Gulf Business May 2011 | Top 50 Banks

GCC'S TOP

BANKS

GCC'S TOP

5

BANKS GULF BUSINESS / 43

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GCC'S TOP

BANKS

Modest recovery in 2010 but challenging times remain

Following two difficult years, 2010 signified the stabilisation and recovery of the GCC banking sector after the impact of the global financial crisis. Returns for the sector improved for the first time since 2007. But as confidence remains fragile, 2011 is likely to be a year of continued modest improvement.

TEXT BY Darren Stubing

A

s expected, 2010 represented a recovery year for the GCC banking sector after two consecutive years of weaker returns.

Three quarters of banks in the GCC 50 list recorded higher net profit last year. This was a good performance given the conditions, but the fact that the remaining banks saw lower profits underlines the still challenging market

environment in the region. In 2009 well over one half of the GCC 50 banks recorded lower net profit.

Improved returns for the GCC were mainly driven by lower provisioning charges for most banks against both loans and investments. Non-performing loans in the region fell in 2010 following the sharp increase post the global and regional downturn and this led to a

lower cost of risk. Although overall asset quality improved in the region, some banks still recorded higher levels of bad debts. Asset values generally stabilised for both listed and unlisted securities, as well as for real estate, and so there was little need for further asset provisioning.

Slightly higher credit demand aided balance sheet growth and, in turn, net interest income. However, credit demand GULF BUSINESS / 45

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BANKS is still lacklustre and is certainly not expected to grow quickly this year.

Moreover, banks remain cautious in their lending activities, preferring to maintain good liquidity and to preserve capital levels, particularly as the recovery in loan asset quality continues.

International funding continues to be tight and the Sukuk and bond market is still to recover. The bond market had shown some signs of promise towards the end of 2010 and early 2011 but has retracted in activity due to weaker investor appetite. This has been caused by the political instability and unrest in the wider region.

The political risk is weighing on both investor and consumer sentiment;

economies in the region are reasonably solid in terms of economic growth. The price of oil was at a higher average level throughout the year, underpinning economic and infrastructure growth.

Recent strategies by governments of increasing public sector salaries as well as one off payments will mean that the price of oil must remain high for governments, otherwise deficits will grow, placing pressure on fiscal positions.

For the first time since 2007, net profit for the top 50 Gulf banks increased in 2010. The GCC’s largest banks achieved a healthy increase of 15.1 per cent in profit last year following falls of 1.5 per cent and 26.0 per cent respectively in the previous two years.

Significant improvements in terms of net profit were seen at a number of banks, including Abu Dhabi Islamic Bank, Saudi Hollandi Bank, Commercial Bank of Kuwait, Commercial Bank International and Bank Al Jazira. Other banks including Abu Dhabi Commercial Bank, Gulf Bank, Gulf International Bank and Kuwait International Bank moved to record good levels of net profit following large losses in the previous year. Gulf International Bank’s profit was its first in four years.

The financial positions of nearly all GCC 50 banks strengthened in 2010 with improved capital adequacy helped by higher retained earnings, and moderate loan growth thereby aiding liquidity

Regional variation points Despite some economic profile similarities and close parallels in infrastructure and policy, there is noted variation amongst sector performance in Gulf countries. The Qatari banking sector is currently the most profitable amongst the GCC with banks registering higher rates of growth for loan assets in particular. The Qatari banking sector achieved a return on assets of 2.7 per cent in 2010. The Qatari economy continues to grow strongly aided by its huge petroleum production. The growth looks likely to continue leading up to the 2022 football World Cup. New banking regulations implemented by the Qatar Central Bank may impact credit growth and in turn profitability. The new regulations are aimed at tightening personal borrowing to both nationals and expats. The central bank also recently ordered conventional banks to close their Islamic banking operations by the end of the year.

Although displaying some mixed results, Saudi Arabian banks are profitable and the sector achieves the second highest return in the Gulf at 1.96 per cent. This is largely due to its market size and fairly limited number of banks chasing that market share. The sector was hit by exposures to the Saad and Algosaibi groups but in general it has not been impacted by wider problems seen in other countries.

The UAE banking sector remains profitable with a return on assets of 1.35 per cent but has also been negatively

impacted by rising non-performing loans, particularly to the corporate sector, up to the peak seen at the end of June 2010. Credit growth has also been low in the UAE, but not across the whole UAE sector as many medium and smallersized banks have performed very well, carving out and expanding successful niches.

The Kuwaiti banking sector has been among the GCC’s most impacted, through problems and losses connected to real estate companies and investment vehicles together with securities losses at some banks previously. Its return on assets was 1.16 per cent in 2010. Credit growth rates in Kuwait are low but Kuwaiti banks should continue to see some modest recovery.

The small Omani banking sector has avoided many of the recent problems seen elsewhere and its returns have remained steady at 1.71 per cent. Bahraini banks achieved a return on assets of 0.93 per cent in 2010. This was partly due to the continued large losses at Ithmaar Bank and still low returns at the Bahrain-based international banks.

Country by country variation in performance will continue in the GCC with those with better growth prospects recording higher returns driven by increased credit demand. Overall however, sentiment should improve as the higher oil price is maintained. The one threat is the wider regional volatility and whether this will diminish.

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BANKS GCC 50 Total Assets Rank 2010 and 2009 Rank Rank Bank Country 2010 2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

1 2 5 3 4 8 9 6 7 10 11 12 13 14 15 17 18 16 19 20 24 21 28 22 25 26 23 31 27 30 29 31 35 34 33 44 36 37 38 42 43 39 40 50 41 45 48 46 47 49

Emirates NBD National Commercial Bank National Bank of Qatar National Bank of Abu Dhabi Samba Al Rajhi Banking Corporation Abu Dhabi Commercial Bank Riyad Bank National Bank of Kuwait Kuwait Finance House First Gulf Bank Saudi British Bank Banque Saudi Fransi Arab National Bank Arab Banking Corporation Ahli United Bank Dubai Islamic Bank Mashreqbank Union National Bank Abu Dhabi Islamic Bank Commercial Bank of Qatar Gulf Bank Albaraka Bank Group Gulf International Bank Bank Muscat Burgan Bank Saudi Hollandi Qatar Islamic Bank Saudi Investment Bank Doha Bank Commercial Bank of Kuwait Commercial Bank of Dubai Al Rayan Bank Al Jazira Ahli United Bank Kuwait Alinma Bank Ithmaar Bank Bank of Bahrain Kuwait National Bank of Bahrain RAKBANK Bank Al Bilad Bank of Sharjah Al Khalij Commercial Bank Boubyan Bank National Bank of Oman Sharjah Islamic Bank Bank Dhofar Kuwait International Bank Arcapita National Bank of Umm Al Qaiwain

UAE KSA Qatar UAE KSA KSA UAE KSA Kuwait Kuwait UAE KSA KSA KSA Bahrain Bahrain UAE UAE UAE UAE Qatar Kuwait Bahrain Bahrain Oman Kuwait KSA Qatar KSA Qatar Kuwait UAE Qatar KSA Kuwait KSA Bahrain Bahrain Bahrain UAE KSA UAE Qatar Kuwait Oman UAE Oman Kuwait Bahrain UAE

Total

2010 Assets US$000

2009 Assets US$000

Growth 2009-2010%

77,924,282 75,299,198 61,368,804 57,562,556 49,977,557 49,290,909 48,535,582 46,281,715 45,968,999 44,720,091 38,322,353 33,432,764 32,858,221 30,942,604 28,105,000 26,457,461 24,540,640 23,099,865 22,265,113 20,489,387 17,175,845 16,392,594 15,879,933 15,527,700 15,197,734 14,789,363 14,368,643 14,241,786 13,730,995 12,975,168 12,900,884 10,484,957 9,528,399 8,804,859 8,746,717 7,111,663 6,743,569 6,508,449 6,048,005 5,820,842 5,631,116 5,613,308 5,597,544 4,690,854 4,688,062 4,546,692 4,322,846 4,069,338 3,643,245 3,603,403

76,661,171 68,653,913 49,266,185 53,582,090 49,471,538 45,527,928 43,617,963 47,039,802 45,998,622 40,237,550 34,160,779 33,823,457 32,152,650 29,412,619 25,965,000 23,573,983 22,952,429 25,761,488 20,616,831 17,447,319 15,746,527 16,906,255 13,166,277 16,207,700 15,196,716 14,617,810 15,762,591 10,789,203 13,372,803 12,636,314 12,812,848 10,014,444 6,627,418 7,993,761 8,056,042 4,615,038 6,105,934 6,060,883 5,632,314 4,660,391 4,642,985 4,917,466 4,814,313 3,438,260 4,670,683 4,349,183 3,920,169 4,063,907 4,009,970 3,780,261

1.65 9.68 24.57 7.43 1.02 8.27 11.27 -1.61 -0.06 11.14 12.18 -1.16 2.19 5.20 8.24 12.23 6.92 -10.33 7.99 17.44 9.08 -3.04 20.61 -4.20 0.01 1.17 -8.84 32.00 2.68 2.68 0.69 4.70 43.77 10.15 8.57 54.10 10.44 7.38 7.38 24.90 21.28 14.15 16.27 36.43 0.37 4.54 10.27 0.13 -9.15 -4.68

1,116,827,617

1,045,511,783

Net Profit $000

Return on Assets 2010%

636,859 1,280,908 1,566,530 1,002,766 1,182,699 1,805,554 106,348 753,234 1,079,530 255,808 964,974 502,174 747,010 508,667 199,000 292,199 221,305 227,771 367,559 278,673 449,253 67,922 193,163 100,400 263,883 55,317 210,782 366,630 117,295 289,628 144,333 223,411 332,787 77,099 81,856 4,056 -139,612 104,120 114,415 273,006 24,619 109,977 117,226 21,771 70,575 72,529 86,442 59,708 34,299 95,507

0.82 1.70 2.55 1.74 2.37 3.66 0.22 1.63 2.35 0.57 2.52 1.50 2.27 1.64 0.71 1.10 0.90 0.99 1.65 1.36 2.62 0.41 1.22 0.65 1.74 0.37 1.47 2.57 0.85 2.23 1.12 2.13 3.49 0.88 0.94 0.06 -2.07 1.60 1.89 4.69 0.44 1.96 2.09 0.46 1.51 1.60 2.00 1.47 0.94 2.65

6.82 18,001,965

1.61

NB. Arcapita 6 months to end December 2010

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GCC'S TOP

BANKS GCC 50 Total Capital Rank 2010 and 2009 Rank Rank Bank Country 2010 2009

2010 Capital US$000

2009 Capital US$000

Growth 2009-2010%

Net Profit 2010 $000

Return on Equity 2010%

1 1 Emirates NBD UAE 2 2 National Commercial Bank KSA 3 3 Al Rajhi Banking Corporation KSA 4 5 National Bank of Kuwait Kuwait 5 4 Riyad Bank KSA 6 10 National Bank of Qatar Qatar 7 7 Samba KSA 8 6 First Gulf Bank UAE 9 9 National Bank of Abu Dhabi UAE 10 8 Kuwait Finance House Kuwait 11 11 Abu Dhabi Commercial Bank UAE 12 12 Banque Saudi Fransi KSA 13 13 Alinma Bank KSA 14 14 Arab National Bank KSA 15 15 Saudi British Bank KSA 16 20 Arab Banking Corporation Bahrain 17 16 Commercial Bank of Qatar Qatar 18 17 Mashreqbank UAE 19 18 Union National Bank UAE 20 22 Dubai Islamic Bank UAE 21 19 Ahli United Bank Bahrain 22 21 Qatar Islamic Bank Qatar 23 24 Abu Dhabi Islamic Bank UAE 24 23 Saudi Investment Bank KSA 25 25 Bank Muscat Oman 26 28 Al Rayan Qatar 27 31 Burgan Bank Kuwait 28 26 Gulf International Bank Bahrain 29 27 Albaraka Bank Group Bahrain 30 32 Saudi Hollandi KSA 31 30 Commercial Bank of Kuwait Kuwait 32 29 Doha Bank Qatar 33 33 Commercial Bank of Dubai UAE 34 34 Gulf Bank Kuwait 35 36 Al Khalij Commercial Bank Qatar 36 37 Bank Al Jazira KSA 37 39 Bank of Sharjah UAE 38 38 Sharjah Islamic Bank UAE 39 35 Arcapita Bahrain 40 44 RAKBANK UAE 41 40 Investcorp Bahrain 42 41 Ahli United Bank Kuwait Kuwait 43 42 National Bank of Umm Al Qaiwain UAE 44 50 Boubyan Bank Kuwait 45 43 Bank Al Bilad KSA 46 47 National Bank of Bahrain Bahrain 47 48 Kuwait International Bank Kuwait 48 46 National Bank of Oman Oman 49 45 Ithmaar Bank Bahrain 50 49 Bank of Bahrain Kuwait Bahrain Total

9,188,562 8,761,785 8,084,744 7,949,022 7,795,525 6,811,178 6,781,249 6,706,003 6,565,047 5,710,348 5,328,981 4,806,146 4,165,481 4,105,782 4,045,853 3,860,000 3,434,027 3,371,898 3,248,271 2,865,902 2,752,175 2,506,595 2,208,182 2,171,033 2,068,556 1,957,910 1,928,522 1,918,000 1,818,190 1,703,188 1,660,365 1,657,828 1,600,583 1,463,698 1,443,786 1,204,138 1,196,551 1,170,705 1,122,408 1,011,805 975,450 945,453 870,014 848,857 827,456 699,388 698,957 690,414 654,016 639,739 155,999,764

8,704,232 8,229,376 7,664,236 6,552,591 7,529,452 5,460,442 5,949,354 6,235,439 5,565,088 5,580,719 5,197,419 4,200,475 4,161,424 3,860,871 3,478,744 2,581,000 3,299,501 3,225,563 2,904,335 2,445,086 2,581,431 2,473,929 1,945,150 1,980,835 1,847,574 1,637,845 1,554,025 1,779,400 1,736,845 1,502,086 1,570,754 1,607,358 1,456,564 1,453,498 1,326,897 1,196,231 1,115,355 1,160,989 1,429,268 761,496 960,000 845,813 820,197 310,530 800,582 641,941 617,257 650,366 711,435 614,346 141,915,343

5.56 6.47 5.49 21.31 3.53 24.74 13.98 7.55 17.97 2.32 2.53 14.42 0.10 6.34 16.30 49.55 4.08 4.54 11.84 17.21 6.61 1.32 13.52 9.60 11.96 19.54 24.10 7.79 4.68 13.39 5.70 3.14 9.89 0.70 8.81 0.66 7.28 0.84 -21.47 32.87 1.61 11.78 6.07 173.36 3.36 8.95 13.24 6.16 -8.07 4.13 9.92

636,859 1,280,908 1,805,554 1,079,530 753,234 1,566,530 1,182,699 964,974 1,002,766 255,808 106,348 747,010 4,056 508,667 502,174 199,000 449,253 227,771 367,559 221,305 292,199 366,630 278,673 117,295 263,883 332,787 55,317 100,400 193,163 210,782 144,333 289,628 223,411 67,922 117,226 77,099 109,977 72,529 34,299 273,006 56,235 81,856 95,507 21,771 24,619 114,415 59,708 70,575 -139,612 104,120 17,971,758

6.93 14.62 22.33 13.58 9.66 23.00 17.44 14.39 15.27 4.48 2.00 15.54 0.10 12.39 12.41 5.16 13.08 6.75 11.32 7.72 10.62 14.63 12.62 5.40 12.76 17.00 2.87 5.23 10.62 12.38 8.69 17.47 13.96 4.64 8.12 6.40 9.19 6.20 3.06 26.98 5.77 8.66 10.98 2.56 2.98 16.36 8.54 10.22 -21.35 16.28 11.52

NB. Arcapita and Investcorp 6 months to Dec. 2010

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BANKS GCC 50 NET PROFIT Rank 2010 and 2009 Rank 2010

Rank Bank Country 2009

1 1 Al Rajhi Banking Corporation KSA 2 3 National Bank of Qatar Qatar 3 4 National Commercial Bank KSA 4 2 Samba KSA 5 5 National Bank of Kuwait Kuwait 6 8 National Bank of Abu Dhabi UAE 7 7 First Gulf Bank UAE 8 9 Riyad Bank KSA 9 10 Banque Saudi Fransi KSA 10 6 Emirates NBD UAE 11 11 Arab National Bank KSA 12 12 Saudi British Bank KSA 13 13 Commercial Bank of Qatar Qatar 14 14 Union National bank UAE 15 15 Qatar Islamic Bank Qatar 16 20 Al Rayan Qatar 17 21 Ahli United Bank Bahrain 18 18 Doha Bank Qatar 19 43 Abu Dhabi Islamic Bank UAE 20 23 RAKBANK UAE 21 24 Bank Muscat Oman 22 19 Kuwait Finance House Kuwait 23 17 Mashreqbank UAE 24 22 Commercial Bank of Dubai UAE 25 16 Dubai Islamic Bank UAE 26 42 Saudi Hollandi KSA 27 26 Arab Banking Corporation Bahrain 28 25 Albaraka Bank Group Bahrain 29 46 Commercial Bank of Kuwait Kuwait 30 27 Saudi Investment Bank KSA 31 39 Al Khalij Commercial Bank Qatar 32 29 National Bank of Bahrain Bahrain 33 28 Bank of Sharjah UAE 34 49 Abu Dhabi Commercial Bank UAE 35 30 Bank of Bahrain Kuwait Bahrain 36 50 Gulf International Bank Bahrain 37 31 National Bank of Umm Al Qaiwain UAE 38 35 Bank Dhofar Oman 39 32 Invest Bank UAE 40 41 Ahli United Bank Kuwait Kuwait 41 45 Bank Al Jazira KSA 42 34 Sharjah Islamic Bank UAE 43 38 National Bank of Oman Oman 44 48 Gulf Bank Kuwait 45 47 Kuwait International Bank Kuwait 46 37 United Arab Bank UAE 47 36 Investcorp Bahrain 48 33 Burgan Bank Kuwait 49 40 National Bank of Fujairah UAE 50 46 Commercial Bank International UAE Total

Net Profit 2010 US$000

Net Profit 2009 US$000

Growth 2009-2010%

1,805,554 1,566,530 1,280,908 1,182,699 1,079,530 1,002,766 964,974 753,234 747,010 636,859 508,667 502,174 449,253 367,559 366,630 332,787 292,199 289,628 278,673 273,006 263,883 255,808 227,771 223,411 221,305 210,782 199,000 193,163 144,333 117,295 117,226 114,415 109,977 106,348 104,120 100,400 95,507 86,442 81,912 81,856 77,099 72,529 70,575 67,922 59,708 58,895 56,235 55,317 46,529 38,960 18,339,362

1,804,594 1,150,678 1,099,029 1,216,047 950,232 822,199 901,978 808,129 658,081 910,028 631,203 541,941 418,570 315,155 363,216 241,939 226,086 267,478 21,243 197,699 191,475 255,951 289,828 218,716 330,052 22,915 154,000 167,386 542 143,672 45,960 113,883 129,457 -139,613 93,130 -152,600 92,859 65,956 78,551 33,998 7,340 70,824 54,819 -100,046 -29,348 55,606 60,200 73,428 38,198 14,266 15,926,930

0.05 36.14 16.55 -2.74 13.61 21.96 6.98 -6.79 13.51 -30.02 -19.41 -7.34 7.33 16.63 0.94 37.55 29.24 8.28 1,211.83 38.09 37.82 -0.06 -21.41 2.15 -32.95 819.84 29.22 15.40 26,544.74 -18.36 155.06 0.47 -15.05 NA 11.80 NA 2.85 31.06 4.28 140.77 950.44 2.41 28.74 NA NA 5.91 -6.59 -24.67 21.81 173.09 15.15

NB. Investcorp and Arcapita 6 months to Dec 2010

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BANKS profiles. The customer deposit market remains by far the main source of funding for Gulf banks and the competition in all GCC countries remains intense. However, customer deposit funding did improve in 2010, albeit modestly.

The Gulf’s top 50 banks’ consolidated assets rose by a slightly higher 6.8 per cent in 2010 to $1.1 trillion. The rise in the previous year was just over four per cent and hence in real terms balance sheets have barely grown over the past two years, underlying the challenging environment and fragile confidence for both the corporate and retail sectors.

Total shareholders’ equity for the GCC 50 banks grew by a higher 9.9 per cent in 2010 and hence overall leverage fell

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once. Total equity stood at $156 billion at end 2010. This represented a higher 14.0 per cent of total assets against 13.6 per cent in the previous year.

The largest bank by assets in the

Gulf region in 2010 remained the UAE’s Emirates NBD with assets of $77.9 billion. The bank’s asset growth was only by two per cent however.

Qatari banks once again enjoyed by far

GCC 50 Banks: return on assets (%) 3.5 3 2.5 2 1.5 1 0.5 0

2005

2006

2007

2008

2009

2010

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GCC'S TOP

BANKS the best growth in terms of assets in 2010, reflecting the continued good performance of the domestic economy. Qatari banks’ assets grew by a high 21 per cent in 2010.

The next highest growth was seen in Bahrain at a much lower 7.6 per cent with UAE banks third with growth of 6.3 per cent. Assets for banks in Saudi Arabia and Kuwait grew by just four per cent each with a lower two per cent in Oman.

For Qatari banks, Al Rayan recorded a strong increase in assets of 44 per cent – Al Rayan’s asset growth was in fact the second highest in the GCC 50 list, beaten only by Saudi Arabia’s Alinma Bank – followed by Qatar Islamic Bank at 32 per cent and Qatar National Bank, the country’s largest bank, with growth of

43-65 Top 50 banks.indd 55

25 per cent. Following this growth Qatar National Bank moved up two places in ranking to become the third largest bank by assets in the GCC at end 2010.

For UAE banks, the fast growing

RAKBANK recorded the highest increase in assets, 25 per cent to $5.8 billion, followed by Abu Dhabi Islamic Bank with asset growth of 17 per cent. Abu Dhabi Commercial Bank

GCC 50 Banks: return on EQUITY (%) 25 20 15 10 5 0

2005

2006

2007

2008

2009

2010

4/26/11 4:38:58 PM

GCC'S TOP

BANKS GCC 50 Net Profit Rank 2010 and 2009 by Countries BAHRAIN Country Bank Rank

Net Profit 2010 US$000

Net Profit 2009 US$000

Growth 2009-2010%

1

Ahli United Bank

292,199

226,086

29.24

2

Arab Banking Corporation

199,000

154,000

29.22

3

Albaraka Bank Group

193,163

167,386

15.40

4

National Bank of Bahrain

114,415

113,883

0.47

5

Bank of Bahrain Kuwait

104,120

93,130

11.80

100,400

-152,600

NA

56,235

60,200

-6.59

6

Gulf International Bank

7

Investcorp

8

Arcapita

34,299

-190,715

NA

9

Ithmaar Bank

-139,612

-251,508

NA

Net Profit 2010 US$000

Net Profit 2009 US$000

Growth 2009-2010%

21.96

UAE Country Bank Rank 1

National Bank of Abu Dhabi

1,002,766

822,199

2

First Gulf Bank

964,974

901,978

6.98

3

Emirates NBD

636,859

910,028

-30.02

4

Union National Bank

367,559

315,155

16.63

5

Abu Dhabi Islamic Bank

278,673

21,243

1,211.83

6

RAKBANK

273,006

197,699

38.09

7

Mashreqbank

227,771

289,828

-21.41

8

Commercial Bank of Dubai

223,411

218,716

2.15

9

Dubai Islamic Bank

221,305

330,052

-32.95

10

Bank of Sharjah

109,977

129,457

-15.05

11

Abu Dhabi Commercial Bank

106,348

-139,613

NA

12

National Bank of Umm Al Qaiwain

95,507

92,859

2.85

13

Invest Bank

81,912

78,551

4.28

14

Sharjah Islamic Bank

72,529

70,824

2.41

15

United Arab Bank

58,895

55,606

5.91

16

National Bank of FujaIrah

46,529

38,198

21.81

17

Commercial Bank International

38,960

14,266

173.09

Net Profit 2010 US$000

Net Profit 2009 US$000

Growth 2009-2010%

1,079,530

950,232

13.61

255,808

255,951

-0.06

KUWAIT Country Bank Rank 1

National Bank of Kuwait

2

Kuwait Finance House

3

Commercial Bank of Kuwait

144,333

542

26,544.74

4

Ahli United Bank Kuwait

81,856

33,998

140.77

5

Gulf Bank

67,922

-100,046

NA

6

Kuwait International Bank

59,708

-29,348

NA

7

Burgan Bank

55,317

73,428

-24.67

8

Boubyan Bank

21,771

-184,230

NA

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GCC'S TOP

BANKS GCC 50 Net Profit Rank 2010 and 2009 by Countries OMAN Country Bank Rank

Net Profit 2010 US$000

Net Profit 2009 US$000

Growth 2009-2010%

37.82

1

Bank Muscat

263,883

191,475

2

Bank Dhofar

86,442

65,956

31.06

3

National Bank of Oman

70,575

54,819

28.74

4

Oman International Bank

45,675

55,902

-18.29

Net Profit 2010 US$000

Net Profit 2009 US$000

Growth 2009-2010%

36.14

QATAR Country Bank Rank 1

National Bank of Qatar

1,566,530

1,150,678

2

Commercial Bank of Qatar

449,253

418,570

7.33

3

Qatar Islamic Bank

366,630

363,216

0.94

4

Al Rayan

332,787

241,939

37.55

5

Doha Bank

289,628

267,478

8.28

6

Al Khalij Commercial bank

117,226

45,960

155.06

Net Profit 2010 US$000

Net Profit 2009 US$000

Growth 2009-2010%

SAUDI ARABIA Country Bank Rank 1

Al Rajhi Banking Corporation

1,805,554

1,804,594

0.05

2

National Commercial Bank

1,280,908

1,099,029

16.55

3

Samba

1,182,699

1,216,047

-2.74

4

Riyad Bank

753,234

808,129

-6.79

5

Banque Saudi Fransi

747,010

658,081

13.51

6

Arab National Bank

508,667

631,203

-19.41

7

Saudi British Bank

502,174

541,941

-7.34

8

Saudi Hollandi

210,782

22,915

819.84

9

Saudi Investment Bank

117,295

143,672

-18.36

10

Bank Al Jazira

77,099

7,340

950.44

11

Bank Al Bilad

24,619

-66,237

NA

12

Alinma Bank

4,056

161,424

-97.49

achieved asset growth of 11 per cent in 2010, to $48.5 billion, and moved up two places to rank seventh largest in the Gulf.

Saudi Arabian banks recorded mixed results. The GCC’s second largest bank by assets, National Commercial Bank, achieved good growth of 10 per cent with assets of $75 billion. Riyad Bank and Saudi British Bank saw assets fall slightly, again indicative of a more prudent approach.

Returns for the GCC 50 banks also improved in 2010 for the first time in three years. The return on assets for the top 50 GCC banks in 2010 was 1.61 per cent, up from a level of 1.51 per cent in 2009.

By net profit, Saudi Arabia’s Al Rajhi Banking and Investment Corporation recorded the largest net profit in the Gulf.

Although barely moving year-on-year, its net profit of $1.8 billion is by some way the largest. The gap was, however,

narrowed by an impressive performance at Qatar National Bank, which saw its net profit grow by 36 per cent to $1.6 billion, overtaking National Commercial Bank, to rank second by net profit despite the flagship Saudi bank also recording a good increase of 16 per cent in net profit.

Other good performances included National Bank of Kuwait’s net profit rising by 14 per cent to around $1.1 billion and National Bank of Abu Dhabi’s net profit GULF BUSINESS / 59

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GCC'S TOP

BANKS GCC 50 TOTAL ASSETS Rank 2010 and 2009 by Countries BAHRAIN Country Bank Rank

2010 Assets US$000

2009 Assets Growth % US$000

Net Profit 2010 US$000

ROA 2010%

0.71

1

Arab Banking Corporation

28,105,000

25,965,000

8.24

199,000

2

Ahli United Bank

26,457,461

23,573,983

12.23

292,199

1.10

3

Albaraka Bank Group

15,879,933

13,166,277

20.61

193,163

1.22

4

Gulf International Bank

15,527,700

16,207,700

-4.20

100,400

0.65

5

Ithmaar Bank

6,743,569

6,105,934

10.44

-139,612

-2.07

6

Bank of Bahrain Kuwait

6,508,449

6,060,883

7.38

104,120

1.60

7

National Bank of Bahrain

6,048,005

5,632,314

7.38

114,415

1.89

8

Arcapita

3,643,245

4,009,970

-9.15

34,299

0.94

9

Investcorp

2,912,948

3,214,000

-9.37

56,235

1.93

NB. Arcapita and Investcorp 6 months to Dec. 2010

UAE Country Bank Rank

2010 Assets US$000

2009 Assets Growth % US$000

Net Profit 2010 US$000

ROA 2010%

0.82

1

Emirates NBD

77,924,282

76,661,171

1.65

636,859

2

National Bank of Abu Dhabi

57,562,556

53,582,090

7.43

1,002,766

1.74

3

Abu Dhabi Commercial Bank

48,535,582

43,617,963

11.27

106,348

0.22

4

First Gulf Bank

38,322,353

34,160,779

12.18

964,974

2.52

5

Dubai Islamic Bank

24,540,640

22,952,429

6.92

221,305

0.90

23,099,865

25,761,488

-10.33

227,771

0.99

22,265,113

20,616,831

7.99

367,559

1.65 1.36

6

Mashreqbank

7

Union National bank

8

Abu Dhabi Islamic Bank

20,489,387

17,447,319

17.44

278,673

9

Commercial Bank of Dubai

10,484,957

10,014,444

4.70

223,411

2.13

10

RAKBANK

5,820,842

4,660,391

24.90

273,006

4.69

11

Bank of Sharjah

5,613,308

4,917,466

14.15

109,977

1.96

12

Sharjah Islamic Bank

4,546,692

4,349,183

4.54

72,529

1.60

13

National Bank of Umm Al Qaiwain

3,603,403

3,780,261

-4.68

95,507

2.65

14

National Bank of Fujairah

3,512,115

3,237,376

8.49

46,529

1.32

15

Commercial Bank International

3,177,488

2,976,345

6.76

29,373

0.92

16

Invest Bank

2,814,729

2,633,366

6.89

81,912

2.91

17

United Arab Bank

1,946,574

1,904,418

2.21

58,895

3.03

NB Commercial Bank International Assets Sep 2010

KUWAIT Country Bank Rank

2010 Assets US$000

2009 Assets Growth % US$000

Net Profit 2010 US$000

ROA 2010%

1

National Bank of Kuwait

45,968,999

45,998,622

-0.06

1,079,530

2.35

2

Kuwait Finance House

44,720,091

40,237,550

11.14

255,808

0.57

3

Gulf Bank

16,392,594

16,906,255

-3.04

67,922

0.41

4

Burgan Bank

14,789,363

14,617,810

1.17

55,317

0.37

5

Commercial Bank of Kuwait

12,900,884

12,812,848

0.69

144,333

1.12

6

Ahli United Bank Kuwait

8,746,717

8,056,042

8.57

81,856

0.94

7

Boubyan Bank

4,690,854

3,438,260

36.43

21,771

0.46

8

Kuwait International Bank

4,069,338

4,063,907

0.13

59,708

1.47

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GCC'S TOP

BANKS GCC 50 TOTAL ASSETS Rank 2010 and 2009 by Countries OMAN Country Bank Rank

2010 Assets US$000

2009 Assets Growth % US$000

Net Profit 2010 US$000

ROA 2010%

1.74

1

Bank Muscat

15,197,734

15,196,716

0.01

263,883

2

National Bank of Oman

4,688,062

4,670,683

0.37

70,575

1.51

3

Bank Dhofar

4,322,846

3,920,169

10.27

86,442

2.00

4

Oman International Bank

3,001,578

2,699,558

11.19

45,675

1.52

2009 Assets Growth % US$000

Net Profit 2010 US$000

ROA 2010%

2.55

QATAR Country Bank Rank

2010 Assets US$000

1

National Bank of Qatar

61,368,804

49,266,185

24.57

1,566,530

2

Commercial Bank of Qatar

17,175,845

15,746,527

9.08

449,253

2.62

3

Qatar Islamic Bank

14,241,786

10,789,203

32.00

503,610

3.54

4

Doha Bank

2,975,168

12,636,314

2.68

289,628

2.23

5

Al Rayan

9,528,399

6,627,418

43.77

332,787

3.49

6

Al Khalij Commercial Bank

5,597,544

4,814,313

16.27

117,226

2.09

2009 Assets Growth % US$000

Net Profit 2010 US$000

ROA 2010%

SAUDI ARABIA Country Bank Rank

2010 Assets US$000

1

National Commercial Bank

75,299,198

68,653,913

9.68

1,280,908

1.70

2

Samba

49,977,557

49,471,538

1.02

1,182,699

2.37

49,290,909

45,527,928

8.27

1,805,554

3.66

46,281,715

47,039,802

-1.61

753,234

1.63

33,432,764

33,823,457

-1.16

502,174

1.50

3

Al Rajhi Banking Corporation

4

Riyad Bank

5

Saudi British Bank

6

Banque Saudi Fransi

32,858,221

32,152,650

2.19

747,010

2.27

7

Arab National Bank

30,942,604

29,412,619

5.20

508,667

1.64

8

Saudi Hollandi

14,368,643

15,762,591

-8.84

210,782

1.47

9

Saudi Investment Bank

13,730,995

13,372,803

2.68

117,295

0.85

10

Bank Al Jazira

8,804,859

7,993,761

10.15

77,099

0.88

11

Alinma Bank

7,111,663

4,615,038

54.10

4,056

0.06

12

Bank Al Bilad

5,631,116

4,642,985

21.28

24,619

0.44

growing by 22 per cent to $1 billion.

Amongst the larger banks in the list, weaker performances were seen at Emirates NBD with profit down by 30 per cent to $637 million, Arab National Bank of Saudi Arabia’s net profit falling by 19 per cent to $509 million, and Mashreqbank’s net profit down by 21 per cent to $228 million.

By return on assets, the best profitability

in the GCC 50 list is RAKBANK which achieved an impressive return on assets of 4.69 per cent in 2010. Second ranked is Al Rajhi with a return on assets of 3.66 per cent followed by Al Rayan Bank with 3.49 per cent. These banks also filled the top places in the previous year.

By equity, the largest bank is again Emirates NBD with total shareholders’ equity of $9.2 billion at end 2010

following a six per cent increase.

National Commercial Bank and Al Rajhi Bank remained second and third respectively. The main movers amongst the largest banks by capital included National Bank of Kuwait which saw its equity increase by 21 per cent to $7.9 billion, moving up to rank fourth from fifth, and Qatar National Bank whose equity grew by 25 per cent to $6.8

62 / MAY 2011

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GCC'S TOP

BANKS GCC 50 TOTAL CAPITAL Rank 2010 and 2009 by Countries BAHRAIN Country Bank Rank

2010 Capital US$000

2009 Capital Growth % US$000

Net Profit 2010 US$000

ROE 2010%

1

Arab Banking Corporation

3,860,000

2,581,000

49.55

199,000

5.16

2

Ahli United Bank

2,752,175

2,581,431

6.61

292,199

10.62

3

Gulf International Bank

1,918,000

1,779,400

7.79

100,400

5.23

4

Albaraka Bank Group

1,818,190

1,736,845

4.68

193,163

10.62

5

Arcapita

1,122,408

1,429,268

-21.47

34,299

3.06

6

Investcorp

975,450

960,000

1.61

56,235

5.77

7

National Bank of Bahrain

699,388

641,941

8.95

114,415

16.36

8

Ithmaar Bank

654,016

711,435

-8.07

-139,612

-21.35

9

Bank of Bahrain Kuwait

639,739

614,346

4.13

104,120

16.28

2009 Capital Growth % US$000

Net Profit 2010 US$000

ROE 2010%

UAE Country Bank Rank

2010 Capital US$000

1

Emirates NBD

9,188,562

8,704,232

5.56

636,859

6.93

2

First Gulf Bank

6,706,003

6,235,439

7.55

964,974

14.39

3

National Bank of Abu Dhabi

6,565,047

5,565,088

17.97

1,002,766

15.27

4

Abu Dhabi Commercial Bank

5,328,981

5,197,419

2.53

106,348

2.00

5

Mashreqbank

3,371,898

3,225,563

4.54

227,771

6.75

6

Union National Bank

3,248,271

2,904,335

11.84

367,559

11.32

7

Dubai Islamic Bank

2,865,902

2,445,086

17.21

221,305

7.72

8

Abu Dhabi Islamic Bank

2,208,182

1,945,150

13.52

278,673

12.62

9

Commercial Bank of Dubai

1,600,583

1,456,564

9.89

223,411

13.96

10

Bank of Sharjah

1,196,551

1,115,355

7.28

109,977

9.19

11

Sharjah Islamic Bank

1,170,705

1,160,989

0.84

72,529

6.20

12

RAKBANK

1,011,805

761,496

32.87

273,006

26.98

13

National Bank of Umm Al Qaiwain

870,014

820,197

6.07

95,507

10.98

14

Invest Bank

547,337

510,901

7.13

81,912

14.97

15

National Bank of Fujairah

492,367

454,267

8.39

35,604

7.23

16

Commercial Bank International

485,946

458,458

6.00

29,373

6.04

17

United Arab Bank

477,781

452,701

5.54

58,895

12.33

NB Commercial Bank International Sep 2010

KUWAIT Country Bank Rank

2010 Capital US$000

2009 Capital Growth % US$000

Net Profit 2010 US$000

ROE 2010%

1

National Bank of Kuwait

7,949,022

6,552,591

21.31

1,079,530

13.58

2

Kuwait Finance House

5,710,348

5,580,719

2.32

255,808

4.48

3

Burgan Bank

1,928,522

1,554,025

24.10

55,317

2.87

4

Commercial Bank of Kuwait

1,660,365

1,570,754

5.70

144,333

8.69

5

Gulf Bank

1,463,698

1,453,498

0.70

67,922

4.64

6

Ahli United Bank Kuwait

945,453

845,813

11.78

81,856

8.66

7

Boubyan Bank

848,857

310,530

173.36

21,771

2.56

8

Kuwait International Bank

698,957

617,257

13.24

59,708

8.54

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GCC'S TOP

BANKS GCC 50 TOTAL CAPITAL Rank 2010 and 2009 by Countries OMAN Country Bank Rank 1

Bank Muscat

2

National Bank of Oman

2010 Capital US$000

2009 Capital Growth % US$000

Net Profit 2010 US$000

ROE 2010%

2,068,556

1,847,574

11.96

263,883

12.76

690,414

650,366

6.16

70,575

10.22

3

Bank Dhofar

588,312

529,888

11.03

86,442

14.69

4

Oman International Bank

439,229

444,620

-1.21

45,675

10.40

2009 Assets Growth % US$000

Net Profit 2010 US$000

ROA 2010%

23.00

QATAR Country Bank Rank

2010 Assets US$000

1

National Bank of Qatar

6,811,178

5,460,442

24.74

1,566,530

2

Commercial Bank of Qatar

3,434,027

3,299,501

4.08

449,253

13.08

3

Qatar Islamic Bank

2,506,595

2,473,929

1.32

503,610

20.09

4

Al Rayan

1,957,910

1,637,845

19.54

332,787

17.00

5

Doha Bank

1,657,828

1,607,358

3.14

289,628

17.47

6

Al Khalij Commercial Bank

1,443,786

1,326,897

8.81

117,226

8.12

2009 Assets Growth % US$000

Net Profit 2010 US$000

ROA 2010%

SAUDI ARABIA Country Bank Rank

2010 Assets US$000

1

National Commercial Bank

8,761,785

8,229,376

6.47

1,280,908

14.62

2

Al Rajhi Banking Corporation

8,084,744

7,664,236

5.49

1,805,554

22.33

3

Riyad Bank

7,795,525

7,529,452

3.53

753,234

9.66

4

Samba

6,781,249

5,949,354

13.98

1,182,699

17.44

5

Banque Saudi Fransi

4,806,146

4,200,475

14.42

747,010

15.54

6

Alinma Bank

4,165,481

4,161,424

0.10

4,056

0.10

7

Arab National Bank

4,105,782

3,860,871

6.34

508,667

12.39

8

Saudi British Bank

4,045,853

3,478,744

16.30

502,174

12.41

9

Saudi Investment Bank

2,171,033

1,980,835

9.60

117,295

5.40

10

Saudi Hollandi

1,703,188

1,502,086

13.39

210,782

12.38

11

Bank Al Jazira

1,204,138

1,196,231

0.66

77,099

6.40

12

Bank Al Bilad

827,456

800,582

3.36

24,619

2.98

billion, ranking sixth at end 2010 against tenth in the previous year.

The largest increase in equity in 2010 was Kuwait’s Boubyan Bank, where National Bank of Kuwait has raised its stake. Its total capital increased to $849 million from $311 million previously.

Arab Banking Corporation increased its equity by 50 per cent to $3.9 billion,

moving up four places.

The GCC’s return on equity also improved from 2009 but only marginally to 11.5 per cent. This remains low but is in part driven by the high levels of capitalisation in the sector. Nonetheless, in the previous boom times of the mid 2000s the return on equity was in the twenties.

Only 10 banks out of the GCC 50 achieved

a return on equity above 15 per cent, the benchmark for most banks.

The largest 20 banks in the Gulf continue to dominate the overall asset base, with the bigger banks comprising 76 per cent of the total asset base of the list.

By profit, the largest 20 represented 79 per cent of total net profit. This was however down from 96 per cent in the previous

64 / MAY 2011

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GCC'S TOP

BANKS year, and due to the improved profitability at a number of the mid-size GCC 50 banks. The aggregated return on assets for the top 20 banks is higher, at 1.71 per cent, than that of the 50 banks, but the gap has closed as the broader base of banks develop their market positions.

2010 marked the start of the recovery period for the Gulf banking sector after some very difficult years. The improvement in net profit and returns, albeit modest, is a positive sign and indicated that the problems of asset quality have peaked in the current cycle. First quarter 2011 earnings results

Right: ENBD, the largest GCC bank by assets.

Below: NCB, Saudi Arabia’s largest bank.

“By profit, the largest 20 represented 79 per cent of total net profit. This was however down from 96 per cent in the previous year, and due to the improved profitability at a number of the midsize GCC 50 banks.

to date for both banks and corporates have exceeded expectations and market sentiment appears to have improved due to the continued strength of the oil price, and despite the heightened geopolitical risk. 2011 should see GCC banks make further advancements but they are likely to be small and conditions will remain challenging.

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