By Satish Kanady
DOHA: Net earnings of GCC’s leading banks increased 4.7 percent year-on-year to $5.3bn in Q4, 2015. Net profits of top banks in the UAE increased the most (11.8 percent), followed by Saudi Arabia (3.7 percent) and Kuwait (1.1 percent); however, net profit of Qatar declined 2.1 percent year-on-year.
The Global Research, which covered 17 leading banks in the GCC, including three in Qatar, noted net profit of the GCC aggregate declined 5.9 percent on quarter-on-quarter basis with Qatar leading the fall (-16.3 percent), followed by Saudi (-6.0 percent) and Kuwait (-5.1 percent). However UAE witnessed a sequential profit growth of 2.8 percent. The aggregate quarterly decline in profit can be ascribed to higher provisions.
The collective loans disbursed by GCC banks (under our coverage) increased by 9.1 percent y-o-y to $793bnn in Q4, 15, with Qatar leading (16.2 percent), followed by UAE (8.1 percent), Saudi (6.5 percent) and Kuwait (6.2 percent). The net interest income of leading GCC banks increased 5.0 percent in the quarter’ However, margins remained under pressure on YoY basis. The NII of banks in Saudi Arabia grew the most (8.1 percent YoY), followed by Kuwait (3.9 percent), Qatar (3.1 percent) and UAE (2.8 percent).
Qatar-based banks’ lending growth as driven by an increase in public sector spending backed by several initiatives taken by the government in the run up to FIFA World Cup 2020. Among Qatar-based banks, Qatar Islamic Bank (QIB), Doha Bank and QNB registered higher growth in lending of 46.1 percent, 14.5 percent and 14.8 percent YoY, respectively.
Non-interest income of GCC banks fell by 6.2 percent YoY during the quarter led by 1.1 percent YoY decline in fee income and lower investment gains. UAE (7.5 percent) recorded a positive change in non-interest income, while Qatar (-22.5 percent YoY), Kuwait (-16.2 percent) and Saudi (-0.9 percent) reported decline in non-interest income.
In Qatar, Qatar Islamic Bank (QIB) reported 16.2 percent YoY growth in non-financing income, while other banks reported a fall in their non-interest income.
Total assets of GCC banks under the coverage expanded 7.4 percent YoY to $1.3 trillion in 4Q15. Qatar-based banks witnessed the strongest growth in total assets (11.9 percent YoY), followed by banks in UAE (9.8 percent YoY), Saudi (3.4 percent) and Kuwait (2.4 percent).
The GCC banks’ operating expenses increased on YoY and QoQ basis. During Q4, 15, the operating expenses of global Research’s combined coverage grew 5.7 percent YoY to $3.6bn, primarily driven by Qatar (9.5 percent), followed by Kuwait (6.4 percent), Saudi (2.8 percent) and UAE(2.7 percent). In Qatar, operating expenses of Masraf Al Rayan rose (52.5 percent YoY), followed by Qatar Islamic Bank (18.0 percent) and Commercial Bank of Qatar (17.2 percent).
Provision expenses of all the countries, except Qatar increased in Q4, 15, led by Saudi (22.8 percent YoY), Kuwait (4.8 percent) and UAE (3.9 percent). Qatar (-11.8 percent YoY) on the other hand, reported a fall in its provision expenses. Among Qatar-based banks, Commercial Bank of Qatar reported 66.3 percent YoY fall in its provision expenses, leading to overall fall in the country’s total provisions.
The Peninsula
