Region’s banking industry sees 10% revenue growth in 2014

Abu Dhabi: The Middle East’s banking industry maintained double digit revenue growth in 2014, with a 10 per cent increase, according to the latest study by The Boston Consulting Group, a management consulting firm.

The increase stemmed largely from customer segments such as retail and corporate banking along with international business and treasury.

While revenues of banks in the UAE grew 14 per cent and banks in Oman and Qatar maintained double digit growth, Saudi, Kuwaiti, and Bahraini banks experienced single digit growth rates.

The spread of profit growth rates was particularly wide, with banks in the UAE reporting a 26 per cent profit increase and those in Kuwait seeing a rise of 21 per cent. However, banks in Bahrain had to cope with profit decreases, the study said.

In 2014, loan-loss provisions dropped in all countries with the exception of Oman. Banks in Kuwait and Qatar, which achieved high growth rates in 2013, have shown double digit reductions in loan-loss provisioning. Banks in the UAE and KSA were also able to reduce in the single digits. This is the strongest reduction in LLPs since 2010.

The study also showed that retail banking revenues in the GCC experienced a further uptick of 7.9 per cent, largely due to an increase in Qatar, the UAE, and Bahrain. Kuwait also witnessed a healthy retail banking revenue growth of 6.3 per cent, followed by Saudi banks with 3.4 per cent.

GCC retail profits maintained single digit growth in 2014 with 3.6 per cent, which is slightly lower compared to 2013, when retail profits grew by 5.8 per cent. Banks in the UAE, Qatar, Bahrain, and Kuwait have shown higher double digit growth rates. In parallel, Saudi Arabia and Oman suffered a sharp decline in retail profits.

The study is part of The Boston Consulting Group’s annual banking performance indices measuring development of banking revenues and profits for leading Middle Eastern banks. The study was based on the banks’ 2014 annual results.

The index covers 40 banks in the GCC accounting for roughly 80 per cent of the total sector in the region.