GCC banks net profits drop 8.56% to $14.4b

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MUSCAT | The financial performance of the banking sector in the GCC collectively saw a drop in net profits by 8.56 per cent in 2009 reaching $14.40 billion against $15.75 billion in 2008, according to the latest report on the GCC banking sector by Global Investment HouseGlobal Investment House.

Among the member states, only Kuwait reported an increase in net profits of 70.22 per cent in 2009 while Bahraini banking sector reported the biggest losses in net profit, declining by 35.23 per cent last year.

"It is worth mentioning that the GCC governments are still offering direct and indirect support, which reduced the impact of the crisis. Qatari government role was very obvious when it interfered by buying portfolios of listed shares and real estate in banks at a value between QR30 billion and QR50 billion. Abu Dhabi government's role was noticeable as it injected $4.36 billion in five banks to strengthen their position in the middle of the crisis," GlobalGlobal report reveals.

The five biggest banks in the Gulf in terms of their market value reported increases in their net profit in 2009 despite the economic difficulties that faced the banking and financial sectors in the Gulf region and worldwide, which confirms their strength and ability to overcome challenges and crisis.

Elaborating the performance of the five biggest banks in the GCC, the GlobalGlobal report reveals that Al Rajhi Bank, the biggest bank in the Gulf, saw an increase of 3.7 per cent in its net profit to reach $1.8 billion in 2009 against U$1.74 billion in 2008.

The reason behind this increase is attributed to the development of the investment banking business and diversifying its sources of income, the report said noting that the banks profits are the highest among all banks in the gulf region.

Samba Financial Group reported an increase of 2.4 per cent in profits in 2009 (from $1.19 billion in 2008 to $1.22 billion in 2009), which was shown in the fourth quarter with an increase in net profits of 1.1 per cent ($220 billion in 2008 to $223 billion in 2009). This increase was due to the increase in operational revenues and a decrease in costs.

Qatar National Bank recorded a net income of $1.15 billion in 2009, up by 15.04 per cent from 2008 level of $1.0 billion. The board of directors its recommending cash dividends of 40 per cent par value and bonus shares of 30 percent.

Riyad Bank reported an increase in net profit of 14.8 per cent in 2009 compared to last year to reach $807.65 million compared to $703.43 million in 2008. Main banking activities represented in the credit portfolio reported an increase in net commissions, which was reflected in total net income. The net profit was $243 million in the fourth quarter in 2009, thus registering an increase of 72.4 per cent from the same period last year, and an increase of 20.1 per cent from the third quarter.

Net Profit of National Bank of Kuwait (NBK) increased by 3.87 per cent in 2009, to reach $920.23 million in 2009. It is worth mentioning that the last quarter's results were 4.5 times compared to the same period last year to reach $221.5 million. This result was despite of the provisions taken by the bank after the financial crisis.

© Times of Oman 2010