take place in the near future as a result of stiff competition and increasing pressures on costs.
Net impairment charges have declined year on year by an average of 9.2 percent, reflecting the more cautious approach to lending adopted by banks in previous years. This trend may not continue due to a lag from the impact of the oil price decline on the wider economy, and with the implementation of IFRS 9, the new International Financial Reporting Standard, which will prescribe a completely new way of calculating credit losses which are likely to drive up impairment charges.
It is clear that the sector is looking for ways to mitigate current financial pressures as cost-to-income ratios have reduced by 7.4 percent on average since 2014. Mahmood further said "the reduction in cost-to income-ratios is backed up by an increase in banks looking to acquire consultancy services on cost-reduction, operational efficiency, digitalization and other ways to improve profitability. This early action will help to bolster bank's resilience moving forward."
Increasing regulation, despite creating additional pressure on banks, is having a positive impact on the sector – a trend which is expected to continue in the long-term. Basel III regulations, which are being adopted across the GCC, will continue to improve the sector's resilience against financial and economic stress, improve risk management and governance and strengthen banks' transparency.
Mahmood added that most banks are being forced to adapt to the challenging environment. "We are seeing banks compete more aggressively, focusing more on efficiencies, and seeking innovative ways to grow and deliver positive results whilst managing shareholder expectations. We firmly believe that some of the fundamental changes we are witnessing, whether it be increasing regulatory scrutiny or greater efficiency will help the financial services industry and provide for greater stability in the long-term."
Adrian Quinton, Head of Financial Services at KPMG in Saudi Arabia, said "Saudi Arabia has maintained its position as the largest banking market in the GCC, and whilst it still shows growth, solid capital ratios and stable impairment, there are pressures on liquidity, margins and impairment as the market heads in 2016 in common with the region as a whole. A combination of a small number of banks, a very strong regulator and increasing senior management focus on more sophisticated underwriting, capital modeling and provisioning should help the Saudi banks navigate the current turbulent period and come out stronger. Another positive note is the approved entry of two large international banks to the market which demonstrates the global view that the Saudi market is one with excellent long term potential."


Clic here to read the story from its source.