UAE banks remain best performers in the GCC

15/07/2015 07:23 AST

DUBAI: UAE banks continue to dominate the rankings, providing six of the top ten ranked banks. Saudi Arabia provided two of the other top ten, with Bahrain and Qatar contributing one each.

These four countries also provided Sharjah’s Invest bank was the best performing commercial bank in the GCC for the second year in a row in 2014, according to a comprehensive survey conducted by darien analytics.

National Bank of Ras Al Kheimah took second place, again, the same as last year, while Qatar’s Masraf Al Rayan moved up into third, replacing Saudi Arabia’s Al-Rajhi Bank which this year ranks fifth. All of the best 20 performing banks: 11 from the UAE and three each from Bahrain, Qatar and Saudi Arabia.

Taken as a whole, GCC commercial banks performed well in 2014, and continued to display strong capital levels and funding.

Only three banks declared net losses for 2014.

Two of those were alizz and Bank Nizwa, the recently created Omani Islamic banks whose financial performance is still constrained by the economics of business start-ups.

The third was Bahrain’s Ithmaar Bank, which was able to declare a smaller loss than in 2013, but whose financials remain precarious.

Of the 71 banks declaring net profits, all but eight reported higher net profits than in 2013. Capital levels are high: the median equity to asset ratio was 13.14 per cent (the asset figure does not include a credit conversion factor for off balance sheet instruments); and balance sheet funding is strong: the median ratio of customers’ deposits and equity to total liabilities was 84.53 per cent. But the picture was not entirely rosy. One third of banks reported lower net profit to average assets ratios than in 2013, and nearly half showed a deterioration in their cost to income ratios. How far this was due to falling international interest rates - many GCC banks are particularly vulnerable to this because they hold large amounts of non-interest bearing deposits - will become apparent during the course of 2015.

The Gulf Today