Arab 100 2004: A year of recovery led by Gulf banks
Banks in Arab countries enjoyed much better results in 2003, especially during the second half. In 2002 earnings fell on the back of weakness in global investment markets, tight margins, and higher provisions. Net profit bounced back in 2003, rising by over 15% for the top 100 Arab banks.
GOOD RESULTS FOR Arab banks in 2003 were led by the six Gulf states (Saudi Arabia, Kuwait, UAE, Bahrain, Qatar and Oman). Improved performances were generated on the back of a generally strong regional economy, a high oil price, rising stock markets, a stronger property sector, and improved sentiment throughout the area. Although margins remain tight, this was more than compensated for by higher loan volumes and rising fee income.
The top 50 banks in the Gulf Cooperation Council states posted net profit rises of 23% in 2003 on an aggregated basis compared with just 2% in 2002 and 3% in 2001. Overall return on equity jumped to 15.6% in 2003 from 14.2% the year before and return on assets increased to 1.84% in 2003 from 1.46% in 2002.
For the top 100 Arab banks, consolidated net profit grew by a strong 15.4% in 2003 and the overall return on equity increased to 13.9% from 13.6% in 2002.
The largest 20 banks dominate the top 100 Arab banks, contributing 56% of the combined capital base, 54% of assets, and 66% of consolidated net profit. The aggregated return on equity for the top 20 banks, at 16.2%,