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 Arabia welcomes Palestinian leadership reforms, appointment of Hussein Al-Sheikh    Ministry of Hajj issued over 150,000 Nusuk cards for the Hajj of 2025    Saudi Arabia deports 12,866 illegal residents in a week    Pope Francis laid to rest at historic funeral in Rome    Massive explosion at Iran's Shahid Rajaee Port injures over 500 people    SFDA clears first 44-ton medical shipment for Hajj pilgrims    Over 13 million worshipers pray at Rawdah Sharif in a year    Saudi orchestra to perform at Sydney Opera House in May    Al Hilal thrash Gwangju to reach AFC Champions League Elite semi-finals    Nammos Amala Resort to open soon with Saudi-Greek designs    Saudi Arabia completes 674 Vision 2030 initiatives, achieves 93% of KPIs as ninth-year milestone marked    GACA chief chairs 16th meeting of the Steering Committee on aviation's strategy    Alkhorayef praises advancements in Al-Kharj food industries sector    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 outperform international banks: BCG
Published in The Saudi Gazette on 03 - 04 - 2013

JEDDAH – Middle East banking revenues continued to grow at single digit rates in 2012 with a 6.9 percent increase, while profits increased by 8.1 percent due to an overproportional increase in extraordinary income, a recent study by The Boston Consulting Group revealed.
At an aggregate level, provisions for bad loans picked up by 2 percent, after having fallen last year, it said. Increases in operating costs exceeded revenue growth slightly with 7.2 percent.
While banks in Qatar grew revenues by 12 percent and banks in Saudi Arabia and Oman achieved high single digit growth rates, banks in the UAE, Kuwait and Bahrain achieved a revenue growth rate of 5 percent or below. Banks in all countries achieved above 7 percent profit growth rates, except in Kuwait with 3 percent.
In 2012, loan-loss provisions varied significantly by country. In particular, banks in Saudi Arabia and Kuwait had to build higher provisions due to increasing delinquencies in sectors such as real estate, construction, banks, financial services, and manufacturing, the report noted. UAE banks were, on aggregate, able to significantly reduce the existing high provisioning levels by 13 percent. Bahrain banks also saw higher LLPs but with a less steep growth rate.
In 2012, retail banking revenues in the GCC which had remained rather flat during the last few years experienced a further uptick of some 4 percent, largely due to an increase in the three biggest markets – the UAE, Saudi Arabia and Kuwait. Oman repeated the strong double digit growth of the previous year. On the whole, the variance between growth rates of individual banks in retail was very high and ranged from -39 percent to +19 percent.
GCC retail profits, which had been declining for several years, saw another significant uptick of 8 percent compared to 11 percent last year. Nevertheless, the profit level in 2012 remained slightly below 2005 and 2006 levels which were exceptional retail years in the GCC.
The corporate segment reached the top index level in revenues in 2012 but only with a minor growth of 3 percent. In terms of country breakdown, the UAE and Kuwait banks experienced a decline in corporate banking revenues while the other countries experienced a healthy increase of 6 percent or more. Profits declined slightly driven again by the countries with the highest increase in loan loss provisions, that is, Saudi Arabia and Kuwait.
In an environment of slower market growth smart strategies and better capabilities are essential to grow more than the competition.
Leading Middle East banks are striving for regional expansion to find new areas for growth. Many Middle East banks are prioritizing better customer service as a critical part of their agenda; quite a number actually want to become the best bank in customer experience in their countries. Other banks are in the process of identifying new growth areas in order to avoid a decline in revenues and there are a number of banks which are focusing on their IT and operations platforms in order to prevent costs from outgrowing revenues continuously.
“Middle East banks should approach these challenges in a professional way and have the foresight to invest in strategic areas. Only appropriate platforms in IT and operations, such as online banking and automation of processes will allow scalability of activities. This is an opportune time for Middle East banks to excel: their cost income ratios are still far below their international counterparts, be it in Europe, the US, Australia or Asia,” said Dr. Reinhold Leichtfuss, Senior Partner & Managing Director in BCG's Dubai office and leader of BCG's Financial Institutions practice in the Middle East.
In light of this, Middle East banks should use the opportunity to invest in capability development and expansion of their businesses, especially given that their cost income ratios are still far better than those of the international banks.
“The 2012 BCG index includes 32 banks from across the GCC capturing nearly 80 percent of the total regional banking sector”, he said.
He added: “While the performance of Middle East banks settled at high single digit growth figures in 2012, it still compared very well with the international banks which experienced a further revenue decline. This provides the Middle East banks the opportunity to undertake the necessary investments in capabilities and regional expansion.” — SG


Clic here to read the story from its source.