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GCC Banking Over the Past 40 Years: a Story of Resilience and Growth

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GCC Banking Over the Past 40 Years: a Story of Resilience and Growth ARAB BANKER – AUTUMN 2020 MIDDLE EAST BANKING 35 GCC banking over the past 40 years: a story of resilience and growth A cursory glance at a list of the biggest GCC banks – it was not until the region was inundated with cash in the from the late 1980s gives the impression that mid-1970s, following the quadrupling of oil prices in 1973–4, that a large number of new, locally-capitalised banks, was little has changed over the past 40 years. National established. Commercial Bank, Qatar National Bank, Arab The second big increase in oil prices, following the Iranian Banking Corporation, Gulf International Bank and revolution in 1979, was even more significant than the first in several Kuwaiti banks were all prominent 30–40 terms of the amount of cash that flowed into the region, and it led to a second wave of new banks being created. years ago, and they remain so today. Many of the banks established at that time are familiar to us today, but the underlying structure of GCC banking But this simple comparison masks many significant during the 1970s and early 1980s was very different. changes in GCC banking, and these have made the Kuwait had begun enjoying large oil revenues earlier than other countries, and as a result Kuwaiti banks and region’s banking system immeasurably stronger and investment houses were well developed with strong more sustainable. international profiles by the early 1980s. Three big investment firms, known as the ‘Three Ks’ (KIC, KIIC and Arab Banker’s Editor, Andrew Cunningham, who KFTCIC) were among the most prominent Middle East financial institutions, recycling huge amounts of money has been writing about GCC banks for most of the through global markets, and particularly through London. past 40 years, considers how the region’s banking Kuwait lost its position as the leading Middle East financial systems have evolved. market when the local stock market crashed in 1982 leaving the banks with huge bad debts, many of which were uncollectable because they were owed by prominent local he expansion, contraction and health of banks in the individuals. six GCC states has always been driven by the extent of Tfinancial liquidity in the region. Bahrain was the GCC’s banking centre in the 1980s Although some GCC banks were created by local merchant The second oil boom led to the creation of numerous families in the 1950s and 1960s – National Bank of Kuwait offshore banks in Bahrain, which had been designated and Saudi Arabia’s National Commercial Bank are examples by the recently formed Gulf Cooperation Council as the 36 MIDDLE EAST BANKING ARAB BANKER – AUTUMN 2020 Largest 50 GCC commercial banks, ranked by equity size (end-2019)* Total Customers’ Net Capital Equity Assets Net Loans All figures in $ mn except for the capital ratio which is % Deposits Profit Ratio (Basel) 1 First Abu Dhabi Bank UAE (Abu Dhabi) 29,418.3 223,820.7 111,071.4 141,367.0 3,428.9 16.9 2 Qatar National Bank Qatar 26,064.4 259,957.3 186,756.3 188,354.3 3,979.3 18.9 3 Emirates NBD UAE (Dubai) 22,218.8 186,068.7 119,112.5 184,274.4 3,949.3 18.5 4 National Commercial Bank Saudi Arabia 18,614.8 135,303.9 75,295.7 94,260.5 3,063.1 18.7 5 Abu Dhabi Commercial Bank UAE (Abu Dhabi) 15,166.4 110,317.6 68,079.3 71,367.8 1,305.0 16.9 6 Saudi British Bank Saudi Arabia 14,979.8 70,810.2 41,257.4 51,257.1 750.1 19.4 7 National Bank of Kuwait Kuwait 14,076.4 96,740.6 54,706.7 52,651.0 1,407.9 17.8 8 Al-Rajhi Bank Saudi Arabia 13,654.5 102,448.5 66,598.6 83,328.9 2,709.6 19.9 9 Samba Financial Group Saudi Arabia 12,122.7 68,177.9 37,768.1 48,056.1 1,064.5 18.5 10 Riyad Bank Saudi Arabia 10,821.8 70,894.6 46,406.7 51,884.3 1,494.3 18.1 11 Dubai Islamic Bank UAE (Dubai) 9,457.5 63,117.6 41,093.5 44,770.9 1,389.4 16.6 12 Banque Saudi Fransi Saudi Arabia 8,788.0 47,518.1 33,535.0 35,432.1 830.9 19.2 13 Arab National Bank Saudi Arabia 7,560.1 48,930.1 31,697.8 37,910.4 806.0 19.0 14 Kuwait Finance House Kuwait 7,414.5 64,087.3 30,857.7 44,791.6 865.3 17.7 15 Qatar Islamic Bank Qatar 6,097.7 44,996.4 31,302.2 30,715.2 821.3 19.5 16 Mashreqbank UAE (Dubai) 6,056.7 43,412.8 20,740.2 24,770.7 581.7 16.3 17 Commercial Bank of Qatar Qatar 5,986.8 40,598.4 24,218.0 20,994.9 556.1 16.4 18 Alinma Bank Saudi Arabia 5,986.8 35,165.9 25,286.6 27,223.5 676.1 20.0 19 Ahli United Bank Bahrain 5,361.5 40,280.1 20,742.4 25,518.1 788.8 16.4 20 Bank Muscat Oman 5,216.3 32,014.3 23,125.2 20,952.0 483.4 19.7 21 Abu Dhabi Islamic Bank UAE (Abu Dhabi) 5,201.8 34,306.1 22,085.6 27,612.2 708.3 18.9 22 Bank-ABC Bahrain 4,489.0 30,068.0 16,452.0 16,666.0 194.0 17.9 23 Masraf Al Rayyan Qatar 3,888.6 29,231.7 20,561.1 18,026.6 601.2 20.3 24 Saudi Investment Bank Saudi Arabia 3,736.1 26,890.6 15,233.9 18,420.1 63.9 18.3 25 Doha Bank Qatar 3,664.8 29,776.3 18,102.2 16,087.8 207.5 17.8 26 Gulf International Bank Bahrain 3,296.3 30,241.7 9,876.1 21,223.3 63.0 18.4 27 Barwa Bank Qatar 3,165.7 21,224.4 14,288.4 13,080.2 210.5 17.6 28 Burgan Bank Kuwait 3,147.4 23,402.8 14,159.7 13,190.3 280.6 16.8 29 Bank Al Jazira Saudi Arabia 3,091.3 23,084.2 13,246.0 16,723.3 264.3 24.6 30 Commercial Bank of Dubai UAE (Dubai) 2,782.0 23,981.0 16,387.1 17,245.8 381.3 14.2 31 Bank AlBilad Saudi Arabia 2,514.2 22,959.1 15,833.9 17,817.1 331.7 17.5 32 Commercial Bank of Kuwait Kuwait 2,421.6 16,106.0 7,491.5 8,106.9 0.3 18.2* 33 Al Ahli Bank of Kuwait Kuwait 2,283.8 16,138.7 10,628.0 10,972.0 95.2 18.7 34 Qatar International Islamic Bank Qatar 2,245.5 15,638.6 10,184.4 8,593.3 255.1 18.5 35 Gulf Bank Kuwait 2,195.5 20,641.2 13,962.4 13,054.5 210.2 17.1 36 Boubyan Bank Kuwait 2,158.8 17,518.3 12,323.8 14,367.6 207.2 20.3 UAE (Ras Al 37 National Bank of Ras Al Khaimah 2,135.3 15,553.7 9,408.2 10,027.9 298.3 16.8 Khaimeh) 38 Sharjah Islamic Bank UAE (Sharjah) 2,050.2 12,632.2 6,846.4 7,437.4 148.5 22.8 39 Al Khalij Commercial Bank Qatar 1,927.1 14,795.5 8,480.0 8,032.7 177.8 19.1 40 Bank Dhofar Oman 1,787.4 11,267.7 7,979.2 7,666.4 78.7 17.9 41 Noor Bank UAE (Dubai) 1,750.7 12,906.1 8,387.5 9,608.8 136.2 16.8 42 National Bank of Fujairah UAE (Fujairah) 1,729.3 11,655.9 7,378.1 8,699.9 150.4 17.8 43 Ahli United Bank (Kuwait) Kuwait 1,706.1 14,381.5 9,977.2 8,913.6 181.8 16.0 44 Ahli Bank of Qatar Qatar 1,639.7 12,084.3 8,693.1 7,016.9 185.8 17.1 45 National Bank of Oman Oman 1,442.8 9,493.6 7,297.5 6,594.0 133.9 16.6 46 Bank of Bahrain and Kuwait Bahrain 1,460.1 10,316.6 4,460.0 5,790.9 202.9 21.7 47 National Bank of Bahrain Bahrain 1,420.8 8,526.9 3,239.6 5,589.4 198.1 37.3 48 Kuwait International bank Kuwait 1,240.7 8,882.6 6,165.8 4,857.1 57.2 19.2 49 Sohar International Bank Oman 1,396.4 9,130.0 6,392.6 5,463.0 89.6 18.9 50 National Bank of Umm al-Qaiwain UAE (Umm al-Q.) 1,298.9 3,893.1 2,250.1 2,460.3 115.6 38.2 * Includes commercial banks that are licensed by GCC central banks. Source for data is banks publicly available financial statements. Commercial Bank of Kuwait’s Capital Ratio refers to 3Q 2019.
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