Arab 100 2005: Gulf banks continue to lead recovery
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Arab 100 2005: Gulf banks continue to lead recovery

Arab banks have sustained the recovery that began in 2002, with Gulf institutions in the forefront. Morris Helal reports. Research provided by Capital Intelligence.


WITH OIL PRICES soaring, the key Arab economies enjoyed robust growth in 2004 with revenues boosted by a buoyant property sector and stock markets, and strong consumer demand. Banks in the region began to recover in 2003 led by those in the Gulf Cooperation Council countries of Saudi Arabia, Kuwait, UAE, Bahrain, Qatar and Oman. This followed a difficult earnings environment in 2002.

A strong operating environment in 2004 resulted in higher loan volumes and rising non-interest income, with the top 50 GCC banks recording a further 38% increase in net profits on an aggregated basis compared with 23% in 2003. This performance produced a stronger overall return on assets of 2.3% in 2004 compared with 1.84% a year earlier. The return on equity ratio jumped to 18.28% from 15.15% in 2003.

For the top 100 Arab banks, consolidated net profit grew by 42% in 2004 against 17% in 2003. The overall ROE increased to 17.1% from 14.3% in 2003, and ROA ratio rose to 1.92% from 1.5%.

The largest 20 banks in terms of capital, comprising predominantly GCC banks, continue to dominate the top 100. These banks in aggregate accounted for 54% of the combined capital base, 54% of total assets, and 66% of consolidated net profit in 2004.

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