JEDDAH — Net earnings of GCC banks plummeted 24 percent year on year to $3 billion in the third quarter despite six percent year on year growth in net interest income and 21 percent increase in non-interest income primarily due to increases in provisions and costs, Global Investment House said Friday in its Banking Sector quarterly report. Total provisions of the banks increased 17 percent in the third quarter to $1.8 billion due to a 65 percent increase in Kuwait's provisions and a 62 percent increase in Saudi Arabia's provisions. “Although UAE banks witnessed a decrease in provisions, the current levels of provisions are higher than those of other GCC countries and remain a cause for concern,” Global said in its Banking Sector quarterly report. In the third quarter, UAE banks' provision to income ratio stood at 26 percent compared to the 16 percent for Saudi banks, 30 percent for Kuwait banks, six percent for Oman banks, and eight per cent for Qatar banks, the report said. “We expect UAE banks' provisioning for bad loans to hold ground in 2013, which, in turn, is likely to keep pressure on their profitability. Global said the banks under its coverage reported mixed earnings performance. “While Saudi banks posted a 68 percent slide in third quarter compared to the same 2011 period, net earnings of the banks in Kuwait, Oman, and Qatar increased 14 percent, 20 percent, and seven percent, respectively. UAE banks posted a marginal decline of one percent. Deposit base of the GCC banks surged 17 per cent in the third quarter, mainly led by Qatar (32 per cent), the UAE (17 percent), Kuwait (15 percent), and Saudi Arabia (13 percent). In the first half, the GCC banking sector recorded growth in assets and profits, QNB Group said separately. The collective assets of the largest 50 banks in the region increased by 7.7 percent in the year to 30 June 2012, reaching $1.28 trillion. — SG/Agencies
