GCC listed banks’ results
Banking redefined Year-ended 31 December 2020
Appendix report
July 2021
— home.kpmg 1 GCC listed banks’ results
Appendices
Appendix 1 Country analysis
Data tables
Sources
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Population (million)1 1.5
Nominal GDP (US$ billion)2 37.5
GDP per head (US$ at PPP)1 48,875.0
Inflation (%)2 1.5
Economic data as of 31 December 2020 Source(s): 1Economist Intelligence Unit, Bahrain — data by country; 2IMF estimates, Link, accessed on 28 June 2021.
Summary Regulatory update In order to mitigate the impact of Covid-19 on the economy, CBB announced various economic measures for Sector overview licensees throughout 2020. In order to promote transparency and consistency amongst the financial The financial sector in Bahrain is the largest non-oil institutions during the pandemic, the regulator has contributor to the GDP, with 370 financial institutions announced the following important disclosure being licensed and regulated under the Central Bank of requirements and clarifications: Bahrain (CBB) regulatory regime as of 31 December 2020. This includes 24 conventional retail banks — Disclosure of financial impact of Covid-19 in the annual (including branches of foreign banks), and 49 and interim financial statements. conventional wholesale banks. The Islamic segment — Submission of readiness and reliability of the licensees’ includes six retail banks and 11 wholesale banks. Of business continuity and disaster recovery plans. these financial institutions, three conventional retail — Guidance paper on the ‘Covid-19 related money banks and five Islamic retail banks are listed on the laundering and terrorist financing risks and policy Bahrain Bourse and have been covered as part of this responses’. report. Financial performance Financial position The banking sector demonstrated resilience during 2020, Whilst the position of the retail bank’s total assets with six out of eight banks posting profits. However, the continues to grow over the years, the current year overall average profit of these listed banks declined by 37 witnessed a marginal increase of 2.3 percent compared percent year-on-year, on account of the higher provision with 8.9 percent in 2019. charge. ROE was in the range of 3–10 percent, whereas ROA did not demonstrate a significant positive or negative movement. The average LDR decreased by 1.6 percent year-on-year.
Total assets (US$ billion) and net profit (US$ million) as of, and for the year ended, 31 December 2020
50.0 452.2 500.0
40.0 300.0 30.0 138.3 141.8 20.0 40.1 66.6 24.3 21.2 100.0 -33.4 profit Net Total assets Total 10.0 -41.7 28.2 11.6 6.0 10.0 8.4 2.7 0.0 3.2 -100.0 AUB Al Baraka Al Salam BISB BBK Ithmaar Khaleeji NBB
Note: 2020 financial figures of NBB includes the effect of consolidation of BISB from January 2020. For source data refer to the data table (page 44–46) in Appendix II.
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Share price movement (US$)
2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020
AUB Al Baraka Al Salam BISB BBK Ithmaar Khaleeji NBB Average Insights Looking back
Overview Capital Adequacy Ratio (CAR) — It has been over a year since Covid-19 was declared as — The regulatory CAR for individual banks was reported a pandemic which has caused significant impact on in the range of 12.7–26.5 percent, which is above the human health and economic disruption across the minimum requirement of 12.5 percent. world. — As of 31 December 2020, the banks were well — This has resulted in economic slowdowns, leading to capitalized at an average CAR of 18.9 percent with a closure of certain businesses and loss of jobs, lower slight reduction of 0.9 percent compared with 2019. interest rates, reduced economic activities, reduced volumes of transactions. This had a direct and indirect Asset quality impact on the banking industry as evident from the — Non-performing loans (NPL) exposure (stage 3) decline in interest income and fee income, lower increased marginally by 3 percent, on an average. This demand for ancillary services, reduced revenue from includes four banks reporting increase in NPL other banking activities, increase in impairment exposures which was offset by decline in exposures in provisions due to increased uncertainty. All of this has the remaining four banks. led to declining profits, declining ROA and ROE, reduced CAR and marginal increase in the financial — The ratio of NPL remained stagnant at an average of 5 position of the banks. percent compared with 2019. The coverage ratio of NPL has marginally increased by 4 percent from 53.3 Asset growth percent as of 31 December 2019 to 57.5 percent as of 2020. — During the year, eight listed retail banks have witnessed a marginal average growth of 2.3 percent in Leverage and liquidity ratios the total assets and average increase in loan exposures of 5 percent compared with 31 December 2019. — As part of the CBB concessionary measures to combat Covid-19, the minimum regulatory requirement of Net profits Liquidity Coverage Ratio (LCR) and Net Stable Funding Ration (NSFR) were always relaxed to 80 percent to — Six out of eight listed banks have reported net profit for the opposed to original requirement of 100 percent. the year 2020, and the year-on-year profit has declined by an average of 37 percent. This decline is largely on — As of 31 December 2020, the LCR was in the range of account of increase in impairment charge, reduction in 103–395 percent and NSFR was in the range of 99– interest income on retail loans and deferral of credit 145 percent. card payments, leading to lower interest income and interest/penalty charges on credit cards, thereby resulting in lower revenue to the banks.
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Supportive government measures Change in outlook In 2020, the disruptions due to Covid-19 and plunge in the Bahrain’s economy is expected to expand by 3.3 percent oil prices during early 2020 led to Bahrain’s real GDP to in 2021 with the expected growth of non-oil economy by decline by 5.8 percent and 10.2 percent in nominal terms. 3.9 percent in 2021. Further, in April 2021, Fitch has The oil sector contracted by 0.1 percent in real terms and affirmed Bahrain’s rating at 'B+’ with a ‘stable’ outlook. by 28.5 percent in nominal terms, while the non-oil sector This growth is supported by the government’s efforts to contracted both in real and nominal terms by 7 percent revive the economy by continuing concessionary and 7.3 percent, respectively, compared to 2019. measures and vaccination of the population. After a sharp decline in 2Q20 due to restrictions imposed As of 13 July 2021, 70 percent of the population has to contain the spread of the pandemic, the economy been vaccinated with both the doses and measures have started showing signs of recovery in 3Q20, owing to been taken to open borders to facilitate trade and concessionary measures implemented by the government tourism, which will help boost the economy. and the regulator. The financial services sector, which is Despite the circumstances caused by the pandemic, the largest non-oil contributor to the GDP, led the way in Bahrain hosted its first international public event, Formula terms of growth, registering an 11.6 percent increase in 1 race, which had a huge positive impact on the 4Q20 compared with the previous quarter. economy. Bahrain’s commitment toward health and well The economy will continue to be under concessionary being of its citizens and residents was demonstrated measures until 31 December 2021 with an objective to through the entry of only vaccinated individuals to the maintain liquidity and promote stability and possible event. growth in the future. The invention of vaccination for Covid-19, has resulted in positive sentiments across the world. However, the pandemic continues to spread and hence the government continues to impose restrictions from time to time. In addition to the concessionary measures by the government and regulators, Bahrain’s semi-autonomous government agency, ‘Tamkeen’ has announced its five- year strategy with regards to the country’s economic development. It aims to revive certain schemes to boost the economy. The key focus laid by Tamkeen will continue to be on two major areas: Business Development Program: — Aims to support emerging startups, expand access to finance, digitization and training opportunities. Supporting individuals through National Employment Program 2.0 — Aims to upskill Bahrainis, identifying potentional opportunities for growth, providing youth with on-the- job trainings and internships, workshops, vocational training initiatives to prepare for the suitable jobs in the market.
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Loan to deposit ratio (%)
100.0% 83.0% 89.1% 90.0% 81.3% 82.3% 81.8%81.2% 84.3% 77.0% 80.0% 74.4% 72.8% 71.8% 72.7% 70.5% 70.0% 65.8% 64.4% 58.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% AUB Al Baraka Al Salam BISB BBK Ithmaar Khaleeji NBB
2019 2020 2019: Average LDR: 76.4% 2020: Average LDR: 74.8%
Capital adequacy ratio (%)
40.0% 37.3% 35.0%
30.0% 26.5%
21.7% 25.0% 21.2% 21.8% 22.3% 20.3% 20.0% 16.4% 16.7% 14.8% 16.6% 16.1% 16.0% 15.9% 13.5% 15.0% 12.7% 10.0%
5.0%
0.0% AUB Al Baraka Al Salam BISB BBK Ithmaar 1 Khaleeji NBB
2019 2020 2019: Average CAR: 19.8% 2020: Average CAR:18.9%
Return on equity/Return on assets (%)
40.0%
10.7% 17.0% 15.0% 14.7%
10.1%
10.1% 6.8%
20.0% 6.7%
4.5%
5.2%
3.4%
3.0%
2.3%
2.0%
1.9%
1.4%
1.4%
1.1% 1.1%
0.8%
0.6%
0.5%
0.4%
0.2%
0.0% 0.4% 0.0%
-20.0%
1.0%
0.5%
1.7%
- -
-40.0% -
11.6%
-
16.0% -
-60.0%
75.6% - -80.0% 2 AUB Al Baraka Al Salam BISB BBK Ithmaar Khaleeji NBB
2019:ROE 2020:ROE 2019:ROA 2020:ROA 2019: Average ROE: 12.8% 2020: Average ROE3: 8.0% 2019: Average ROA: 1.3% 2020: Average ROA: 0.8%
Note: 1For calculating CAR and NPL for Ithmaar Holding, financial numbers for Ithmaar Bank have been considered as proxy data; 22020 financial figures of NBB includes the effect of consolidation of BISB from January 2020; Average for total assets, total net profits and total average assets has been adjusted, as appropriate, to remove effect of the BISB consolidation by NBB (only to the extent of publicly available information). For source data refer to the data table (page 44–46) in Appendix II.
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Stage-wise coverage ratios as at 31 December 2019 vs as at 31 December 2020 (%)
100.0% 85.9% 90.0% 85.9%
80.0%
73.6% 73.6%
70.0% 66.8% 61.2%
60.0%
52.9% 49.5%
50.0%
40.1%
37.9% 36.0%
40.0% 34.9%
30.9% 29.7%
30.0% 26.6% 19.8%
20.0%
12.1%
11.6%
11.3%
10.2%
9.8%
8.5%
8.5%
8.3%
8.1%
7.9%
7.4%
7.3%
7.1% 6.6%
10.0% 5.3%
4.2%
2.2%
1.3%
1.1%
0.8%
0.8%
0.7%
0.7%
0.7%
0.6%
0.5%
0.5%
0.5%
0.5%
0.5%
0.4% 0.3% 0.0% 1 AUB Al Baraka Al Salam BISB BBK Ithmaar Khaleeji NBB 2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Average 2019: Average 2019: Average 2020: Average 2020: Average 2020: Average Stage 1: 0.6% Stage 2: 8.3% Stage 3: 53.3% Stage 1: 0.7% Stage 2: 9.5% Stage 3: 57.5%
Total loans subject to ECL (by stage) as at 31 December 2019 vs as at 31 December 2020 (%)
100% 2.6 1.9 5.1 5.6 5.6 5.1 6.9 5.9 6.3 6.9 7.4 6.9 11.8 7.6 12.8 4.6 15.6 90% 14.9 10.0 8.4 21.1 2.8 5.1 14.9 15.3 11.2 12.1 17.1 19.0 80% 6.5 12.0 8.2 70%
60%
50% 90.3 89.6 85.3 88.0 82.5 84.4 84.7 82.0 80.5 40% 80.0 79.0 77.9 77.1 76.2 74.7 70.7 30%
20%
10%
0% 1 AUB 2 Al3 Baraka4 Al5 Salam6 7BISB 8 9 BBK 10 11Ithmaar112 13Khaleeji14 15NBB 16
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Average 2019: Average 2019: Average 2020: Average 2020: Average 2020: Average Stage 1: 82.4% Stage 2: 12.5% Stage 3: 5.1% Stage 1: 81.7% Stage 2: 13.2% Stage 3: 5.1%
Note: 1For Ithmaar Holding, stage-wise breakup of financial assets is considered due to non availability of data for financing assets in the financial statement. For source data refer to the data table (page 44–46) in Appendix II.
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Net provision charge on loans (US$ million)
2.4 86.6 95.8 2.3 26.6 31.1 0.9 48.1 18.4 10.4 104.6 109.7 44.4 7.1 63.6 87.6 2.3 28.5 49.7 43.1 3.6 2.9 10.9 41.1 12.9 16.6 9.7 0.7 22.7 -2.0 -1.1 14.6 -17.8 -4.1 -3.5 4.5 -0.4 -0.3 -6.6 1.5 -5.1 -5.6 -5.5 -8.2
AUB Al Baraka Al Salam BISB BBK Ithmaar1 Khaleeji NBB2
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Total 2019: Total 2019: Total 2020: Total 2020: Total 2020: Total stage 1: (11.4) stage 2: 43.0 stage 3: 270.9 stage 1: 88.0 stage 2: 229.3 stage 3: 338.8
Cost to income ratio (%)
100.0% 87.4% 75.0% 80.0% 72.6% 60.0% 58.7% 55.6% 59.3% 60.0% 52.3% 51.1% 49.2% 45.9% 47.5% 41.7% 35.9% 40.0% 28.6% 29.3% 20.0%
0.0% AUB Al Baraka Al Salam BISB BBK Ithmaar Khaleeji NBB
2019 2020 2019: Average CIR: 53.4% 2020: Average CIR: 52.8%
Credit rating
S&P Moody’s Fitch Credit rating agency Long-term Long-term Long-term Bank issuer rating Outlook issuer rating Outlook issuer rating Outlook AUB BBB Stable NA NA BB+ Stable Al Baraka BB- Stable NA NA NA NA Al Salam NA NA NA NA NA NA BISB NA NA B2 Negative NA NA BBK NA NA B+ Negative B+ Stable Ithmaar NA NA NA NA NA NA Khaleeji NA NA Withdrawn Withdrawn NA NA NBB NA NA B2 Negative B+ Stable Overall country rating B+ Negative B2 Negative B+ Stable
Note: NA = rating not available on ThompsonOne database, checked on 02 April 2021. 1For Ithmaar Holding, the graph represents total impairment charge for 2019 and 2020 as stage-wise breakup of provision charge was not available in the financial statement; For source data refer to the data table (page 44–46) in Appendix II.
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Digitalization of the banking sector — National e-KYC: The platform provides a national digital identity database for financial institutions to With the Covid-19 social distancing measures, there was securely verify the identities of their customers, an increase in the use of digital channels for carrying out validate their information and share data digitally transactions, prompting innovation in the financial and before providing products and services. This shall banking sector. This was evident from the decline in accelerate the automation of the maintenance of volume and value of ATM withdrawal transactions by 5 customer data and records. percent and 11 percent, respectively, and a significant increase in the online payments by 290 percent in terms — Tokenization for contactless payments: This of volume and increase in value of online transactions pertains to a coding service for operating the from US$35 billion during 2019 to US$43 billion during encryption feature for contactless payment for 2020. As part of CBB’s ongoing initiatives towards smartphones running on the Android system, which financial digital transformation and development in digital enables contactless (‘Tap & Go’) payments at POS financial services, series of measures were announced. terminals via Android smart phones. The ease of Some of the latest developments are as follows: making payments without using physical cards strengthens the preventive and precautionary — FinHub 973: CBB Digital Lab: FinHub 973, a virtual measures taken by CBB to contain and prevent the fintech platform will enable fintech entrepreneurs to spread of Covid-19 along with protecting the connect with financial institutions, consultants, tech customer from the risk of misuse of the cards. companies, mentors and investors to develop an open innovation platform to test and build products LIBOR transition that solve real consumer problems. CBB has enhanced its monitoring over the LIBOR — Open Banking: Bahrain was the first country in the transition through requirement of below reporting by the Middle East to adopt open banking, offering two financing companies: broad categories of services. — Update on LIBOR transition from the CEO / General – Account information service provides customers Managers of all banks and financing companies. with access to all bank account information in an aggregated manner through a single platform. — Update on measures established for use of alternate reference rate. – Payment initiation service allows licensed third parties to initiate payments on behalf of — Monthly progress reports within 10 days of each customers, while allowing seamless transfers month since September 2020. between different customer accounts through a mobile-based application. In October 2020, CBB launched the Bahrain Open Banking Framework (BOBF) to ensure its holistic implementation and overall governance framework needed to protect customer data.
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Population (million)1 4.3
Nominal GDP (US$ billion)2 126.9
GDP per head (US$ at PPP)1 68,937
Inflation (%)2 2.3
Economic data as of 31 December 2020 Source(s): 1Economist Intelligence Unit, Kuwait — data by country; 2IMF estimates, Link, accessed on 28 June 2021.
The required CAR was lowered from 13 percent to 10.5 Summary percent as a prudent measure to allow utilization of capital conservation buffer by the Kuwaiti banks. Sector overview Financial position The banking landscape in Kuwait consists of 11 locally Total listed banking sector assets at the end of 2020 incorporated banks (out of which five operate under the stood at US$ 301.6 billion, 5.3 percent higher than that at principles of Sharia) and 12 branches (of which one the end of 2019. The market continues to be dominated operates under the principles of Sharia) of foreign banks. by NBK and KFH, which collectively account for 56.4 Shares of all locally incorporated banks except one percent share of total banking assets. Total assets of (which has been excluded for the purpose of this report) Islamic banks stood at US$128.2 billion at the end of are listed on Boursa Kuwait. 2020, 12.1 percent higher than that at the end of 2019. Regulatory update Financial performance In response to Covid-19, the Central Bank of Kuwait (CBK) Profits for Kuwaiti banks have declined by 52.8 percent has slashed the benchmark rate twice during the year to during 2020, primarily driven by higher ECL and payment ease the financial conditions by a cumulative 1.25 percent, holidays granted on consumer and other installment bringing it down to a historical low of 1.5 percent, loans, coupled with the impact of lower interest rates. consistent with the reduction by the US Federal Reserve. The average cost-to-income ratio (CIR) increased by 1.6 In addition, the CBK also reduced the rates of other percent compared with 2019. At the end of 2020, the monetary policy instruments by 0.125 percent for the CAR was at 17.9 percent, comfortably above the CBK’s entire interest rate yield curve, up to the 10-year term. This mandated minimum of 13 percent and the Basel includes repurchases (REPO), CBK Bonds, the Term- Committee on Banking Supervision’s requirement of 10.5 Deposits system and direct intervention instruments. percent.
Total assets (US$ billion) and net profit (US$ million) as of, and for the year ended, 31 December 2020
100.0 1,000.0 818.5 800.0 80.0 493.1 600.0 60.0 400.0 98.8 114.4 111.9 95.7 40.0 0.0 - 18.7 200.0
0.0 profit Net -231.5
Total assets Total 20.0 9.3 11.5 -200.0 14.5 16.1 21.4 23.6 20.3 71.4 9… 14.6 0.0 -400.0 AUBK ABK Boubyan Burgan GBK KFH KIB NBK CBK Warba
Note: For source data refer to the data table (page 47–48) in Appendix II.
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Share price movement (US$)
4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020
AUBK ABK Boubyan Burgan GBK KFH KIB NBK CBK Warba Average Insights Looking back
Banking sector remains resilient: Increase in credit losses: — The total assets of Kuwait’s banking sector amounted — The provision for expected credit losses has shown an to US$301.6 billion in 2020. Despite the ramifications increasing trend from US$2.2 billion in 2019 to US$2.9 of the Covid-19 pandemic on local and international billion in 2020, representing an increase of 32.9 percent economic conditions, the Kuwaiti banks have in the provision charge. Three banks showed a successfully weathered the first year of the crisis with reduction in provision for expected credit losses an increase of 5.3 percent in total assets in 2020. whereas, the other banks have seen an increase. Moreover, the Kuwaiti banks demonstrated remarkable resilience in the face of volatility in oil prices and the Non-performing loans: total assets of the banking sector increased annually on — In 2020, despite an increase in the NPL ratio by 40 an average by 6.0 percent from 2016. basis points compared with 2019, the NPL ratio Trends in profitability: remained steady at 1.6 percent. This shows that the Kuwaiti banks have maintained the quality of their — The pandemic resulted in increased implications on the assets despite the ongoing Covid-19 pandemic and the Kuwaiti banking sector’s operating environment. Banks current market trends. faced challenges in terms of profitability, which resulted in their profits slipping from US$3.2 billion in Stimulus package: 2019 to US$1.5 billion in 2020, a 52.8 percent drop. — The CBK introduced various stimulus packages to The decline in profitability was due to a drop in revitalize the economy, including relief packages for operating revenues combined with higher provision for postponement of principal and interest payments for expected credit losses, which increased by 32.9 six months for all the customers of Kuwaiti banks. The percent, due to the detrimental impact of the pandemic postponement of principal and interest payments on the economy. Kuwaiti banks’ initiative of introducing provided direct benefits to the affected customers moratoriums for consumer, housing, and credit card amid the ongoing COVID-19 crisis. These stimulus installments also played a role in weighing down on packages were introduced to enhance the liquidity and profitability in addition to the low interest rate help cushion the blow on the Kuwait economy and environment. businesses. — The ROA and ROE witnessed a decline of 0.7 percent and 5.7 percent, respectively, on account of decrease in profitability of the Kuwaiti banks during the year.
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Growth Market outlook 2020 was dominated by the Covid-19 pandemic and we The trajectory of the virus, implementation of vaccine roll- expect its impact to continue into the future. In KPMG outs and its efficacy would determine the economic professional’s view, Covid-19 is expected to add strain to prospect of 2021. the Kuwaiti banking sector which is expected to face — Kuwait’s economy is expected to grow by 0.6 percent pressure on the earnings in 2021 mainly due to: in 2021. Gradual easing of production cuts and demand — Pressure on net interest margin, arising from the recovery aided by vaccine rollout could support oil GDP current low interest rate environment. growth while continued easing of lockdowns and travel restrictions and credit availability could support non-oil — Interest holiday of six months to be provided to GDP growth. Kuwaiti citizens in 2021. — Lower oil prices and fiscal pressures might impact — Volatility in oil prices. infrastructure spending. Loan repayment holidays could Digital agenda contribute to delayed recognition of NPL, coupled with low interest rate environment, profitability could be Due to the outbreak of Covid-19, Kuwaiti banks have pressured in the short term. Given successful emphasized more on digitalization and will continue to deployment of vaccination, though might take time, invest in digital banking channels with the aim to would help the return to normal, benefitting the transform the banking sector and customer experience economy in general and banks, in particular. by focusing on the following: — Digital culture and execution capacity. — Improving analytics and insights. — Remote customer initiatives. — Transformation of internal process. In KPMG professional’s view, Kuwaiti banks are likely to witness increased acquisition of customers through digital channels across most product offerings.
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Loan to deposit ratio (%)
140.0% 126.9% 132.6% 120.3% 120.0% 111.9% 107.3% 112.3%106.8% 106.1% 103.5%96.9% 106.2% 103.9%102.3% 94.4% 96.2% 100.0% 89.4%88.0% 92.4%
80.0% 69.9% 70.2% 60.0%
40.0%
20.0%
0.0% AUBK ABK Boubyan Burgan GBK KFH KIB NBK CBK Warba
2019 2020 2019: Average LDR: 104.2% 2020: Average LDR: 99.6%
Capital adequacy ratio (%)
25.0% 22.1% 20.3% 19.2% 20.0% 18.7% 18.2% 18.4% 18.2% 18.5% 17.3% 18.1% 17.7%17.5% 17.8% 17.8% 16.9% 16.9% 16.8% 17.1% 16.0%15.7% 15.0%
10.0%
5.0%
0.0% AUBK ABK Boubyan Burgan GBK KFH KIB NBK CBK Warba
2019 2020 2019: Average CAR: 18.0% 2020: Average CAR:17.9%
Return on equity/Return on assets (%)
30.0%
20.0%
12.7%
11.7%
11.8%
11.7%
11.3%
9.8%
5.9% 7.4%
10.0% 6.6%
5.3%
5.6%
4.7%
4.8%
4.4%
5.3%
0.6%
0.2%
0.7%
2.7%
1.3%
0.7%
0.8%
1.4%
0.6%
1.2% 0.7%
1.3%
0.5%
0.0%
1.4%
0.5% 0.6% 0.0% 1.0% AUBK ABK Boubyan Burgan GBK KFH KIB NBK CBK Warba
-10.0%
1.4%
- 1.9%
-20.0% -
12.7% -
2019:ROE 2020:ROE 2019:ROA 2020:ROA 2019: Average ROE: 10.1% 2020: Average ROE: 4.4% 2019: Average ROA:1.2% 2020: Average ROA: 0.5%
Note: For source data refer to the data table (page 47–48) in Appendix II.
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NPL (%)
6.0% 3.9% 4.0% 2.4% 2.1% 2.3% 1.9% 1.6% 1.9% 1.8% 1.7% 1.3% 1.5% 1.1% 1.1% 1.1% 1.1% 2.0% 0.8% 0.6% 0.0% 0.0% 0.1% 0.0% 2 AUBK ABK Boubyan Burgan GBK KFH KIB NBK CBK Warba
2019 2020 2019: Average NPL: 1.2% 2020: Average NPL:1.6%
Net provision charge on loans (US$ million)
800.0 707.6 607.8 600.0 523.9 398.5 403.9 400.0 253.9 246.0 223.1 295.5 252.4 233.6 168.1 93.8 161.3 160.4 200.0 74.4 50.8 26.2 89.8 61.8 0.0 AUBK ABK Boubyan Burgan GBK KFH KIB NBK CBK Warba 2019 2020
Cost to income ratio (%)
80.0% 57.9% 48.1% 44.4% 57.7% 60.0% 36.6% 41.2%45.7% 40.4% 38.9% 41.9% 37.6% 37.4% 37.2% 37.0% 37.5% 40.0% 37.3% 34.0% 31.6% 30.5% 33.3% 20.0% 0.0% AUBK ABK Boubyan Burgan GBK KFH KIB NBK CBK Warba
2019 2020 2019: Average CIR: 39.5% 2020: Average CIR: 41.1%
Credit rating
S&P Moody’s Fitch Credit rating agency Long-term Long-term Long-term Bank issuer rating Outlook issuer rating Outlook issuer rating Outlook AUBK NA NA A2 Stable A+ Negative ABK NA NA A2 Stable A+ Negative Boubyan A Stable A3 Stable A+ Negative Burgan BBB+ Stable A3 Negative A+ Negative GBK A- Stable A3 Stable A+ Negative KFH NA NA A2 Stable A+ Negative KIB NA NA NA NA A+ Negative NBK A+ Stable A1 Stable AA- Negative CBK NA NA A3 Stable A+ Negative Warba NA NA Baa2 Stable A+ Negative Overall country rating AA- Negative A1 Stable AA Negative
Note: NA = rating not available on ThompsonOne database, checked on 28 June 2021. 1For calculating NPL ratio for Warba bank, past due or impaired has been taken as proxy data. Islamic Banks have been presented in italics. For source data refer to the data table (page 47–48) in Appendix II.
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Mobile banking Social corporate responsibility In response to movement restrictions and self-isolation During the pandemic, a conventional bank launched a directives imposed at the height of the pandemic, a nationwide mental and physical wellness campaign to leading conventional bank launched mobile bank raise awareness about adjusting to the gradual and safe branches. A small fleet of vehicles travelled around return to the workplace. The bank was the first in Kuwait Kuwait to customers’ doorsteps, enabling ATM and ITM to offer psychological services for its employees in transactions, withdrawals and deposits, debit card recognition of the importance of mental and social health issuance, cheque deposits and cashing. The launch of during the pandemic. The bank hosted two wellbeing mobile bank branches was evidence of the bank’s ability webinars during the national lockdown. In addition, the to rapidly respond to shifting customer needs, and its bank launched a remote mental and physical wellness devotion to serving those needs even in the most training program for over 700 of its employees. adverse circumstances. The mobile branch fleet has remained active in Kuwait, serving those who are unable to perform essential transactions in person. Online customer registration In 2020, one of the leading Islamic bank provided its customers the facility to open bank accounts online including all KD deposits e.g., Mudarabah or Wakala deposits. An online service was launched to manage the accounts of customers (specifically children under the age of 15) through the website, as well as the mobile application and e-signature facility in cooperation with the Public Authority for Civil Information in Kuwait. The customers were able to benefit from several digital services without the need to visit branches. The bank also launched new operational lease services in two new packages i.e. golden and platinum to offer best services to its customers.
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Population (million)1 4.6
Nominal GDP (US$ billion)2 74.1
GDP per head (US$ at PPP)2 30,180.0
Inflation (%)2 3.8
Economic data as of 31 December 2020 Source(s): 1Economist Intelligence Unit, Oman — data by country; 2IMF estimates, Link, accessed on 28 June 2021.
Summary Financial position All banks total assets increased by 1.67 percent, from US$92.7 billion in 2019 to US$94.2 billion in 2020. Sector overview Conventional banks total assets increased by 0.93 percent and Islamic banks / windows assets shown good As of 31 December 2020, twenty banks operate under growth of 6.3 percent. Overall credit has increased by the Central Bank of Oman (CBO) regulatory regime, of 3.32 percent of which conventional banks increase is 2.2 which eight banks are listed on Muscat Stock Exchange percent whereas Islamic banks / windows growth is 9.5 (MSE), two are government banks, one is local unlisted percent. Deposits have overall grown by 2.9 percent with Islamic bank and nine are foreign banks branches. During 2.4 percent from conventional banking and 5.4 percent the year, Oman Arab Bank got listed on MSE and from Islamic banks / windows. Investment in acquired another bank: Alizz Islamic Bank SAOC government development bonds and other government exemplifying the consolidations in recent past. securities has shown significant increase of 23 percent.
Regulatory update ROA for listed banks have declined from 1.3 percent to The CBO has taken pro-active measures to minimize the 0.8 percent during the year. Decline is observed in all the impact of the pandemic on businesses. The banks were listed banks which is mainly due to reduction in given suitable regulatory forbearance so that the business profitability whereas the total assets has seen a marginal and retail customers are given time to recover. CBO also increase during the year. ensured adequate liquidity for the banking system. Further, other program such as the stimulus package was Financial performance also introduced by CBO in 2020 which had various measures. In 2020, profitability for listed banks declined by 32.5 percent from the previous year. This was mainly due to higher ECL charge on financial assets and decrease in fees and commission income due to impact of Covid-19 on the banking sector.
Total assets (US$ billion) and net profit (US$ million) as of, and for the year ended, 31 December 2020
35.0 424.3 500.0 30.0 400.0 25.0 300.0 20.0 200.0 15.0 79.4 62.3 52.0 47.1 28.7 36.8 100.0 profit Net 10.0 -21.3 Total assets Total 5.0 3.1 0.0 7.0 11.1 32.3 8.6 9.4 6.1 9.4 0.0 -100.0 Ahli Dhofar Muscat Nizwa OAB Sohar HSBC NBO
Note: For source data refer to the data table (page 49–51) in Appendix II.
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Share price movement (US$)
1.2
1.0
0.8
0.6
0.4
0.2
0.0 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020
Ahli Dhofar Muscat Nizwa OAB* Sohar HSBC NBO Average Insights Looking back
Profitability under pressure Increase in cost of deposits — The overall profitability for listed commercial banks has — Deposits increased by 2.9 percent as compared to 1.7 decreased by 32.5 percent year-on-year. Six listed banks’ percent in 2019. Conventional banking deposits has net profits has declined whereas two banks had marginal shown growth of 2.4 percent and Islamic banks / growth in profitability as compared to prior year. windows of 5.4 percent. Private sector deposits — Decline is largely contributed by significant increase in increased by 10.5 percent, non-resident deposits by 72 allowance for expected credit losses on financial assets percent and whereas the deposits by government and due to deteriorating asset quality and Covid-19 impacts. public enterprises decreased by 14.7 percent as Further the fees and commission income has also compared to prior year. Weighted average Rial Omani witnessed decline due to lockdown in the Sultanate for private sector interest rate for time deposits has certain months in 2020 which halted certain businesses increased by 2.5 percent year-on-year, resulting in affecting the income generated by Banks including increased interest cost for the period impacting the income on trade finance products. bottom line. Subdued credit growth Capital adequacy still strong — Credit growth remains moderate at 3.3 percent as — The average CAR for listed banks stands at 17.4 compared to 3.0 percent in 2019. Conventional banking percent as compared to 17.3 of 2019. Bank’s CAR is credit has shown growth of 2.2 percent and Islamic above the original regulatory limit of 13.5 percent banking / windows of 9.5 percent. Credit to the private which is relaxed to 12.25 percent due to COVID 19. sector has increased slightly by 1.1 percent, whereas the Sufficient capital buffers indicate resilience of Oman credit to government and public enterprises increased by banking sector. 27 percent as compared to prior year. — Banks have also taken cautious approach in dividend — Islamic banks / windows credit growth of 9.5 percent in payouts, as cash dividend for 2020 declined by 48 2020 and 11 percent in 2019 indicates penetration of percent for listed banks as compared to prior year, Islamic banks / windows in the market and customer which has helped maintain the CAR at healthy levels. interest towards the Islamic products. Four banks has declared dividend as compared to seven banks in the prior year. — In growth trajectory during 2020, Banks mainly focused towards investing in government securities and lending Government assistance to the sector to government / public enterprises. These both have — Impact on economy due to Covid-19, steep declines in increased by 23 percent and 27 percent, respectively, oil prices and cuts to oil production were managed when compared with 2019. through support from government bodies including waiving or reducing selected taxes and fees, payment Expected credit losses impact of taxes in installments, formation of Job Security Fund — Net ECL impairment charge on loans and advances in to support unemployed citizens, CBO's stimulus statement of profit or loss for listed banks has package through lower interest rates, liquidity significantly increased by 115 percent. The major factor injections, deferred loan installments and relieve in was emerging stress in the economic and business requirements on capital adequacy and liquidity ratios. conditions due to Covid-19 coupled with continued pressure on oil prices resulting in banks considering additional impairment allowance.
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Modest growth Accelerated efforts for Fintech and With continued unprecedented impact of Covid-19 digitalization pandemic on financial sector globally including in Oman — Pandemic, increasing the demand for digital financial coupled with slowdown in economic activities and services as well as Oman’s economy moving towards modest real GDP projected growth of 1.8 percent as per a robust base of economic diversification with focus IMF, credit growth is expected to be moderate during on technology, knowledge and innovation under 2021 as it was in 2020 of 3.32 percent and 2.99 percent Vision 2040 has accelerated the bank’s focus towards in 2019. Roll-out of vaccines and relieving social fintech initiatives and digital transformation. Fintech distancing restrictions would support increased activities Regulatory Sandbox (FRS) initiative by the CBO, globally as well as in Oman. During 2021, the banks are launched during December 2020 and establishment expected to focus more on managing their existing of BM Innovate with capital of US$100 million during portfolio and assisting their customers to tackle Covid-19 September 2020 by Bank Muscat are some of the key challenges by providing additional funding and initiatives to accelerate the digitalization and fintech. restructuring their existing debts to align their cashflows Digital onboarding of customers, virtual banking hubs, in recovery phase. voice ID for banking services, WhatsApp banking, QR Asset quality under pressure code payments, money transfer using mobile number or alias are some of the latest steps towards wider Gross NPL was 4.2 percent in 2020 compared with 3.5 digitalization. percent in 2019 and 2.7 percent in 2018. With Covid-19 impacts coupled with slowed economic growth, asset Consolidation drive continues quality is expected to further deteriorate and thereby — With global economy coming under stress leading to credit risks should be closely monitored especially for reduced profitability coupled with increasing pressure impacted sectors. by the regulators for capital requirements and Heightened uncertainty on asset quality exists as real risk compliance costs, we are witnessing a rising trend in of classification will unveil once the loan deferment M&A activity in the banking industry with the latest scheme is over by 30 September 2021 thereby potential one where listed Islamic bank in Oman being acquired credit risks should be closely watched especially for hard- by a conventional bank. The merger of banks is hit sectors. expected to consolidate market share, improve pricing and cost synergies, and create stronger Bank’s approach to credit expansions seems more financial institutions, which are expected to make calculated and towards government securities and them more competitive in the local, regional and entities as evident from the fact that during 2020, international markets. investment in government securities increased by 23 percent and lending to government / public enterprises Diversification and fiscal stability to increased by 27 percent when compared with 2019. boost Country’s growth Capital adequacy is a concern but no — The Tenth Five-Year Plan (2021 to 2025) is significant sign of crisis as it is the first executive financial plan of Oman Vision 2040. It will serve as the cornerstone and As the impact of Covid-19 and CBO loan deferrals springboard to achieve fiscal balance, sustainability, scheme continues to unfold, CBO continues to provide economic diversification and growth. It reiterates the capital and liquidity support to the banks to navigate government’s intention to engage the private sector through the liquidity challenges. Apart from this, bank are in achieving sustainable economic and social also getting benefit of low inter bank rates to meet the development. The plan continues to focus at short-term liquidity mismatches. Further, to enhance the enhancing non-oil revenues and rationalize public capital base and availability of funds for growth, the spending leading to fiscal sustainability. If the banks are focusing to raise their capital base like by issue government succeeds in improving the investment of EMTN bonds of US$500 million by Bank Muscat, climate and enhancing the role of the private sector, Capital Tier 1 securities of US$300 million by NBO and thereby achieving fiscal sustainability as outlined in right issue of US$78 million by Ahli Bank during 1Q’21. the plan, there is every reason to hope that Oman will Certain other banks are also looking to raise capital emerge successfully from the current global securities during 2021. challenges and regional economic environment. With the regulatory support and enhancement in capital base, banks in Oman are expected to be above the regulatory capital base requirements.
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Loan to deposit ratio (%)
140.0% 120.1% 115.3% 110.4% 117.0% 120.0% 114.1% 112.2% 110.7%114.3% 104.1% 106.7% 104.0%106.9% 100.4% 100.0% 95.7%
80.0% 72.5% 71.6% 60.0%
40.0%
20.0%
0.0% Ahli Dhofar Muscat Nizwa OAB Sohar HSBC NBO
2019 2020 2019: Average LDR: 104.9% 2020: Average LDR: 104.6%
Capital adequacy ratio (%)
25.0%
20.8% 20.6% 19.7% 20.0% 18.9%19.1% 18.8% 17.9%17.7% 16.9% 16.6%16.4% 15.7% 14.5% 15.2%15.4% 15.0% 13.7%
10.0%
5.0%
0.0% Ahli Dhofar Muscat Nizwa OAB Sohar HSBC NBO
2019 2020 2019: Average CAR: 17.3% 2020: Average CAR:17.4%
Return on equity/Return on assets (%)
15.0%
11.9%
11.0% 11.1% 11.8%
10.1% 9.1%
10.0% 8.6%
8.5%
7.1%
7.2%
5.6%
5.7%
6.0% 4.3%
5.0% 4.3%
1.5%
1.4%
1.3%
1.3%
1.2%
1.3%
1.1%
1.1%
1.0%
0.9% 0.7%
0.7%
0.5%
0.5% 0.6%
0.0% 0.3%
-5.0% - 2.4% Ahli Dhofar Muscat Nizwa OAB Sohar HSBC- NBO 2019:ROE 2020:ROE 2019:ROA 2020:ROA 2019: Average ROE: 9.7% 2020: Average ROE: 6.4% 2019: Average ROA:1.3% 2020: Average ROA: 0.8%
Note: For source data refer to the data table (page 49–51) in Appendix II.
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Stage-wise coverage ratios as at 31 December 2019 vs at 31 December 2020 (%)
90.0%
80.0% 78.4%
73.3%
68.7% 68.1%
70.0% 66.5%
61.6% 57.1%
60.0% 56.0%
50.0% 47.9%
44.1%
42.7%
38.0% 38.0%
40.0% 38.0%
33.1% 31.5% 30.0%
20.0%
12.1% 11.8%
10.0% 6.1%
5.1%
5.1%
4.8%
4.2%
4.1%
3.9%
3.7%
3.6%
3.5%
3.3%
3.2%
2.6% 2.6%
1.0%
0.7%
0.5%
0.5% 0.5%
0.5%
0.5%
0.5%
0.5%
0.5%
0.4%
0.4%
0.4%
0.3%
0.3% 0.2% 0.0% Ahli Dhofar Muscat Nizwa OAB Sohar 1 HSBC NBO
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Average 2019: Average 2019: Average 2020: Average 2020: Average 2020: Average Stage 1: 0.4% Stage 2: 4.2% Stage 3: 55.8% Stage 1: 0.4% Stage 2: 5.4% Stage 3: 58.5%
Total loans subject to ECL (by stage) as at 31 December 2019 vs as at 31 December 2020 (%)
100% 1.7 2.9 4.7 4.5 3.2 3.6 0.1 1.0 3.6 4.5 4.8 6.0 2.0 2.7 4.9 5.6 14.4 90% 17.9 19.4 20.4 19.5 13.8 13.1 16.8 19.4 28.4 21.1 22.2 25.8 20.4 80% 33.2 38.2 70%
60%
50% 85.5 40% 80.3 81.4 81.0 78.3 77.7 76.0 76.3 76.9 75.3 74.0 69.5 70.6 73.3 64.8 30% 59.1
20%
10%
0% 1 Ahli 2 3Dhofar 4 5Muscat 6 7Nizwa 8 9 OAB 10 11Sohar 12 13HSBC 14 15NBO 16
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Average 2019: Average 2019: Average 2020: Average 2020: Average 2020: Average Stage 1: 76.2% Stage 2: 20.3% Stage 3: 3.5% Stage 1: 75.3% Stage 2: 20.7% Stage 3: 4.0%
Note: For source data refer to the data table (page 49–51) in Appendix II.
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Net provision charge on loans (US$ million)
0.5 9.8 13.6 84.9 19.6 18.1 39.0 7.1 9.9 29.9 84.0 14.1 67.4 22.7 62.8 6.8 5.6 77.1 49.0 64.6 24.0 47.7 15.8 21.3 9.7 38.8 56.3 35.7 4.8 15.9 2.6 6.9 2.7 2.9 -3.2 -8.0 -0.6 -2.0 -18.6 -7.0 0.4 -7.5 -4.6 -8.0 -57.5 -17.7 -3.8 -12.3 Ahli Dhofar Muscat Nizwa OAB Sohar HSBC NBO
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Total 2019: Total 2019: Total 2020: Total 2020: Total 2020: Total stage 1: 13.6 stage 2: 4.8 stage 3: 242.3 stage 1: 14.0 stage 2: 284.4 stage 3: 262.3
Cost to income ratio (%)
100.0% 87.0% 80.0% 64.7% 55.0% 55.8% 56.0% 54.6% 60.0% 52.7% 50.1% 50.1% 52.3% 49.1% 49.6% 43.3% 43.3% 41.5% 39.4% 40.0%
20.0%
0.0% AhliAhli DhofarDhofar MuscatMuscat NizwaNizwa OABOAB SoharSohar HSBCHSBC NBONBO
2019 2020 2019: Average CIR: 49.6% 2020: Average CIR: 56.0%
Credit rating
S&P Moody’s Fitch Credit rating agency Long-term Long-term Long-term Bank issuer rating Outlook issuer rating Outlook issuer rating Outlook Ahli NA NA NA NA B+ Negative Dhofar NA NA Ba3 Negative BB- Negative Muscat B+ Stable Ba3 Negative BB- Negative Nizwa NA NA Ba3 Negative NA NA OAB NA NA Ba3 Negative NA NA Sohar NA NA Ba3 Negative B+ Negative HSBC NA NA Ba2 Negative BB Negative NBO NA NA Ba3 Negative BB- Negative Overall country rating B+ Stable Ba3 Negative BB- Negative
Note: NA = rating not available on ThompsonOne database, checked on 28 June 2021. For source data refer to the data table (page 49–51) in Appendix II.
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Public enterprises management Payment license to non-banking In 2020, the Government of Oman has made significant financial entity reforms to restructure, streamline and fully revise the In 2020, the CBO has issued the first license to a non- work of government-owned companies with a vision to banking financial entity, a fintech company. The fintech upgrade their performance, strengthen the governance company is an example of Omani entrepreneurship that and efficiency of public enterprises and enable them to was established in 2016 as an innovative startup allowing strongly contribute to the economic system. As a result, cashless mobile payment solutions to merchants and a consolidated sovereign wealth fund and energy holding individual shoppers and buyers alike. company were formed in 2020, with an objective to invest and finance in conventional and renewable energy sectors and reduce the impact of lower oil prices. Fintech regulatory framework The Central Bank of Oman has recently launched the CBO Fintech Regulatory Sandbox (FRS), which targets cultivating advanced and innovative products, services and business models in the domestic financial services industry. The FRS is a closed testing environment in which the CBO will grant certain regulatory exemptions for participants that have fintech solution applications entering the FRS, thus allowing them to live test their banking, payments and other financial services solutions on volunteer customers in order to prove their viability.
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Population (million)1 2.9
Nominal GDP (US$ billion)2 166.0
GDP per head (US$ at PPP)1 90,119
Inflation (%)2 2.4
Economic data as of 31 December 2020 Source(s): 1Economist Intelligence Unit, Qatar — data by country; 2IMF estimates, Link; accessed on 28 June 2021.
Summary Financial position Total listed banking sector assets increased by 7.3 Sector overview percent, from US$446.4 billion in 2019 to US$478.8 billion in 2020, driven by a growth in lending to As of 31 December 2020, 17 banks operate under the customers and investment securities along with increase Qatar Central Bank (QCB) regulatory regime, of which 10 in cash and balances with central banks, which was are national banks (four of which are Islamic) and seven partially offset by a decrease in due from bank balances. foreign branches. Nine national banks are listed on the The market is dominated by QNB, which had a market Qatar Stock Exchange (QSE) (four being Islamic), including share of 58.8 percent of total listed banking assets at the one Islamic investment bank regulated by Qatar Financial end of 2020 while Islamic banks have a combined market Center Regulatory Authority (QFCRA) that has been share of 20.5 percent. excluded for the purposes of this report, which only covers commercial banks. No new banking licenses were granted by the QCB in 2020, while two listed banks entered into Financial performance merger talks during the year. In 2020, profitability for listed banks declined by 12.4 percent on average from the previous year. This was Regulatory update mainly a result of higher provisions on loans, investments The QCB takes a proactive approach to regulating banks in and other financial assets, lower fee commission income, Qatar. It has issued Basel III regulations for all banks, which and lower share of income from associates, all of which have been applied in a phased manner, and has was marginally offset by an increase in net interest implemented numerous regulatory requirements that have income and reduced costs. been applied in more developed financial markets, covering areas such as stress testing, capital planning, liquidity management, and recovery and resolution planning. In line with the increased global focus on AML, QCB issued guidelines on Anti-Money Laundering and Counter Financial Terrorism (AML&CFT) for local banks in May 2020.
Total assets (US$ billion) and net profit (US$ million) as of, and for the year ended, 31 December 2020
300.0 3,297.5 3,500.0
2,500.0 200.0 842.1 1,500.0 597.6 357.5 100.0 257.6 profit Net Total assets Total 186.8 187.6 193.1 500.0 33.3 13.1 15.5 28.4 16.8 47.9 281.6 42.2 0.0 -500.0 Ahli Al Khaliji Doha MAR QIIB QIB QNB CB
Note: For source data refer to the data table (page 52–54) in Appendix II.
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Share price movement (US$)
6.0
5.0
4.0
3.0
2.0
1.0
0.0 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020
Ahli Al Khaliji Doha MAR QIIB QIB QNB CB Average Insights Looking back
Profitability pressure Cost consciousness remains — Overall profitability for listed commercial banks in Qatar — At 24.3 percent, Qatar’s listed banks have the lowest has decreased year-on-year by 12.4 percent. Four CIR on average across the GCC, reflecting cost banks showed a decline in profit from 2019, with no consciousness across the sector and country. The ratio other bank reporting profit growth in excess of 6 dropped by 2.4 percent from the prior year. percent. — All banks reported a decline in their CIR which helped — This decline can predominantly be attributed to higher the overall average remain below 30 percent. provisions on loans, investments and other financial Investment in digital and innovation supported assets as banks took a more conservative approach in reduction in costs. wake of the Covid-19 pandemic. Conservative provisioning Robust asset growth — The ECL charge for stage 1 and 2 loans and advances — Listed commercial banks posted a 7.3 percent average to customers increased by US$445 million, growth in total assets from the prior year. This growth predominantly as a result of the ECL on stage 1 loans can be predominantly attributed to the increase in and advances to customers, which contributed lending to customers (7 percent), investment securities US$379 million to the increase. (10 percent) and cash and bank balances (33 percent) — Islamic banks, which account for 21 percent of the which was partially offset by lower ‘due from bank’ listed banking assets in Qatar, contributed 62 percent balances (12 percent) and lower investment in of this ECL increase while conventional banks associates (3 percent). accounted for the balance. — The significant increase in lending to customers and investment securities were primarily driven by QNB, Capital adequacy still strong which contributed 72 percent of the total growth. The — The average CAR increased by 0.1 percent compared significant decrease in due from bank balances was with the prior year, with five banks showing an primarily driven by QNB, which accounted for 89 increase and the remaining showing a decrease, percent of the decline. reflecting the conservative approach to business during Challenging credit environment the year coupled with the limited capital raising activities undertaken. — Although the lending to customers continued to — Banks have also been conservative in their dividend increase, 2020 witnessed higher provision charges payouts, with an overall decline of 5.3 percent in the against lending to customers, which increased by 73 dividend percentage from the prior year, which has percent, driven by the corporate sector, particularly due helped maintain the CAR at healthy levels. to the impact of Covid-19. — NPL ratios remained relatively low compared to international norms in 2020. However, compared with the prior year, the average NPL ratio increased 0.1 percent.
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Covid–19 impact continues Qatar’s banking sector to weather the — Covid-19 has been having an unprecedented impact on storm financial markets globally, including Qatar, with — Qatar took all necessary precautionary measures to implications for banking: businesses, employees, protect its population and economy from Covid-19. suppliers and customers. While the State of Qatar Qatar’s economy will continue to weather the storm government has taken numerous proactive measures and activity is expected to rebound in the latter half of to ensure that the financial system and wider economy 2021. The government’s QR75 billion (US$20.6 billion) are protected, as far as possible, from the effects of stimulus and support package included targeted the pandemic, helped by the rising oil prices, there are, measures to defer fees and loan payments, boost nevertheless, implications that banks will inevitably concessional financing for small and medium-sized face. enterprises (SMEs), and provide additional liquidity to — The current challenges faced by the Qatar banking the banking system, all of which will help maintain sector are primarily linked with credit quality, stability through 2021. operational risks and digital acceptance. While there are wide-ranging views on how this situation will affect — As the 2022 FIFA World Cup approaches and in line the financial markets, one point over which there is with the Qatar National Vision 2030, banks will be unanimous agreement is that we will be dealing with primarily focused on the local market, as opposed to the effects of the pandemic for the foreseeable future, seeking growth overseas. Qatar Petroleum’s and while the banking sector will suffer, it will also multibillion-dollar North Field development, which is set most certainly emerge stronger as a result of this. to increase Qatar’s liquefied natural gas (LNG) capacity by more than 64 percent, will continue the momentum Fintech support gathers momentum set in place by the preparations for the 2022 FIFA World Cup, providing impetus to the local economy. — With increased focus on innovation and regulatory requirements, QCB has partnered with Qatar Selective capital and fundraising Development Bank (QDB) and The Qatar Financial Center (QFC) to rollout Qatar Fintech Hub (QFTH) to — In KPMG professional’s view, banks may selectively stimulate the sector and rise to meet the evolving look to access capital markets for funding (through needs of the country. QFTH is dedicated to offer EMTN and sukuk issuances) and local capital Qatar’s first ever specialized incubator and accelerator issuances, owing to the low interest rate environment programs, which target entrepreneurs with innovative and given that the State of Qatar outlook continues to and cutting-edge fintech ideas. be stable in 2021. Liquidity is expected to improve through government support and possible further — As part of a globally interconnected financial world we issuances in the capital markets. live in, Qatar will continue in its fintech push. The Qatar Fintech Hub expects to bring together talented — The regulator will continue to implement Basel III entrepreneurs, investors and enablers to develop capital requirements, with additional Domestic disruptive technologies so that visions can become Systemically Important Banks (DSIB) and counter reality. The pandemic has allowed fintech payment cyclical buffer (CCB) requirements to be gradually propositions to flourish in the Qatari market, as banks phased in, resulting in higher capital adequacy promote cashless transactions and the use of greater requirements for banks to meet. technology and innovation. Consolidation drive continues Regulators to remain active — With the global economy coming under stress and — In line with the Second Strategic Plan for the Financial leading to reduced profitability coupled with increasing Sector 2017–22, a greater emphasis is expected by pressure by the regulators for capital requirements and banks in Qatar on enhancing AML/CFT and cyber compliance costs, we are witnessing a rising trend in security effectiveness for improving the integrity of and M&A activity in the banking industry with the latest confidence in the financial system. This is further one being a listed Islamic bank entering into a merger supported by the move to wider digital channels agreement with another listed conventional bank. embraced by banks in view of Covid-19. — The merger of banks is expected to consolidate market — Furthermore, we expect the regulators, both the QFC share, improve pricing and cost synergies, and create and QCB, to embrace ‘regtech’ and explore new stronger financial institutions, which are expected to regulations in emerging areas such as open banking make them more competitive in the local, regional and and digital currencies. international scene.
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Loan to deposit ratio (%)
140.0% 124.4% 127.6% 123.9% 118.9% 124.8% 112.5% 114.1% 118.5% 115.4% 120.0% 110.2% 111.4% 105.6% 101.9% 100.8% 99.2% 100.0% 98.0%
80.0%
60.0%
40.0%
20.0%
0.0% Ahli Al Khaliji Doha MAR QIIB QIB QNB CB
2019 2020 2019: Average LDR: 111.4% 2020: Average LDR: 114.5%
Capital adequacy ratio (%)
25.0%
20.3%20.3% 19.4% 19.8% 19.5%19.4% 20.0% 19.1% 18.9%19.1% 18.0% 17.7% 18.5% 17.8% 16.9% 16.5% 16.4% 15.0%
10.0%
5.0%
0.0% Ahli Al Khaliji Doha MAR QIIB QIB QNB CB
2019 2020 2019: Average CAR: 18.5% 2020: Average CAR:18.7%
Return on equity/Return on assets (%)
20.0% 19.0%
17.5%
16.1%
16.0%
15.4% 14.7%
16.0% 14.7%
13.5%
11.8%
11.1%
10.6% 10.2%
12.0% 10.0% 6.0%
8.0% 5.9%
5.2%
2.1%
1.9%
1.9%
1.8%
1.7%
1.6% 1.6%
4.0% 1.6%
1.5%
1.4%
1.2%
1.2% 1.2%
0.9%
0.7% 0.7% 0.0% Ahli Al Khaliji Doha MAR QIIB QIB QNB CB 2019:ROE 2020:ROE 2019:ROA 2020:ROA 2019: Average ROE: 15.9% 2020: Average ROE: 12.9% 2019: Average ROA:1.6% 2020: Average ROA: 1.3%
Note: For source data refer to the data table (page 52–54) in Appendix II.
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Stage-wise coverage ratios as at 31 December 2019 vs at 31 December 2020 (%)
120.0%
107.2%
100.0% 100.0%
100.0% 94.4%
88.7%
86.3%
84.3%
79.0% 79.0%
80.0% 76.4%
66.5%
61.3%
60.7% 56.0%
60.0% 54.0% 43.2%
40.0% 18.6%
20.0% 18.1%
8.2%
7.8%
7.4% 7.4%
6.3%
5.7%
5.1%
4.8%
4.6%
4.0%
3.6%
2.6%
2.2%
1.6%
1.3%
0.9%
0.7%
0.6%
0.4%
0.4%
0.4% 0.4%
0.4%
0.3% 0.3%
0.2%
0.2%
0.1%
0.1% 0.1% 0.0% Ahli Al Khaliji Doha MAR QIIB QIB QNB CB
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Average 2019: Average 2019: Average 2020: Average 2020: Average 2020: Average Stage 1: 0.3% Stage 2: 6.6% Stage 3: 87.6% Stage 1: 0.4% Stage 2: 6.3% Stage 3: 88.8%
Total loans subject to ECL (by stage) as at 31 December 2019 vs as at 31 December 2020 (%)
100% 1.9 1.8 2.1 2.5 1.7 5.8 6.0 1.0 1.1 2.7 1.6 1.3 1.5 2.1 4.9 4.3 8.0 4.7 5.8 9.7 11.4 11.5 13.9 90% 17.8 15.4 16.6 15.4 15.4 16.8 16.0 80% 27.2 28.1
70%
60%
50% 93.4 88.1 90.4 92.1 86.2 82.9 82.4 83.5 85.8 84.8 83.2 40% 80.4 78.2 79.7 67.0 65.9 30%
20%
10%
0% 1 Ahli 2 3Al Khaliji 4 5 Doha 6 7 MAR 8 9 QIIB 10 11QIB 12 13QNB 14 15 CB 16
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Average 2019: Average 2019: Average 2020: Average 2020: Average 2020: Average Stage 1: 88.2% Stage 2: 9.5% Stage 3: 2.3% Stage 1: 87.6% Stage 2: 10.0% Stage 3: 2.4%
Note: For source data refer to the data table (page 52–54) in Appendix II.
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Net provision charge on loans (US$ million)
45.2 21.5 8.0 62.2 42.3 14.0 7.9 52.9 20.7 566.4 33.3 103.9 1227.1 18.2 38.4 294.8 173.4 108.0 52.5 497.9 7.2 293.7 55.8 7.1 45.9 97.6 25.1 22.8 277.6 271.6 59.6 33.9 5.4 4.0 101.7 -21.7 -1.8 0.8 0.1 6.4 -15.8 -30.1 28.8 -16.7 -120.1 -10.8 Ahli1 Al Khaliji Doha2 MAR3 QIIB QIB QNB4 CB5
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Total 2019: Total 2019: Total 2020: Total 2020: Total 2020: Total stage 1: 94.3 stage 2: 340.7 stage 3: 1,219.5 stage 1: 472.9 stage 2: 406.8 stage 3: 1,982.6
Cost to income ratio (%)
40.0% 34.1%
27.9% 29.5% 28.3%27.2% 30.0% 27.3% 26.2% 25.6% 25.8% 24.6% 22.8% 24.1% 22.8% 21.5% 20.3% 20.1% 20.0%
10.0%
0.0% Ahli Al Khaliji Doha MAR QIIB QIB QNB CB
2019 2020 2019: Average CIR: 26.7% 2020: Average CIR: 24.3%
Credit rating
S&P Moody’s Fitch Credit rating agency Long-term Long-term Long-term Bank issuer rating Outlook issuer rating Outlook issuer rating Outlook Ahli NA NA A2 NA AA- Stable Al Khaliji NA NA A3 Stable A Stable Doha NA NA Baa1 Stable A Stable MAR NA NA A1 Stable A Stable QIIB NA NA A2 Stable A Stable QIB A Stable A1 Stable A Stable QNB NA NA B2 Negative A+ Stable CB BBB+ Stable A3 Stable A Stable Overall country rating AA- Stable Aa3 Stable AA- Stable
Note: NA = rating not available on ThompsonOne database, checked on 28 June 2021. 1Stage 3 charge as mentioned in the FS (–) interest in suspense for the year; 2Stage 3 charge as mentioned in the FS (–) interest in suspense for the year – foreign currency translation; 3Stage 3 charge as mentioned in the FS (–) profit in suspense for the year; 4Stage 3 charge as mentioned in the FS (–) interest in suspense for the year (which is assumed to be differential between total profit and loss charge and total charge as per note 4); 5Stage 3 charge as mentioned in the FS (–) interest in suspense for the year; For source data refer to the data table (page 52–54) in Appendix II.
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Islamic Bank launches Visual IVR Islamic Bank launches new digital H2H An Islamic bank in Qatar has become the first to provide Payment Management solution this ultra-modern, technology-driven service to its Qatar’s leading Islamic Bank has launched a new customers. Visual IVR Service provides many services to integrated Host-to-Host (H2H) Online Payment customers, including information on accounts and Management solution for its large corporate customers. money transfers, as well as those related to bank cards The new H2H Online Payment System offers an extra such as transaction inquiry, card activation, password layer of security as all processed data is fully encrypted. change, service bills’ payment etc. remotely from With this new end-to-end digital payment solution, the anywhere, while ensuring speed and security. This is bank has become the first of its kind in Qatar that will part of the implementation of the bank’s digital allow corporate customers to submit their payments transformation strategy and the provision of best from their Enterprise Resource Planning (ERP) Systems services to its customers, in accordance with the latest automatically without any manual intervention at any standards, adopted globally. time. Conventional bank enables payment through wearables One of the leading conventional banks in Qatar announced the launch of a new digital feature that enables payment through wearables, a new innovative payment method provided through smartwatches and trackers. Through this new offering, the bank has added another contactless payment solution that allows users to make secure payments from the smartwatch or fitness trackers, without the need for a phone or cards. The new feature offers athletes and sports enthusiasts in Qatar a new way to pay for their purchases with their watches and keep moving.
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Population (million)1 35.0
Nominal GDP (US$ billion)2 804.9
GDP per head (US$ at PPP) 46,548.0
Inflation (%)3 5.7
Economic data as of 31 December 2020 Source(s): 1Economist Intelligence Unit, Saudi Arabia — data by country; 2IMF estimates, Link; 3SAMA website, Inflation rate, accessed on 28 June 2021.
Summary Financial position Backed by government reforms, halt in credit losses (ECL), Sector overview stable liquidity, stronger CAR, and transformational changes, banks are heralding stable year, as compared to a 2020 started as a challenging year due to pandemic, but for shaky outlook in the corresponding period last year. The 11 the banking industry in Saudi Arabia, it concluded as a year Tadawul-listed banks stayed resilient at the end of 31 of reflecting cohesiveness of industry and how the banks December 2020 reflecting signs of recovery since and the regulator can play a joint-role in economic recovery. uncertainties evolved in March 2020 and a promising The Saudi Central Bank (SAMA) came out proactively with outlook for FY21. the stimulus program to support borrowers and simultaneously helped banks to accelerate their digital Financial performance journey for ensuring continuation of all banking services without physical interaction with customers. The financial performance of the 11 banks in 2020 accumulated a net income of US$11.2 billion, as compared Regulatory update with US$12.0 billion in 2019, reflecting only a 6.3 percent fall. Meanwhile, total assets increased to 13.1 percent SAMA had a whirlwind 2020, which saw it unveil combining US$739.0 billion, against US$653.1 billion in unprecedented stimulus packages to soften the economic 2019. Total customer deposits saw a 9.2 percent spike to impact of the pandemic. These packages have been US$527.6 billion, as compared to US$482.4 billion in 2019, extended to allow banks to give more leeway to their ECL saw a staggering rise to 39.1 percent to US$4.6 billion, customers. In November, SAMA was officially minted as as compared US$3.3 billion in 2019. the Saudi Central Bank and a new objective was added to its mandate: supporting economic growth. Simultaneously, Banks are reporting a strong capital and liquidity base, and SAMA took big strides in its long-running plans to develop while Covid-19 increasing housing demand, house the Saudi fintech and digital banking sectors. mortgage is witnessing a double-digit growth.
Total assets (US$ billion) and net profit (US$ million) as of, and for the year ended, 31 December 2020
200.0 4,000.0 2,825.5 3,050.7 150.0 2,000.0 1,257.3 1,120.2 261.2 100.0 524.3 552.6 359.6 412.3 9.0 -1,101.9
0.0 profit Net
50.0 Total assets Total 125.0 41.8 48.1 25.5 24.6 51.8 82.7 79.2 159.9 73.7 26.6 0.0 -2,000.0 Al Rajhi Alinma ANB BAB BAJ BSF Riyad SAMBA NCB SABB SAIB
For source data refer to the data table (page 55–57) in Appendix II.
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Share price movement (US$)
25.0
20.0
15.0
10.0
5.0
0.0 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020
Al Rajhi Alinma ANB BAB BAJ BSF Riyad SAMBA NCB SABB SAIB Average Insights Looking back
Impact of stimulus program Growth mortgage financing
Except for the one-off impairment of goodwill incurred by The lending book has been the proverbial silver lining SABB, the overall industry has done exceptionally well to of the year, with a healthy 12.6 percent net increase recover from the looming uncertainty during the height of relative to the prior year, fueled by strong growth the pandemic, essentially stalling the hike in ECLs to across mortgage finance. On the other front, SAMA’s under 40 percent from the prior year, culminating into a generous injections of deposits under the support net decline of 6 percent in the operating results across program and overall liquidity protection by corporates the sector. This is a direct consequence of the and individuals alike has enabled an impressive 9.2 commendable government support through SAMAs relief percent growth across bank and non-bank deposit programs, along with conscious measures that were base. invariably taken by the banks. Those included, but not limited to, asset protection via restrained and cautious Consolidation in banking landscape credit underwriting and re-balancing of prop books. In line with a regional trend toward consolidation, NCB and Samba Financial Group are already at an advanced Strong fundamentals stage and expecting a merger during the first half of This effectively means that in the wake of immense this year. This is expected to create – by far – the uncertainty throughout FY20, financial positions have largest lender in the Kingdom. The GCC is widely surprisingly thrived rather than just survived. In lieu of the viewed as overbanked. That fact, combined with optimism generated by the introduction of various increased pressure from fintechs and other market vaccines and overall improving fundamentals, it is up to entrants, has created an environment which may drive the individual banks to sustain the asset growth without an increase in number of M&A activity, in the near compromising credit quality while maintaining adequate future. While initially putting the brakes on M&A liquidity and capital levels. activity, the Covid-19 pandemic may prove to be a further catalyst for deal making if economic growth These factors also drove an increase of 13.1 percent in continues to dampen or the doubtful loans pile total assets and 7.8 percent in total equity for the banking continue to grow. industry while average return on assets and equity stands at 1.3 percent and 8.8 percent, respectively, compared with 1.9 percent and 12.6 percent, respectively for FY19. The average NPL coverage ratio has also increased to 164 percent during FY20 compared with 160 percent for FY19 on the back of significant increase of 39.4 percent in the impairment charge for FY20 compared with FY19.
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New working reality: challenges and Steadily progressing AML compliance opportunities — Saudi Arabia has made significant progress in anti- — The pandemic posed a significant test of financial money laundering (AML) and counter-terrorism resilience, as well as banks’ operational, financing (CTF) measures, especially since its organizational, reputational, and business-model acceptance into the Financial Action Task Force pliability. Embracing the new working reality has truly (FATF) two years ago. In the know-your-customer brought opportunities for not only withstanding threat (KYC) area, banks have recently implemented digital or change but transforming for the better. Remote customer on-boarding that paired customer ease with working is here to stay and is expected to become an KYC controls. Its adoption has been accelerated due integral part of the way we will work in future. It is an to physical branch closures during the early days of opportunity for banks to change their way of working pandemic. sustainably and reap the benefits over the medium to long term. Emerging tax technologies for banking
Accelerated diversity & inclusion efforts — Saudi Arabia’s tax authority, GAZT, will implement by major banks new e-invoicing regulations later this year, having issued guidance last year. The move will improve compliance, tax revenue collections, and the — Banks are working on keeping their gender inclusion efficiency of the tax filing process, and will combat efforts on track, despite some challenges unique to commercial concealment. Until now, the use of tax women presented by the pandemic. Fortunately, technology in the banking sector has lagged behind banks are well-suited to support women’s product and accounting technologies. However, employment because they have been at the forefront GAZT’s e-invoicing regulations are likely to be a signal of employing women and offering flexible work of change for the use of technology in tax practices schemes, which provides more opportunity to more broadly. women with young children or families. Technology-driven governance, risk, and Growing ESG commitment driven by compliance consumers and regulators — Banks’ business continuity plans (BCPs) came — Having faced initial uncertainties at the onset of the squarely into focus last year. Those with the most pandemic, Saudi banks’ ESG programs are now agile and cross-functional plans proved to be the most recognized as essential tools for assisting in the beneficial for the organizations against the economic economic recovery. Executives have indicated they impacts of the pandemic. As banks move forward and are increasing their focus on the ‘S’, or Social, aspect reformulate their BCPs with the lessons of 2020 in of their ESG agendas – a nod to the immense human mind, many are implementing governance, risk, and impact of the pandemic. As ESG ratings systems and compliance (GRC) technologies. GRC technology- ESG-focused stock indexes gain popularity, banks can enabled products and services not only integrate and get ahead of the game by better understanding streamline the value, but it also prepares banks for stakeholder desires and by putting ESG on more than the kind of liquidity, credit, and market risks just their reputational risk radar. experienced during the last year.
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Loan to deposit ratio (%)
120.0% 93.1% 102.7% 98.0% 94.2% 81.0% 91.6% 100.0% 92.9% 87.6% 94.6% 75.1% 83.3% 82.5% 88.4% 79.4% 89.4% 79.9% 83.6% 79.2% 78.6% 79.8% 79.1% 82.7% 80.0%
60.0%
40.0%
20.0%
0.0% Al Rajhi Alinma ANB BAB BAJ BSF Riyad SAMBA NCB SABB SAIB
2019 2020 2019: Average LDR: 84.4% 2020: Average LDR: 88.0%
Capital adequacy ratio (%)
30.0%
24.6% 25.0% 22.0% 23.6% 19.9% 21.1% 21.8% 20.3% 18.9% 17.9% 21.6% 20.3% 21.2% 19.1% 19.3% 19.2% 19.6%18.7% 18.3% 20.0% 17.5% 18.1% 19.1% 18.2%
15.0%
10.0%
5.0%
0.0% Al Rajhi Alinma ANB BAB BAJ BSF Riyad SAMBA NCB SABB SAIB
2019 2020 2019: Average CAR:19.5% 2020: Average CAR: 20.5%
Return on equity/Return on assets (%)
25.0%
20.4% 19.4%
20.0% 17.1%
15.5%
14.5%
14.4%
13.4% 11.6%
15.0% 11.1%
11.0%
9.8%
9.1%
9.0%
8.7%
(13.4)%
7.1% 6.7%
10.0% 6.2%
2.7%
1.7%
4.3%
2.4%
2.3%
2.5%
2.1%
2.0%
1.7%
1.7%
1.6%
1.6%
1.6%
1.5%
0.3%
(1.4)%
1.3% 1.2%
5.0% 1.5%
1.0%
1.1%
0.2% 0.0% 0.0% 0.8%
-5.0% 7.7%
- 1.5% -10.0% - Al Rajhi Alinma ANB BAB BAJ BSF Riyad SAMBA NCB SABB SAIB
2019:ROE 2020:ROE 2019:ROA 2020:ROA 2019: Average ROE: 12.6% 2020: Average ROE: 8.8% 2019: Average ROA:1.9% 2020: Average ROA: 1.3%
Note: For source data refer to the data table (page 55–57) in Appendix II.
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Stage-wise coverage ratios as at 31 December 2019 vs at 31 December 2020 (%)
100.0%
94.8% 92.6%
90.0% 85.2% 81.8%
80.0% 76.3%
74.0%
68.7% 67.4%
70.0% 65.9%
61.5%
59.4%
58.6%
58.2% 54.8%
60.0% 54.6%
52.8%
50.0% 49.6%
50.0%
43.5% 39.3%
40.0%
34.2% 31.8%
30.0%
24.1% 22.9%
20.0%
14.3%
13.8%
13.1%
12.8%
11.3%
11.1%
10.8%
10.8%
10.2%
9.6%
9.3%
8.2%
8.2%
8.1%
6.9%
6.3% 6.2%
10.0% 5.8%
3.7%
2.5%
1.0%
0.9%
0.9%
0.8% 0.8%
0.8%
0.8%
0.7%
0.7%
0.7%
0.6%
0.6% 0.6%
0.6%
0.6%
0.5%
0.5% 0.5%
0.5%
0.4%
0.4% 0.3% 0.0% Al Rajhi Alinma ANB BAB BAJ BSF Riyad SAMBA NCB SABB SAIB
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Average 2019: Average 2019: Average 2020: Average 2020: Average 2020: Average Stage 1: 0.6% Stage 2: 11.0% Stage 3: 54.9% Stage 1: 0.7% Stage 2: 11.4% Stage 3: 57.8%
Total loans subject to ECL (by stage) as at 31 December 2019 vs as at 31 December 2020 (%)
1.1 1.1 1.9 1.2 1.2 2.7 1.9 2.3 1.8 1.7 100% 2.5 2.1 2.2 2.0 3.8 3.8 3.5 6.1 5.6 2.9 2.8 5.9 6.2 5.6 4.3 6.8 5.9 7.6 4.6 5.2 5.9 5.0 12.3 10.1 14.2 12.5 9.3 9.2 7.4 90% 7.6 7.6 10.7 8.4 15.9 80%
70%
60%
50% 95.1 95.1 95.3 93.1 92.8 92.3 93.3 91.3 91.6 88.1 87.9 90.2 88.3 85.6 86.4 84.6 86.3 86.3 86.8 83.4 86.0 40% 77.9
30%
20%
10%
0% Al1 Rajhi2 3Alinma4 5ANB 6 7BAB 8 9BAJ 10 11BSF 12 13Riyad14 SAMBA15 16 17NCB 18 19SABB20 21SAIB 22
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Average 2019: Average 2019: Average 2020: Average 2020: Average 2020: Average Stage 1: 90.6% Stage 2: 6.9% Stage 3: 2.5% Stage 1: 90.2% Stage 2: 7.3% Stage 3: 2.5%
Note: For source data refer to the data table (page 55–57) in Appendix II.
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Net provision charge on loans (US$ million)
11.0 224.2 178.7 71.3 308.2 340.5 298.1 294.0 297.7 707.4 131.3 204.6 302.9 261.9 591.6 88.3 755.0 127.6 315.2 66.6 271.8 312.4 440.7 136.9 183.7 187.5 212.8 239.8 214.6 85.8 63.2 72.5 54.1 88.9 15.6 110.9 85.6 194.6 161.9 205.0 50.4 1.9 2.5 126.7 133.5 155.8 13.1 17.0 93.3 21.6 7.3 16.7 33.1 33.6 -35.1 55.9 62.4 46.4 -8.8 -6.5 -36.5 -1.8 10.6 -23.4 -210.6 -160.6
Al Rajhi Alinma ANB BAB BAJ BSF Riyad SAMBA NCB SABB SAIB
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Total 2019: Total 2019: Total 2020: Total 2020: Total 2020: Total stage 1: (204.6) stage 2: 1,111.6 stage 3: 3,123.3 stage 1: 656.6 stage 2: 1,355.8 stage 3: 3,270.0
Cost to income ratio (%)
70.0% 60.0% 57.2% 51.1% 51.4% 48.5% 47.0% 50.0% 42.5%42.0% 37.1%36.9% 39.0% 40.0% 34.8% 33.3%33.6%33.8% 33.0% 32.8%32.5% 32.7% 32.4% 33.5% 30.5%30.4% 30.0% 20.0% 10.0% 0.0% Al Rajhi Alinma ANB BAB BAJ BSF Riyad SAMBA NCB SABB SAIB
2019 2020 2019: Average CIR: 38.5% 2020: Average CIR: 38.4% Credit rating
S&P Moody’s Fitch Credit rating agency Long-term Long-term Long-term Bank issuer rating Outlook issuer rating Outlook issuer rating Outlook Al Rajhi NA NA A1 Negative A- Stable Alinma NA NA NA NA BBB+ Negative ANB NA NA NA NA BBB+ Negative BAB NA NA A3 Stable NA NA BAJ NA NA Baa1 Negative BBB+ Negative BSF BBB+ Stable A1 Negative BBB+ Negative Riyad BBB+ Stable A2 Negative BBB+ Stable SAMBA BBB+ Positive A1 Negative NA NA NCB BBB+ Positive A1 Negative A- Negative SABB NA NA A1 Negative BBB+ Stable SAIB BBB Stable A3 Negative BBB+ Negative Overall country rating A- Stable A1 Negative A Negative
Note: NA = rating not available on ThompsonOne database, checked on 28 June 2021. For source data refer to the data table (page 55–57) in Appendix II.
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A commercial bank introduces a smart SAMA overhauls instant payment TeleMoney app for international system ‘SARIE’ remittance: SARIE has been around since 1997 as facilitator of immediate and scheduled transfers between banks in the Initially, the TeleMoney Service was created by one of Kingdom. Since recently, SARIE allows banking clients to the country’s commercial bank, to provide customers send and receive low-value local transactions for a low with a simplified way of executing their monetary fee, not exceeding one Saudi Riyal, while providing an transfers via an automated system and through 87 easier and quicker way for financial exchanges to take TeleMoney centers around the Kingdom. However, as place without any constraints by official operating hours. part of the bank’s continuous efforts toward developing a The IPS also creates a more flexible method for business sustainable digital service platform, the smart app was to add payment details and instructions to the beneficiary launched for its TeleMoney Service. The new app in order to enable financial data and ensure efficient supports quick and easy login through fingerprint or face execution of transactions between companies. ID, while maintaining high levels of security by Additionally, the IPS provides beneficiaries with the supporting a feature that allows users to enable/disable option of using a mobile number as an identifier as the cards being used and straightforward pin-changing opposed to an IBAN. The service aids in improving services. The app is a remarkable step in the right efficiency in financial systems such as, managing risks, direction as it facilitates instant international remittance combating money laundering, improving current banking through smart phones, which makes the customer products, and managing cash flows for businesses, experience far easier and the service itself more making the banking sector more efficient and technology efficient. based.
An Islamic bank launches a mobile point-of-sale app
In its efforts to become the bank of the future and a digital leader, one of the leading Islamic bank launched a new Point of Sale (POS) application. This offers a quick and easy payment method, which provides POS customers in numerous establishments the option to convert their smart phones into a means of accepting payment, as opposed to POS devices. The new and innovative application provides a fast electronic payment mechanism that provides POS customers the option from all establishments to convert their phones to a means of accepting payment as an alternative to POS devices, which will save them effort, cost and maintenance.
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Population (million)2 11.1
Nominal GDP (US$ billion)2 373.2
GDP per head (US$ at PPP)1 69,376.0
Inflation (%)2 1.5
Economic data as of 31 December 2020 Source(s): 1Economist Intelligence Unit, UAE — data by country; 2IMF estimates, Link, accessed on 28 June 2021.
Summary
Sector overview Financial position There are 48 commercial banks under Central Bank of the For the top 10 listed local banks, total assets increased United Arab Emirates (CBUAE): 27 are foreign and 21 are by 7.0 percent year-on-year to US$775 billion in 2020. national. This report analyzes the top 10 listed local banks. The CAR increased from 17.4 percent to 18.1 percent, The regulatory environment continues to change profoundly mainly due to issue of Tier 1 and Tier 2 instruments by with several circulars and regulations issued and more is ADCB, CBD and DIB, and also attributed to mergers expected by the CBUAE. In light of the Covid–19 crisis, the during the year. The LDR remained consistent. The implementation of several regulatory standards have been overall liquidity position of the market seems steady and deferred to the latter part of 2021 or later, for all banks, to consistent with the prior year, mainly as a result of minimize the burden on recovering from the pandemic. increased liquidity created by the CBUAE. The NPL ratio increased to 4.4 percent in 2020 from 3.6 percent in Regulatory update 2019, which is mainly due to deteriorating quality of the financial assets owing to Covid-19. During March 2020, the CBUAE rolled out a AED100 billion (US$27.2 billion) stimulus package to mitigate the impact of Financial performance Covid-19 on the country's economy. This was further augmented to AED256 billion (US$70.0 billion) during April Results indicate a decrease in profitability for the 10 banks 2020, when the banking regulator halved the banks' capital analyzed in this report compared with the previous year. buffer requirements to 7 percent from 14 percent. During This is mainly due to increased impairment losses, which March 2020, CBUAE allowed banks and finance companies to grew from US$4.2 billion in 2019 to US$7.9 billion in 2020. defer the principal amount of the loans and interest until the Average ROE also declined significantly from 15.1 percent end of 2020 through the Targeted Economic Support Scheme to 7.7 percent, and CIR increased from 36.5 percent in (TESS) for affected retails and corporate customers. TESS was 2019 to 38.0 percent in 2020. further extended by the CBUAE till the end of 2021. Total assets (US$ billion) and net profit (US$ million) as of, and for the year ended, 31 December 2020 300.0 4,000.0 2,873.3 1,894.5 200.0 2,000.0 1,036.1 896.6 436.3 304.9 110.5 137.1 -347.8 -129.4
100.0 0.0 profit Net
Total assets Total 34.8 26.5 111.9 78.8 190.0 250.2 43.2 10.9 14.6 14.4 0.0 -2,000.0 ADCB ADIB CBD DIB ENBD FAB Mashreq NBF SIB RAK
Note: For source data refer to the data table (page 58–60) in Appendix II.
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Share price movement (US$)
12.024.0 28.0
10.0 24.0 20.0 8.020.0 16.0 6.0 4.0 12.0 4.0 8.0
2.0 4.0 0.0 0.0 - 31/12/2019 31/03/2020 30/06/2020 30/09/2020 31/12/2020 ADCB ADIB CBD DIB ENBD FAB NBF SIB RAK Mashreq Average Insights Looking back
COVID impact on banking industry Economic growth During 2020, net profit for the top 10 UAE banks in the Due to the overall pandemic conditions, there was a analysis dropped on an average by 41 percent compared significant decline in overall consumer spending with 2019. This decrease is due to the significant increase globally, which affected most businesses in the UAE. in the provision charge on loans, with banks expecting Moreover, oil prices declined significantly during 2020 higher losses and customer defaults because of the which impacted oil revenues. pandemic. The NPL ratio also increased to 6.3 percent in 2020. Net Interest Margin continues to be under pressure largely because of record low interest rates, exacerbated by increased competition.
Governance and liquidity support by CBUAE During March 2020, The Central Bank of the UAE (CBUAE) rolled out an AED100 billion (US$27.2 billion) stimulus package to mitigate the impact of Covid-19 on the country's economy. This was further augmented to AED256 billion (US$70.0 billion) in April 2020 when the banking regulator halved banks' capital buffer requirements to 7.0 percent from 14.0 percent. The CBUAE allowed banks and finance companies to defer the principal amount of the loans and interest until the end of 2020 through the Targeted Economic Support Scheme (TESS) for affected retails and corporate customers. TESS was further extended by the CBUAE till the end of 2021.
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Weakening asset quality Focus on SMEs There are indicators of continued weakening asset The UAE economy is highly dependent on small and quality of the banks due to operational issues that are medium tier businesses, which are in the majority. Banks being faced by the borrowers. This is a matter of primary are therefore being encouraged to inject funds into SMEs concern in relation to those borrower groups that have through lending to help growth, which would ultimately been severely impacted by the pandemic, such as real benefit the economy as a whole. With lower interest estate, tourism, hospitality and travel. Going forward, in rates and increased relief to SMEs, these portfolios are some cases, the only – or optimal – approach may be to expected to increase in all banks as this sector grows. restructure rather than liquidate the exposure through This could increase bank's asset bases and ultimately collateral sale. This may result in shutting down the lead to an increase in profitability even with lower customer’s business, thereby expecting a decline in the interest rates. overall performance. Fintech and digital banking Economic growth and govt support As the digital revolution continues to sweep across the However, with oil prices stabilizing, resumption of many financial sector, many traditional banks in the UAE are business activities and some flight operations, and the embracing new technologies to remain competitive, UAE opening up to tourists again, recovery can be increase market share and target new customer expected in the above sectors. This should give a boost segments. The latter include millennials and Generation to the banks’ portfolios. Moreover, the CBUAE's TESS Z. For example, newly introduced smartphone app-based program to rescue the country's banks from excessive banks include Liv by Emirates NBD, Mashreq Neo by provisions and give relief to all mainstream industries Mashreq Bank, and Hayyak by Abu Dhabi Commercial should continue facilitating the stakeholders. This is Bank. likely to enable banks to stabilize profits. Future profitability Interest rates have been continuously declining in the UAE, mainly due to the CBUAE's efforts in stimulating markets to address Covid-19 challenges and increase consumer spending and borrowing. This has decreased profitability in the banking sector. Interest rates are not expected to increase in the near future as the CBUAE continues to implement measures to tackle the economic effects of the pandemic. This would indicate continued lower profitability.
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Loan to deposit ratio (%)
120.0% 95.1% 91.8% 92.6% 95.0% 95.5% 93.8% 100.0% 94.6% 93.6% 95.6% 81.0% 92.1% 82.4% 84.8% 87.1% 81.3% 80.0% 83.7% 83.5% 80.0% 78.6%71.5%
60.0%
40.0%
20.0%
0.0% ADCB ADIB CBD DIB ENBD FAB Mashreq NBF SIB RAK
2019 2020 2019: Average LDR: 88.7% 2020: Average LDR: 86.6%
Capital adequacy ratio (%)
25.0% 22.8% 20.7% 19.4% 19.2% 20.0% 17.9% 18.5% 18.5% 18.5% 18.6% 16.3%17.2% 17.8% 16.8% 16.7%16.5% 16.9%16.5% 16.3%16.0% 15.0% 14.2%
10.0%
5.0%
0.0% 2 ADCB ADIB CBD DIB ENBD FAB Mashreq NBF SIB RAK
2019 2020 2019: Average CAR: 17.4% 2020: Average CAR:18.1%
Return on equity/Return on assets (%)
25.0%
18.4% 21.8%
20.0% 16.8%
14.7%
14.4%
12.7%
11.5% 9.9%
15.0% 9.7%
10.5%
10.4%
10.2% 9.8%
9.2%
8.6%
7.0% 6.5%
10.0% 5.5%
2.2%
1.4%
1.3%
1.4%
2.5%
1.6%
2.0%
1.0%
1.3%
1.2%
1.3%
1.7% 2.1%
5.0% 1.2%
0.9%
1.2%
0.9% 0.8% 0.0%
-5.0%
0.8%
11.7%
1.1%
- -
-10.0% - 6.2% -15.0% - ADCB ADIB CBD DIB ENBD FAB Mashreq NBF SIB RAK 2019:ROE 2020:ROE 2019:ROA 2020:ROA 2019: Average ROE: 15.1% 2020: Average ROE: 7.7% 2019: Average ROA:1.8% 2020: Average ROA: 1.0%
Note: For source data refer to the data table (page 58–60) in Appendix II.
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Stage-wise coverage ratios as at 31 December 2020 vs at 31 December 20201 (%)
90.0%
82.8% 80.4% 80.0%
70.0%
64.9%
62.7%
60.8%
59.3% 59.2%
60.0% 57.2%
52.5%
50.4%
50.1% 45.7%
50.0% 45.5%
45.0%
41.4%
40.9%
40.3% 36.4%
40.0% 35.3%
32.8% 29.0%
30.0% 26.5%
24.0%
21.1% 18.8%
20.0% 16.8%
15.0%
15.0%
13.8%
11.8%
11.5%
10.0%
8.5%
8.4%
8.0%
7.4%
6.5%
6.2% 6.0%
10.0% 5.7%
2.4%
2.0%
1.2%
1.2%
1.1%
1.1%
1.0%
1.0%
0.9%
0.8%
0.8%
0.8%
0.7%
0.6%
0.5%
0.5%
0.3% 0.3% 0.3% 0.2% 0.0% ADCB ADIB CBD DIB ENBD FAB Mashreq NBF SIB RAK
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Average 2019: Average 2019: Average 2020: Average 2020: Average 2020: Average Stage 1: 0.6% Stage 2: 12.8% Stage 3: 54.7% Stage 1: 0.6% Stage 2: 14.4% Stage 3: 53.4%
Total loans subject to ECL (by stage) as at 31 December 2019 vs as at 31 December 20202 (%)
1.9 100% 2.0 3.9 6.1 4.0 5.9 5.6 6.2 3.8 5.5 5.7 5.2 5.0 3.8 5.5 6.5 8.8 7.0 7.5 3.0 2.8 10.4 6.8 7.7 6.3 5.2 6.3 90% 6.7 7.1 8.0 5.2 5.6 7.5 8.8 7.3 7.5 8.4 11.2 12.1 11.5 80%
70%
60%
50% 95.1 95.3 89.3 87.2 88.3 89.2 88.1 89.9 87.0 89.6 87.7 89.9 87.0 86.4 82.8 86.1 85.5 40% 81.7 80.4 78.1
30%
20%
10%
0% 1ADCB2 3ADIB 4 5 CBD 6 7 DIB 8 9 ENBD10 11 FAB12 13Mashreq14 15 NBF16 17 SIB18 19 RAK20
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Average 2019: Average 2019: Average 2020: Average 2020: Average 2020: Average Stage 1: 91.3% Stage 2: 5.1% Stage 3: 3.6% Stage 1: 90.4% Stage 2: 5.2% Stage 3: 4.4%
Note: 1All numbers are presented for loans and advances (financing assets for Islamic banks) except for ADCB, FAB and RAK Bank, where numbers have been reported for all financial instruments at amortized cost. Where interest suspense h as not been disclosed in the financial statements, KPMG professionals have assumed the amount of interest suspense to have been already netted with outstanding of exposure loan and hence amount of interest suspense h as not been taken in to the formula to calculate coverage ratio. 2The ECL numbers presented in this document are on loans and advances (including financing assets for Islamic banks) for all top 10 listed banks except for ADCB, FAB and RAK Bank where ECL numbers are presented on all financial assets measured. For source data refer to the data table (page 58–60) in Appendix II.
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Net provision charge on loans (US$ million)
381.8 34.7 276.4 1004.8 634.0 111.5 269.3 283.0 161.9 292.0 1688.2 409.8 634.3 1191.3 592.1 446.5 955.6 352.3 22.4 11.4 258.6 82.4 50.5 213.0 7.6 97.5 86.3 31.7 396.2 248.7 22.5 79.5 20.7 135.8 0.1 478.7 102.4 90.3 18.3 15.0 40.7 16.6 61.3 8.4 37.9 14.6 12.1 3.3 9.9 -4.3 -12.3 -46.5 -11.1 15.4 -9.9 -23.0 -10.9 -3.8 -6.0 -147.2
ADCB ADIB CBD DIB ENBD FAB Mashreq NBF SIB RAK
2019: Stage 1 2019: Stage 2 2019: Stage 3 2020: Stage 1 2020: Stage 2 2020: Stage 3 2019: Total 2019: Total 2019: Total 2020: Total 2020: Total 2020: Total stage 1: 184.0 stage 2: 343.0 stage 3: 3,685.1 stage 1: 486.0 stage 2: 1,115.7 stage 3: 6,315.3
Cost to income ratio (%)
70.0% 57.2% 60.0% 48.3% 47.7% 47.3% 50.0% 38.5% 33.8% 43.8% 44.6% 39.5% 39.2% 36.2% 35.4% 40.0% 29.2% 32.1% 33.0% 30.5% 27.2% 27.2% 30.0% 27.1% 26.7% 20.0% 10.0% 0.0% ADCB ADIB CBD DIB ENBD FAB Mashreq NBF SIB RAK
2019 2020 2019: Average CIR: 36.5% 2020: Average CIR: 38.0% Credit rating
S&P Moody’s Fitch Credit rating agency Long-term Long-term Long-term Bank issuer rating Outlook issuer rating Outlook issuer rating Outlook ADCB A Negative A1 Negative A+ Stable ADIB NA NA A2 Stable A+ Stable CBD NA NA Baa1 Negative A- Stable DIB NA NA A3 Negative A Stable ENBD NA NA A3 Negative A+ Stable FAB AA- Negative Aa3 Stable AA- Stable Mashreq A- Negative Baa1 Negative A Stable NBF BBB+ Negative Baa1 Negative NA NA SIB A- Stable A3 Negative BBB+ Stable RAK NA NA Baa1 Negative A Stable Overall country rating NA NA Aa2 Stable AA- Stable
Note: NA = rating not available on ThompsonOne database, checked on 28 June 2021. For source data refer to the data table (page 58–60) in Appendix II.
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Digital banking Remote working and digitization In a move toward digital transformation, the first only As a result of the lockdown and social distancing digital bank in UAE was launched in April 2021 with a full restrictions due to Covid-19, an environment of remote UAE Banking License to provide innovative, effective working has been implemented throughout the country, financial solutions that help simplify businesses and including the banking sector. This has led to digital lives, addressing the needs of both retail and corporate transformation in the banks where most, if not all, key customers. activities are performed remotely. This includes virtual meetings and the use of new reporting, communication The digital banks will have a thorough digital account- tools, digital apps and software to assist with the opening technology, which leverages new local operations. Thus, work continues to be performed even advancements such as electronic know-your-customer with restrictions and gives banks an opportunity to (KYC) modules, digital onboarding, opening accounts, reduce costs and enjoy economies of scale. carrying out transfers, paying bills, as well as the UAE Pass for digital, biometric-based identification for smart phone users. These applications offer broad, tailored solutions such as accounting to abolish manual data entry, automating reconciliations and VAT-compliant accounting, to ease the workload of small businesses. Digital wallet and solutions A number of banks and organizations within the UAE have launched their own digital wallets that have enabled consumers to register and top up balances to make multiple transactions. Some providers have marched ahead by offering a complete digital experience, being flexible, leveraging cloud-native platforms using open-source tech, and being fast and nimble in launching products. The Covid-19 pandemic has helped lift digital wallet uptake in a big way in the Gulf, especially in the UAE, as customers increasingly opt for cashless, contactless transactions.
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Appendices
Appendix 2
Country analysis Data tables
Sources
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Total assets (US$ million) Net profit (US$ million) Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y AUB 40,280.1 40,071.2 (0.5)% 730.5 452.2 (38.1)% Al Baraka 26,258.5 28,250.0 7.6% 105.7 66.6 (37.0)% Al Salam 5,433.0 6,014.2 10.7% 56.1 24.3 (56.7)% BISB 3,254.1 3,222.3 (1.0)% 16.5 (33.4) (302.2)% BBK 10,279.3 10,001.1 (2.7)% 200.5 138.3 (31.0)% Ithmaar 8,085.2 8,383.7 3.7% 0.7 (41.7) (6336.0)% Khaleeji 2,499.3 2,701.0 8.1% (39.7) 21.2 153.5% NBB 8,496.0 11,599.5 36.5% 197.3 141.8 (28.2)% Total 104,585.6 107,020.62 2.3% 1,267.6 795.82 (37.2)%
Capital adequacy ratio Return on assets Return on equity Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y AUB 16.4% 16.1% (0.3)% 1.9% 1.1% (0.8)% 17.0% 10.1% (6.9)% Al Baraka 16.7% 16.0% (0.7)% 0.4% 0.2% (0.2)% 6.7% 3.4% (3.3)% Al Salam 21.2% 26.5% 5.2% 1.1% 0.4% (0.7)% 6.8% 3.0% (3.7)% BISB 14.8% 15.9% 1.1% 0.5% (1.0)% (1.5)% 5.2% (11.6)% (16.8)% BBK 21.7% 21.8% 0.1% 2.0% 1.4% (0.7)% 15.0% 10.7% (4.3)% Ithmaar1 13.5% 12.7% (0.9)% 0.0% (0.5)% (0.5)% 0.6% (75.6)% (76.3)% Khaleeji 16.6% 20.3% 3.7% (1.7)% 0.8% 2.5% (16.0)% 7.0% 23.0% NBB 37.3% 22.3% (15.0)% 2.3% 1.4% (0.9)% 14.7% 10.1% (4.7)% Average 19.8% 18.9% (0.9)% 1.3% 0.8%2 (0.5)% 12.8% 8.0%2 (4.8)%
Share price (US$) Bank 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 AUB 1.1 0.7 0.6 0.8 0.8 Al Baraka 0.3 0.3 0.3 0.3 0.3 Al Salam 0.3 0.2 0.2 0.2 0.2 BISB 0.3 0.3 0.3 0.3 0.2 BBK 1.5 1.3 1.3 1.3 1.3 Ithmaar 0.1 0.0 0.0 0.1 0.1 Khaleeji 0.1 0.1 0.1 0.1 0.1 NBB 1.9 1.6 1.7 1.7 1.7 Average 0.7 0.6 0.6 0.6 0.6
1For calculating CAR and NPL for Ithmaar Holding, financial numbers for Ithmaar Bank have been considered as proxy data. 22020 financial figures of NBB includes the effect of consolidation of BISB from January 2020; Average for total assets, total net profits and total average assets has been adjusted, as appropriate, to remove effect of the BISB consolidation by NBB (only to the extent of publicly available information). For detailed sources, refer to Appendix III: Sources.
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Loan-to-deposit ratio Cost-to-income ratio Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y AUB 81.3% 82.3% 1.0% 28.6% 29.3% 0.7% Al Baraka 74.4% 72.8% (1.6)% 58.7% 49.2% (9.6)% Al Salam 81.8% 81.2% (0.6)% 55.6% 52.3% (3.4)% BISB 84.3% 83.0% (1.3)% 59.3% 60.0% 0.7% BBK 77.0% 71.8% (5.2)% 41.7% 51.1% 9.4% Ithmaar 89.1% 72.7% (16.3)% 75.0% 87.4% 12.4% Khaleeji 65.8% 64.4% (1.5)% 72.6% 45.9% (26.7)% NBB 58.0% 70.5% 12.5% 35.9% 47.5% 11.6% Average 76.4% 74.8% (1.6)% 53.4% 52.8% (0.6)%
Coverage ratios on loans as at 31 December 2019 Stage 1 (US$ million) Stage 2 (US$ million) Stage 3 (US$ million) Exposures Exposures Coverage Exposures Coverage subject to Coverage Bank ECL subject to ECL ratio ECL subject to ECL ratio ECL ECL ratio AUB 100.8 18,339.3 0.5% 312.5 2,758.0 11.3% 356.5 414.8 85.9% Al Baraka 61.5 13,186.6 0.5% 131.3 2,462.2 5.3% 415.7 840.0 49.5% Al Salam 17.8 2,499.2 0.7% 19.4 295.7 6.6% 44.2 166.0 26.6% BISB 4.8 1,706.4 0.3% 11.6 143.2 8.1% 101.3 340.6 29.7% BBK 13.0 3,635.9 0.4% 57.4 805.3 7.1% 204.3 277.4 73.6% Ithmaar 48.5 6,015.0 0.8% 69.6 818.9 8.5% 336.1 503.2 66.8% Khaleeji 12.6 962.0 1.3% 8.3 111.7 7.4% 88.9 287.5 30.9% NBB 19.9 3,006.6 0.7% 11.4 94.4 12.1% 96.5 254.8 37.9% Total 34.9 6,168.9 0.6% 77.7 936.2 8.3% 205.4 385.6 53.3%
Coverage ratios on loans as at 31 December 2020 Stage 1 (US$ million) Stage 2 (US$ million) Stage 3 (US$ million) Exposures Exposures Exposures Coverage subject to Coverage subject to Coverage Bank ECL subject to ECL ratio ECL ECL ratio ECL ECL ratio AUB 139.0 17,919.9 0.8% 376.0 3,235.8 11.6% 479.8 558.9 85.9% Al Baraka 87.9 13,723.8 0.6% 210.3 2,662.9 7.9% 517.3 977.0 52.9% Al Salam 36.1 3,205.3 1.1% 15.9 163.5 9.8% 64.5 179.3 36.0% BISB 8.2 1,828.4 0.5% 15.0 181.3 8.3% 52.2 149.6 34.9% BBK 16.8 3,274.2 0.5% 60.6 834.3 7.3% 168.4 275.0 61.2% Ithmaar 37.5 5,167.5 0.7% 79.2 775.0 10.2% 350.1 475.8 73.6% Khaleeji 20.7 949.5 2.2% 6.3 149.7 4.2% 29.0 146.8 19.8% NBB 26.6 5,277.9 0.5% 26.3 308.2 8.5% 165.2 411.4 40.1% Total 46.6 6,418.3 0.7% 98.7 1,038.8 9.5% 228.3 396.7 57.5%
For detailed sources, refer to Appendix III: Sources.
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Net provision charge on loans (US$ million) 31 December 2019 31 December 2020 Bank Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Δ y-o-y AUB (17.8) 43.1 31.1 56.4 41.1 87.6 86.6 215.3 281.5% Al Baraka 12.9 (4.1) 104.6 113.4 22.7 109.7 95.8 228.3 101.3% Al Salam 3.6 0.9 2.3 6.7 16.6 2.3 26.6 45.6 577.0% BISB (2.0) (3.5) 28.5 23.0 1.5 9.7 48.1 59.4 157.8% BBK (1.1) (5.1) 49.7 43.6 4.5 2.9 18.4 25.8 (40.9)% Ithmaar1 Stage-wise break up not available (5.5) Stage-wise break up not available (8.2) 49.7% Khaleeji (0.4) 0.7 44.4 44.6 7.1 2.4 (0.3) 9.2 (79.3)% NBB (6.6) 10.9 10.4 14.6 (5.6) 14.6 63.6 72.6 396.4% Total (11.4) 43.0 270.9 297.0 88.0 229.3 338.8 588.52 98.2%
Total loans subject to ECL - By stages as at 31 Total loans subject to ECL - By stages as at 31 December 2019 December 2020 Bank Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 AUB 85.3% 12.8% 1.9% 82.5% 14.9% 2.6% Al Baraka 80.0% 14.9% 5.1% 79.0% 15.3% 5.6% Al Salam 84.4% 10.0% 5.6% 90.3% 4.6% 5.1% BISB 77.9% 6.5% 15.6% 84.7% 8.4% 6.9% BBK 77.1% 17.1% 5.9% 74.7% 19.0% 6.3% Ithmaar 82.0% 11.2% 6.9% 80.5% 12.1% 7.4% Khaleeji 70.7% 8.2% 21.1% 76.2% 12.0% 11.8% NBB 89.6% 2.8% 7.6% 88.0% 5.1% 6.9% Average 82.4% 12.5% 5.1% 81.7% 13.2% 5.1%
Note: 1For calculating CAR and NPL for Ithmaar Holding, financial numbers for Ithmaar Bank have been considered as proxy data; For detailed sources, refer to Appendix III: Sources.
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Total assets (US$ million) Net profit (US$ million) Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y AUBK 14,282.4 14,520.6 1.7% 180.6 98.8 (45.3)% ABK 16,027.5 16,124.7 0.6% 94.1 (231.5) (346.0)% Boubyan 17,397.7 21,389.4 22.9% 205.6 114.4 (44.4)% Burgan 23,241.6 23,612.1 1.6% 277.9 111.9 (59.8)% GBK 20,499.0 20,311.3 (0.9)% 208.9 95.7 (54.2)% KFH 63,645.5 71,447.9 12.3% 823.9 493.1 (40.2)% KIB 8,821.4 9,309.1 5.5% 56.3 0.0 (100.0)% NBK 96,073.7 98,744.9 2.8% 1,317.1 818.5 (37.9)% CBK 15,995.1 14,583.0 (8.8)% - - 0.0% Warba 10,318.3 11,547.6 11.9% 54.3 18.7 (65.5)% Total 286,302.0 301,590.6 5.3% 3,218.8 1,519.5 (52.8)%
Net provision charge on loans (US$ million) Loan-to-deposit ratio (%) Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y AUBK 74.4 93.8 26.0% 111.9% 103.5% (8.4)% ABK 233.6 398.5 70.6% 96.9% 89.4% (7.4)% Boubyan 50.8 168.1 230.8% 88.0% 94.4% 6.4% Burgan 161.3 253.9 57.4% 107.3% 106.2% (1.1)% GBK 246.0 223.1 (9.3% 112.3% 106.8% (5.5)% KFH 607.8 523.9 (13.8)% 69.9% 70.2% 0.3% KIB 26.2 89.8 242.4% 126.9% 120.3% (6.6)% NBK 403.9 707.6 75.2% 103.9% 102.3% (1.6)% CBK 295.5 252.4 (14.6)% 92.4% 96.2% 3.8% Warba 61.8 160.4 159.5% 132.6% 106.1% (26.5)% Total/average 2,161.3 2,871.4 32.9% 104.2% 99.6% (4.7)%
Share price (US$) Bank 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 AUBK 1.1 0.8 0.8 0.9 1.0 ABK 0.8 0.6 0.6 0.6 0.7 Boubyan 2.1 1.7 1.8 2.0 1.9 Burgan 1.0 0.7 0.7 0.7 0.7 GBK 1.0 0.7 0.7 0.7 0.7 KFH 2.7 2.1 2.0 2.2 2.3 KIB 0.9 0.7 0.6 0.6 0.7 NBK 3.5 2.4 2.7 2.9 2.8 CBK 1.7 1.7 1.7 1.7 1.7 Warba 0.9 0.6 0.7 0.8 0.8 Average 1.6 1.2 1.2 1.3 1.3
For detailed sources, refer to Appendix III: Sources.
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Capital adequacy ratio (%) Return on equity (%) Return on assets (%) Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y AUBK 16.0% 15.7% (0.3)% 11.7% 5.9% (5.8)% 1.3% 0.7% (0.6)% ABK 18.7% 17.3% (1.4)% 4.8% (12.7)% (17.5)% 0.6% (1.4)% (2.0)% Boubyan 20.3% 16.9% (3.5)% 11.7% 5.3% (6.3)% 1.3% 0.6% (0.7)% Burgan 16.8% 18.1% 1.3% 11.3% 4.7% (6.6)% 1.2% 0.5% (0.7)% GBK 17.1% 18.2% 1.1% 9.8% 4.4% (5.4)% 1.0% 0.5% (0.6)% KFH 17.7% 17.5% (0.1)% 12.7% 7.4% (5.3)% 1.4% 0.7% (0.6)% KIB 19.2% 22.1% 2.9% 5.3% (1.9)% (7.2)% 0.7% 0.0% (0.7)% NBK 17.8% 18.4% 0.7% 11.8% 6.6% (5.2)% 1.4% 0.8% (0.6)% CBK1 18.2% 17.8% (0.4)% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Warba 18.5% 16.9% (1.5)% 5.6% 2.7% (2.9)% 0.6% 0.2% (0.4)% Average 18.0% 17.9% (0.1)% 10.1% 4.4% (5.7)% 1.2% 0.5% (0.7)%
Non-performing loan ratio (%) Cost-to-income ratio (%) Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y AUBK 1.3% 1.9% 0.7% 37.3% 36.6% (0.7)% ABK 1.5% 1.6% 0.1% 38.9% 48.1% 9.2% Boubyan 0.8% 1.1% 0.3% 41.9% 44.4% 2.5% Burgan 2.4% 3.9% 1.5% 41.2% 45.7% 4.5% GBK 1.1% 1.1% 0.0% 37.6% 40.4% 2.8% KFH 1.9% 2.1% 0.2% 37.4% 37.2% (0.2)% KIB 1.8% 2.3% 0.5% 57.7% 57.9% 0.2% NBK 1.1% 1.7% 0.6% 34.0% 37.0% 3.0% CBK 0.0% 0.0% 0.0% 31.6% 30.5% (1.1)% Warba2 0.6% 0.1% (0.5)% 37.5% 33.3% (4.3)% Average 1.2% 1.6% 0.3% 39.5% 41.1% 1.6%
Note: 1Capital adequacy for CBK as on 30 September 2018 and 30 September 2019 has been used as proxy data for regulatory capital numbers as on 31 December 2018 and 31 December 2019, respectively, due to non-availability of disclosure document on report release date; 2For calculating NPL ratio for Warba bank, past due or impaired has been taken as proxy data. For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 49 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates Appendix II: Data tables — Oman
Total assets (US$ million) Net profit (US$ million) Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y Ahli 6,541.6 7,019.4 7.3% 80.6 62.3 (22.7)% Dhofar 11,236.0 11,057.2 (1.6)% 78.6 79.4 1.1% Muscat 31,923.7 32,347.4 1.3% 481.9 424.3 (12.0)% Nizwa 2,686.7 3,133.1 16.6% 26.4 28.7 8.7% OAB 6,486.0 8,571.5 32.2% 84.6 36.8 (56.5)% Sohar 9,104.2 9,379.2 3.0% 89.4 52.0 (41.8)% HSBC 6,623.4 6,118.4 (7.6)% 76.1 (21.3) (128.0)% NBO 9,462.5 9,435.5 (0.3)% 133.6 47.1 (64.7)% Total 84,064.0 87,061.8 3.6% 1,051.1 709.3 (32.5)%
Capital adequacy ratio Return on assets Return on equity
Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y Ahli 16.9% 15.7% (1.2)% 1.3% 0.9% (0.4)% 11.9% 9.1% (2.9)% Dhofar 17.9% 17.7% (0.2)% 0.7% 0.7% 0.0% 5.6% 5.7% 0.1% Muscat 19.7% 20.8% 1.1% 1.5% 1.3% (0.2)% 10.1% 8.6% (1.5)% Nizwa 14.5% 13.7% (0.8)% 1.1% 1.0% (0.1)% 7.1% 7.2% 0.1% OAB 15.2% 15.4% 0.2% 1.3% 0.5% (0.9)% 11.0% 4.3% (6.7)% Sohar 18.9% 19.1% 0.2% 1.1% 0.6% (0.5)% 11.1% 6.0% (5.1)% HSBC 18.8% 20.6% 1.8% 1.2% (0.3)% (1.5)% 8.5% (2.4)% (10.9)% NBO 16.6% 16.4% (0.1)% 1.4% 0.5% (0.9)% 11.8% 4.3% (7.5)% Average 17.3% 17.4% 0.1% 1.3% 0.8% (0.4)% 9.7% 6.4% (3.3)%
Share price (US$) Bank 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 Ahli 0.3 0.4 0.3 0.4 0.3 Dhofar 0.3 0.2 0.3 0.3 0.3 Muscat 1.1 0.8 0.9 0.9 1.0 Nizwa 0.2 0.2 0.2 0.3 0.2 OAB - - - 0.5 0.5 Sohar 0.3 0.2 0.2 0.2 0.2 HSBC 0.3 0.3 0.2 0.2 0.2 NBO 0.5 0.4 0.5 0.4 0.4 Average 0.4 0.3 0.3 0.4 0.4
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 50 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates
Loan-to-deposit ratio Cost-to-income ratio Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y Ahli 120.1% 115.3% (4.8)% 43.3% 52.7% 9.4% Dhofar 104.1% 114.1% 10.0% 55.0% 50.1% (4.9)% Muscat 110.4% 106.7% (3.7)% 41.5% 39.4% (2.1)% Nizwa 104.0% 106.9% 2.9% 55.8% 50.1% (5.7)% OAB 100.4% 95.7% (4.7)% 52.3% 64.7% 12.4% Sohar 117.0% 112.2% (4.8)% 43.3% 49.1% 5.8% HSBC 72.5% 71.6% (1.0)% 56.0% 87.0% 31.1% NBO 110.7% 114.3% 3.6% 49.6% 54.6% 5.0% Average 104.9% 104.6% (0.3)% 49.6% 56.0% 6.4%
Coverage ratios on loans as at 31 December 2019 Stage 1 (US$ million) Stage 2 (US$ million) Stage 3 (US$ million)
Exposures Coverage Exposures Coverage Exposures Coverage Bank ECL subject to ECL ratio ECL subject to ECL ratio ECL subject to ECL ratio Ahli 15.9 4,374.4 0.4% 37.9 976.4 3.9% 54.1 94.6 57.1% Dhofar 30.1 5,743.9 0.5% 67.7 2,134.1 3.2% 146.6 385.9 38.0% Muscat 47.3 18,227.9 0.3% 202.0 4,874.2 4.1% 568.4 775.4 73.3% Nizwa 11.1 2,584.2 0.4% 15.9 435.3 3.7% 1.0 1.7 56.0% OAB 18.2 4,029.9 0.5% 38.9 1,126.8 3.5% 63.6 192.0 33.1% Sohar 28.1 5,434.0 0.5% 108.4 918.0 11.8% 122.4 322.0 38.0% HSBC 12.0 2,596.2 0.5% 34.4 1,328.6 2.6% 54.3 79.0 68.7% NBO 32.2 5,940.4 0.5% 45.3 1,270.6 3.6% 229.7 373.0 61.6% Total 24.4 6,116.4 0.4% 68.8 1,633.0 4.2% 155.0 278.0 55.8%
Coverage ratios on loans as at 31 December 2020 Stage 1 (US$ million) Stage 2 (US$ million) Stage 3 (US$ million)
Exposures Coverage Exposures Coverage Exposures Coverage Bank ECL subject to ECL ratio ECL subject to ECL ratio ECL subject to ECL ratio Ahli 21.6 4,595.2 0.5% 48.0 1,147.9 4.2% 82.6 172.5 47.9% Dhofar 45.8 6,734.4 0.7% 87.6 1,720.7 5.1% 177.2 401.5 44.1% Muscat 50.7 18,643.2 0.3% 290.3 4,722.0 6.1% 687.7 877.5 78.4% Nizwa 9.0 2,457.6 0.4% 25.6 990.3 2.6% 10.9 34.5 31.5% OAB 25.5 5,248.1 0.5% 75.8 1,590.9 4.8% 136.4 319.5 42.7% Sohar 13.3 5,534.4 0.2% 108.2 894.3 12.1% 155.0 408.0 38.0% HSBC 22.3 2,174.3 1.0% 46.0 1,403.7 3.3% 68.5 100.5 68.1% NBO 30.8 5,852.9 0.5% 82.1 1,614.0 5.1% 292.0 438.9 66.5% Total 27.4 6,405.0 0.4% 95.5 1,760.5 5.4% 201.3 344.1 58.5%
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 51 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates
Net provision charge on loans (US$ million) 31 December 2019 31 December 2020 Bank Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Δ y-o-y
Ahli (7.5) 15.8 7.1 15.5 (3.2) 18.1 36.2 134.2% 21.3 Dhofar (8.0) 2.7 62.8 57.5 (8.0) 49.0 39.0 80.0 39.0%
Muscat 56.3 (57.5) 84.0 82.8 35.7 84.9 185.3 123.7% 64.6 Nizwa (0.6) 6.8 0.5 6.6 (2.0) 9.7 9.9 17.5 164.6% OAB (4.6) 4.8 14.1 14.4 2.9 24.0 19.6 46.5 223.5% Sohar (17.7) 38.8 29.9 51.0 (18.6) 15.9 67.4 64.7 26.9% HSBC 2.6 5.6 (3.8) 4.5 6.9 22.7 9.8 39.4 776.7% NBO (7.0) (12.3) 47.7 28.4 0.4 77.1 13.6 91.1 220.8% Total 13.6 4.8 242.3 260.7 14.0 284.4 262.3 560.7 115.1%
Total loans subject to ECL - By stages as at 31 Total loans subject to ECL - By stages as at 31 December 2019 December 2020 Bank Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Ahli 80.3% 17.9% 1.7% 77.7% 19.4% 2.9% Dhofar 69.5% 25.8% 4.7% 76.0% 19.4% 4.5% Muscat 76.3% 20.4% 3.2% 76.9% 19.5% 3.6% Nizwa 85.5% 14.4% 0.1% 70.6% 28.4% 1.0% OAB 75.3% 21.1% 3.6% 73.3% 22.2% 4.5% Sohar 81.4% 13.8% 4.8% 81.0% 13.1% 6.0% HSBC 64.8% 33.2% 2.0% 59.1% 38.2% 2.7% NBO 78.3% 16.8% 4.9% 74.0% 20.4% 5.6% Average 76.2% 20.3% 3.5% 75.3% 20.7% 4.0%
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 52 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates Appendix II: Data tables — Qatar
Total assets (US$ million) Net profit (US$ million) Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y Ahli 12,064.5 13,064.6 8.3% 185.5 186.8 0.7% Al Khaliji 14,771.4 15,520.1 5.1% 177.5 187.6 5.7% Doha 29,727.6 28,445.1 (4.3)% 207.1 193.1 (6.8)% MAR 29,229.8 33,273.3 13.8% 598.5 597.6 (0.1)% QIIB 15,613.0 16,844.4 7.9% 254.7 257.6 1.1% QIB 44,922.9 47,900.0 6.6% 839.4 842.1 0.3% QNB 259,532.3 281,597.5 8.5% 3,942.5 3,297.5 (16.4)% CB 40,532.0 42,199.4 4.1% 555.2 357.5 (35.6)% Total 446,393.5 478,844.6 7.3% 6,760.5 5,919.9 (12.4)%
Capital adequacy ratio Return on assets Return on equity Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y Ahli 18.0% 16.9% (1.1)% 1.6% 1.5% (0.1)% 11.8% 11.1% (0.7)% Al Khaliji 19.1% 19.4% 0.3% 1.2% 1.2% 0.0% 10.2% 10.0% (0.2)% Doha 17.7% 19.8% 2.0% 0.7% 0.7% (0.1)% 5.9% 5.2% (0.7)% MAR 20.3% 20.3% 0.0% 2.1% 1.9% (0.2)% 16.0% 15.4% (0.6)% QIIB 18.5% 16.5% (2.0)% 1.7% 1.6% (0.1)% 14.7% 13.5% (1.2)% QIB 19.5% 19.4% (0.1)% 1.9% 1.8% (0.1)% 17.5% 16.1% (1.4)% QNB 18.9% 19.1% 0.2% 1.6% 1.2% (0.4)% 19.0% 14.7% (4.2)% CB 16.4% 17.8% 1.4% 1.4% 0.9% (0.6)% 10.6% 6.0% (4.6)% Average 18.5% 18.7% 0.1% 1.6% 1.3% (0.3)% 15.9% 12.9% (3.0)%
Share price (US$) Bank 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 Ahli 1.0 0.9 0.9 0.9 0.9 Al Khaliji 0.4 0.3 0.4 0.4 0.5 Doha 0.7 0.5 0.6 0.6 0.7 MAR 1.1 1.0 1.0 1.1 1.2 QIIB 2.7 2.0 2.2 2.3 2.5 QIB 4.2 3.9 4.3 4.5 4.7 QNB 5.7 4.6 4.8 5.0 4.9 CB 1.3 1.1 1.0 1.1 1.2 Average 2.1 1.8 1.9 2.0 2.1
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 53 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates
Loan-to-deposit ratio Cost-to-income ratio Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y Ahli 123.9% 124.4% 0.5% 27.3% 25.6% (1.7)% Al Khaliji 105.6% 110.2% 4.7% 27.9% 25.8% (2.1)% Doha 112.5% 118.9% 6.4% 34.1% 29.5% (4.6)% MAR 114.1% 124.8% 10.7% 22.8% 21.5% (1.3)% QIIB 118.5% 111.4% (7.1)% 24.1% 20.3% (3.8)% QIB 101.9% 100.8% (1.1)% 22.8% 20.1% (2.7)% QNB 99.2% 98.0% (1.2)% 26.2% 24.6% (1.6)% CB 115.4% 127.6% 12.2% 28.3% 27.2% (1.1)% Average 111.4% 114.5% 3.1% 26.7% 24.3% (2.4)%
Coverage ratios on loans as at 31 December 2019 Stage 1 (US$ million) Stage 2 (US$ million) Stage 3 (US$ million)
Exposures subject Coverage Exposures Coverage Exposures Coverage Bank ECL to ECL ratio ECL subject to ECL ratio ECL subject to ECL ratio Ahli 32.5 7,846.7 0.4% 41.2 865.8 4.8% 150.4 190.5 79.0% Al Khaliji 28.5 7,190.1 0.4% 295.7 1,590.9 18.6% 157.2 166.5 94.4% Doha 39.8 13,046.8 0.3% 391.6 5,302.5 7.4% 977.9 1,132.5 86.3% MAR 10.7 17,086.2 0.1% 74.3 3,440.1 2.2% 90.1 208.5 43.2% QIIB 61.4 6,481.4 0.9% 11.4 868.2 1.3% 122.1 201.3 60.7% QIB 164.8 27,132.4 0.6% 178.6 4,462.0 4.0% 416.2 416.2 100.0% QNB 342.5 178,474.7 0.2% 740.2 9,058.0 8.2% 3,526.2 3,527.2 100.0% CB 17.0 19,536.6 0.1% 239.7 4,207.5 5.7% 755.8 1,232.8 61.3% Total 87.2 34,599.4 0.3% 246.6 3,724.4 6.6% 774.5 884.4 87.6%
Coverage ratios on loans as at 31 December 2020 Stage 1 (US$ million) Stage 2 (US$ million) Stage 3 (US$ million) Exposures Exposures Exposures subject Coverage subject to Coverage subject to Coverage Bank ECL to ECL ratio ECL ECL ratio ECL ECL ratio Ahli 57.2 8,196.4 0.7% 49.7 1,080.5 4.6% 197.4 234.1 84.3% Al Khaliji 32.1 8,083.2 0.4% 271.5 1,500.0 18.1% 131.5 166.4 79.0% Doha 38.0 12,455.3 0.3% 271.5 5,314.9 5.1% 610.3 1,130.4 54.0% MAR 18.4 19,943.8 0.1% 94.1 3,672.0 2.6% 150.7 269.1 56.0% QIIB 45.1 10,279.0 0.4% 57.9 912.3 6.3% 135.5 177.4 76.4% QIB 457.8 28,124.9 1.6% 189.3 5,197.5 3.6% 444.5 501.2 88.7% QNB 392.3 188,566.9 0.2% 875.5 11,857.2 7.4% 4,655.2 4,343.7 107.2% CB 77.2 21,901.6 0.4% 340.6 4,383.2 7.8% 790.0 1,188.8 66.5% Total 139.7 37,193.9 0.4% 268.8 4,239.7 6.3% 889.4 1,001.4 88.8%
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 54 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates
Net provision charge on loans (US$ million) 31 December 2019 31 December 2020 Bank Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Δ y-o-y Ahli - - 38.4 38.4 25.1 18.2 21.5 64.8 10.6% Al Khaliji (16.7) 55.8 14.0 53.1 4.0 52.5 42.3 98.8 (6.7)% Doha (21.7) 33.9 294.8 307.1 (1.8) (120.1) 497.9 376.0 17.5% MAR 0.1 7.1 7.9 15.1 6.4 22.8 52.9 82.1 (475.8)% QIIB 5.4 7.2 20.7 33.4 (15.8) 45.9 33.3 63.5 71.0% QIB 97.6 (30.1) 103.9 171.4 293.7 8.0 45.2 346.9 23.6% QNB 28.8 277.6 566.4 872.8 101.7 271.6 1,227.1 1,600.4 4.5% CB 0.8 (10.8) 173.4 163.3 59.6 108.0 62.2 229.8 (35.9)% Total 94.3 340.7 1,219.5 1,654.5 472.9 406.8 1,982.6 2,862.3 73.0%
Total loans subject to ECL - By stages as at 31 Total loans subject to ECL - By stages as at 31 December 2019 December 2020 Bank Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Ahli 88.1% 9.7% 2.1% 86.2% 11.4% 2.5% Al Khaliji 80.4% 17.8% 1.9% 82.9% 15.4% 1.7% Doha 67.0% 27.2% 5.8% 65.9% 28.1% 6.0% MAR 82.4% 16.6% 1.0% 83.5% 15.4% 1.1% QIIB 85.8% 11.5% 2.7% 90.4% 8.0% 1.6% QIB 84.8% 13.9% 1.3% 83.2% 15.4% 1.5% QNB 93.4% 4.7% 1.8% 92.1% 5.8% 2.1% CB 78.2% 16.8% 4.9% 79.7% 16.0% 4.3% Average 88.2% 9.5% 2.3% 87.6% 10.0% 2.4%
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 55 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates Appendix II: Data tables — Saudi Arabia
Total assets (US$ million) Net profit (US$ million) Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y Al Rajhi 102,423.1 125,019.9 22.1% 2,708.9 2,825.5 4.3% Alinma 35,157.2 41,833.8 19.0% 675.9 524.3 (22.4)% ANB 48,918.0 48,105.6 (1.7)% 806.2 552.6 (31.5)% BAB 22,934.2 25,531.7 11.3% 331.7 359.6 8.4% BAJ 23,078.5 24,557.0 6.4% 264.3 9.0 (96.6)% BSF 47,506.3 51,753.0 8.9% 830.7 412.3 (50.4)% Riyad 70,877.0 82,690.1 16.7% 1,493.9 1,257.3 (15.8)% SAMBA 69,207.5 79,185.4 14.4% 1,062.5 1,120.2 5.4% NCB 135,151.7 159,852.3 18.3% 3,040.4 3,050.7 0.3% SABB1 70,929.8 73,720.4 3.9% 734.5 (1,101.9) (250.0)% SAIB 26,883.9 26,635.9 (0.9)% 63.9 261.2 309.1% Total 653,067.2 738,885.1 12.1% 12,012.8 9,270.8 22.8%
Capital adequacy ratio Return on assets Return on equity Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y Al Rajhi 19.9% 19.1% (0.8)% 2.7% 2.5% (0.2)% 20.4% 19.4% (1.0)% Alinma 20.3% 19.3% (1.0)% 2.0% 1.4% (0.6)% 11.6% 8.4% (3.2)% ANB 18.9% 22.0% 3.1% 1.7% 1.1% (0.5)% 11.0% 7.1% (3.9)% BAB 17.5% 17.9% 0.5% 1.6% 1.5% (0.1)% 14.4% 13.4% (1.0)% BAJ 24.6% 23.6% (1.0)% 1.2% 0.0% (1.2)% 8.7% 0.3% (8.4)% BSF 19.2% 21.6% 2.4% 1.7% 0.8% (0.9)% 9.8% 4.3% (5.4)% Riyad 18.1% 19.1% 1.0% 2.3% 1.6% (0.6)% 14.5% 11.1% (3.4)% SAMBA 21.1% 19.6% (1.5)% 1.6% 1.5% (0.1)% 9.1% 9.0% (0.1)% NCB 18.7% 20.3% 1.7% 2.4% 2.1% (0.3)% 17.1% 15.5% (1.6)% SABB 18.2% 21.8% 3.6% 1.3% (1.5)% (2.8)% 6.2% (7.7)% (14.0)% SAIB 18.3% 21.2% 2.9% 0.2% 1.0% 0.7% 1.7% 6.7% 4.9% Average 19.5% 20.5% 1.0% 1.9% 1.3% (0.6)% 12.6% 8.8% (3.8)%
Share price (US$) Bank 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 Al Rajhi 17.4 14.3 15.1 17.5 19.6 Alinma 6.8 4.2 3.9 4.4 4.3 ANB 7.3 4.9 5.1 5.4 5.4 BAB 7.2 5.5 5.9 6.4 7.6 BAJ 4.0 3.0 3.0 3.7 3.6 BSF 10.1 6.9 7.6 8.6 8.4 Riyad 6.4 4.0 4.5 5.0 5.4 SAMBA 8.7 5.4 7.2 7.2 8.1 NCB 13.1 9.3 9.9 9.9 11.6 SABB 9.3 5.4 6.1 6.7 6.6 SAIB 4.8 3.3 3.5 4.2 4.3 Average 8.6 6.0 6.5 7.2 7.7
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 56 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates
Loan-to-deposit ratio Cost-to-income ratio Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y Al Rajhi 79.9% 82.5% 2.6% 32.8% 32.5% (0.2)% Alinma 92.9% 93.1% 0.2% 37.1% 36.9% (0.2)% ANB 83.6% 87.6% 4.0% 32.7% 34.8% 2.2% BAB 88.4% 98.0% 9.6% 51.1% 48.5% (2.6)% BAJ 79.2% 79.4% 0.1% 57.2% 51.4% (5.9)% BSF 94.6% 102.7% 8.1% 33.3% 33.6% 0.3% Riyad 89.4% 94.2% 4.8% 33.8% 32.4% (1.4)% SAMBA 78.6% 75.1% (3.5)% 33.5% 33.0% (0.5)% NCB 79.8% 83.3% 3.5% 30.5% 30.4% (0.1)% SABB 79.1% 81.0% 1.9% 39.0% 47.0% 8.0% SAIB 82.7% 91.6% 8.9% 42.5% 42.0% (0.5)% Average 84.4% 88.0% 3.7% 38.5% 38.4% (0.1)%
Coverage ratios on loans as at 31 December 2019 Stage 1 (US$ million) Stage 2 (US$ million) Stage 3 (US$ million) Exposures Exposures Exposures subject to Coverage subject to Coverage subject to Coverage Bank ECL ECL ratio ECL ECL ratio ECL ECL ratio Al Rajhi 593.1 65,129.0 0.9% 824.1 2,594.9 31.8% 622.3 730.0 85.2% Alinma 187.6 23,719.9 0.8% 199.5 1,758.4 11.3% 302.2 491.4 61.5% ANB 210.3 27,913.1 0.8% 246.4 4,000.2 6.2% 450.4 683.7 65.9% BAB 61.2 13,797.9 0.4% 248.5 2,308.1 10.8% 181.7 196.2 92.6% BAJ 45.5 11,660.5 0.4% 25.3 1,029.9 2.5% 198.3 821.4 24.1% BSF 181.6 30,396.2 0.6% 261.7 3,201.5 8.2% 545.6 917.9 59.4% Riyad 119.9 44,925.4 0.3% 135.8 1,327.7 10.2% 479.2 877.0 54.6% SAMBA 169.1 35,940.3 0.5% 144.8 1,763.4 8.2% 512.7 881.6 58.2% NCB 457.5 71,162.6 0.6% 421.7 4,537.6 9.3% 1,083.9 1,421.2 76.3% SABB 171.8 35,154.3 0.5% 575.0 4,504.0 12.8% 854.0 2,495.8 34.2% SAIB 101.2 13,642.6 0.7% 49.2 1,333.0 3.7% 491.1 896.0 54.8% Total 209.0 33,949.3 0.6% 284.7 2,578.1 11.0% 520.1 946.6 54.9%
Coverage ratios on loans as at 31 December 2020 Stage 1 (US$ million) Stage 2 (US$ million) Stage 3 (US$ million) Exposures Exposures Exposures subject to Coverage subject to Coverage subject to Coverage Bank ECL ECL ratio ECL ECL ratio ECL ECL ratio Al Rajhi 641.2 81,988.9 0.8% 749.3 3,272.8 22.9% 753.4 920.6 81.8% Alinma 223.0 27,982.0 0.8% 255.8 1,789.6 14.3% 401.4 760.8 52.8% ANB 270.2 27,034.8 1.0% 256.8 3,165.8 8.1% 546.4 1,102.8 49.6% BAB 99.5 16,686.4 0.6% 317.1 2,415.9 13.1% 213.7 225.4 94.8% BAJ 89.5 12,997.6 0.7% 79.5 1,144.6 6.9% 415.8 832.3 50.0% BSF 154.5 31,687.4 0.5% 366.8 3,318.4 11.1% 730.2 1,062.9 68.7% Riyad 273.7 47,091.5 0.6% 252.1 3,977.6 6.3% 683.2 1,165.7 58.6% SAMBA 235.2 39,573.7 0.6% 240.8 2,226.2 10.8% 583.6 866.0 67.4% NCB 482.1 88,418.7 0.5% 652.8 4,747.0 13.8% 1,209.5 1,634.2 74.0% SABB 224.9 33,321.9 0.7% 653.6 6,821.5 9.6% 1,035.0 2,635.0 39.3% SAIB 118.2 13,384.7 0.9% 64.8 1,114.3 5.8% 285.1 655.5 43.5% Total 255.6 38,197.1 0.7% 353.6 3,090.3 11.4% 623.4 1,078.3 57.8%
For detailed sources, refer to Appendix III: Sources.
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Net provision charge on loans (US$ million) 31 December 2019 31 December 2020 Bank Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Δ y-o-y Al Rajhi (160.6) 205.0 755.0 799.3 93.3 110.9 707.4 911.6 14.0% Alinma (23.4) 85.8 131.3 193.7 21.6 136.9 178.7 337.2 74.0% ANB 7.3 63.2 204.6 275.0 50.4 72.5 302.9 425.8 54.8% BAB 16.7 127.6 (8.8) 135.6 85.6 71.3 11.0 167.9 23.8% BAJ (6.5) 1.9 66.6 62.0 33.1 54.1 261.9 349.1 462.6% BSF (36.5) 33.6 271.8 269.0 (35.1) 194.6 591.6 751.0 179.2% Riyad1 2.5 (1.8) 312.4 313.0 126.7 183.7 308.2 618.6 97.6% SAMBA 133.5 212.8 340.5 686.9 161.9 187.5 298.1 647.5 (5.7)% NCB (210.6) 155.8 440.7 385.9 55.9 239.8 224.2 519.9 34.7% SABB 62.4 214.6 294.0 571.0 46.4 88.9 297.7 433.1 (24.2)% SAIB 10.6 13.1 315.2 338.9 17.0 15.6 88.3 120.9 (64.3)% Total (204.6) 1,111.6 3,123.3 4,030.3 656.6 1,355.8 3,270.0 5,282.5 31.1%
Total loans subject to ECL - by stage as at 31 December Total loans subject to ECL - by stage as at 31 2019 December 2020 Bank Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Al Rajhi 95.1% 3.8% 1.1% 95.1% 3.8% 1.1% Alinma 91.3% 6.8% 1.9% 91.6% 5.9% 2.5% ANB 85.6% 12.3% 2.1% 86.4% 10.1% 3.5% BAB 84.6% 14.2% 1.2% 86.3% 12.5% 1.2% BAJ 86.3% 7.6% 6.1% 86.8% 7.6% 5.6% BSF 88.1% 9.3% 2.7% 87.9% 9.2% 2.9% Riyad1 95.3% 2.8% 1.9% 90.2% 7.6% 2.2% SAMBA 93.1% 4.6% 2.3% 92.8% 5.2% 2.0% NCB 92.3% 5.9% 1.8% 93.3% 5.0% 1.7% SABB 83.4% 10.7% 5.9% 77.9% 15.9% 6.2% SAIB 86.0% 8.4% 5.6% 88.3% 7.4% 4.3% Average 90.6% 6.9% 2.5% 90.2% 7.3% 2.5%
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 58 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates Appendix II: Data tables — UAE
Total assets (US$ million) Net profit (US$ million) Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y ADCB 110,273.8 111,923.9 1.5% 1,303.8 1,036.1 (20.5)% ADIB 34,295.9 34,793.8 1.5% 707.8 436.3 (38.4)% CBD 23,973.9 26,503.5 10.6% 381.2 304.9 (20.0)% DIB 63,098.8 78,822.3 24.9% 1,365.0 896.6 (34.3)% ENBD 186,011.7 190,031.5 2.2% 3,947.9 1,894.5 (52.0)% FAB 223,753.9 250,184.2 11.8% 3,408.2 2,873.3 (15.7)% Mashreq 43,399.9 43,152.8 (0.6)% 562.2 (347.8) (161.9)% NBF 11,652.3 10,853.8 (6.9)% 150.3 (129.4) (186.1)% SIB 12,628.3 14,591.1 15.5% 148.5 110.5 (25.6)% RAK 15,548.9 14,365.6 (7.6)% 298.1 137.1 (54.0)% Total 724,637.5 775,222.5 7.0% 12,273.0 7,212.2 (41.2)%
Capital adequacy ratio Return on assets Return on equity Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y ADCB 16.3% 17.2% (1.0)% 1.4% 0.9% (0.5)% 11.5% 7.0% (4.5)% ADIB 17.9% 19.4% 0.7% 2.1% 1.3% (0.8)% 16.8% 9.2% (7.6)% CBD 14.2% 16.7% (0.4)% 1.7% 1.2% (0.5)% 14.4% 9.7% (4.7)% DIB 16.5% 18.5% (0.9)% 2.2% 1.3% (0.9)% 18.4% 10.2% (8.2)% ENBD 18.5% 18.5% (2.4)% 2.5% 1.0% (1.4)% 21.8% 8.6% (13.2)% FAB 16.9% 16.5% 1.2% 1.6% 1.2% (0.4)% 12.7% 10.4% (2.3)% Mashreq 16.3% 16.0% (0.2)% 1.4% (0.8)% (2.2)% 9.9% (6.2)% (16.1)% NBF 17.8% 19.2% 2.6% 1.3% (1.1)% (2.5)% 10.5% (11.7)% (22.1)% SIB 22.8% 20.7% 5.1% 1.2% 0.8% (0.4)% 9.8% 5.5% (4.4)% RAK 16.8% 18.6% (0.4)% 2.0% 0.9% (1.1)% 14.7% 6.5% (8.2)% Average 17.4% 18.1% 0.4% 1.8% 1.0% (0.9)% 15.1% 7.7% (7.4)%
Share price (US$) Bank 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 ADCB 2.2 1.3 1.3 1.5 1.7 ADIB 1.5 1.1 1.0 1.2 1.3 CBD 1.1 1.0 1.0 1.0 1.1 DIB 1.5 1.0 1.0 1.2 1.3 ENBD 3.5 2.0 2.4 2.9 2.8 FAB 4.1 2.6 3.1 3.1 3.5 Mashreq 19.1 19.6 18.2 17.1 19.0 NBF 1.4 1.4 1.4 1.4 1.4 SIB 0.3 0.3 0.3 0.3 0.4 RAK 1.3 1.1 1.0 1.0 1.1
Average 3.6 3.1 3.1 3.1 3.3
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 59 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates
Loan-to-deposit ratio Cost-to-income ratio Bank 2019 2020 Δ y-o-y 2019 2020 Δ y-o-y ADCB 94.6% 95.1% 0.5% 38.5% 36.2% (2.2)% ADIB 80.0% 82.4% 2.4% 47.3% 48.3% 1.0% CBD 95.0% 93.6% (1.4)% 29.2% 27.1% (2.1)% DIB 91.8% 95.5% 3.7% 26.7% 30.5% 3.8% ENBD 92.6% 95.6% 2.9% 32.1% 33.8% 1.7% FAB 78.6% 71.5% (7.1)% 27.2% 27.2% 0.1% Mashreq 83.7% 81.0% (2.7)% 43.8% 57.2% 13.4% NBF 84.8% 83.5% (1.3)% 33.0% 35.4% 2.5% SIB 92.1% 87.1% (5.0)% 47.7% 44.6% (3.1)% RAK 93.8% 81.3% (12.5)% 39.5% 39.2% (0.3)% Average 88.7% 86.6% (2.0)% 36.5% 38.0% 1.5%
Coverage ratios on loans as at 31 December 2019 Stage 1 (US$ million) Stage 2 (US$ million) Stage 3 (US$ million) Exposures Coverage Exposures Coverage Exposures Coverage Bank ECL subject to ECL ratio ECL subject to ECL ratio ECL subject to ECL ratio ADCB 229.1 77,322.0 0.3% 813.4 5,881.1 13.8% 972.7 3,357.5 29.0% ADIB 102.7 19,785.1 0.5% 121.5 1,633.2 7.4% 596.1 1,480.9 40.3% CBD 140.9 14,250.2 1.0% 165.8 1,959.5 8.5% 743.6 1,222.8 60.8% DIB 292.9 37,747.7 0.8% 262.9 3,294.2 8.0% 1,099.4 1,694.6 64.9% ENBD 1,272.8 113,338.1 1.1% 988.5 6,609.5 15.0% 5,694.6 7,084.3 80.4% FAB 599.9 250,039.3 0.2% 949.7 8,019.7 11.8% 1,732.6 4,911.0 35.3% Mashreq 129.5 19,322.1 0.7% 409.6 1,544.6 26.5% 542.4 948.8 57.2% NBF 60.0 7,164.7 0.8% 73.8 736.2 10.0% 218.2 479.4 45.5% SIB 53.0 6,412.3 0.8% 30.9 368.8 8.4% 222.2 375.0 59.2% RAK 179.4 8,874.5 2.0% 115.9 617.4 18.8% 170.7 379.2 45.0% Total 306.0 55,425.6 0.6% 393.2 3,066.4 12.8% 1,199.3 2,193.4 54.7%
Coverage ratios on loans as at 31 December 2020 Stage 1 (US$ million) Stage 2 (US$ million) Stage 3 (US$ million) Exposures Coverage Exposures Coverage Exposures Coverage Bank ECL subject to ECL ratio ECL subject to ECL ratio ECL subject to ECL ratio ADCB 239.0 78,740.7 0.3% 910.9 6,053.3 15.0% 1,995.5 5,480.7 36.4% ADIB 90.4 19,694.0 0.5% 131.3 2,006.7 6.5% 866.5 2,093.0 41.4% CBD 177.8 15,109.7 1.2% 141.0 2,280.6 6.2% 705.0 1,406.2 50.1% DIB 308.3 48,058.6 0.6% 255.0 4,487.2 5.7% 1,723.6 3,283.2 52.5% ENBD 1,255.7 114,803.2 1.1% 1,550.9 7,343.0 21.1% 6,716.9 8,117.0 82.8% FAB 857.7 281,089.7 0.3% 938.2 8,168.1 11.5% 1,906.7 5,816.5 32.8% Mashreq 167.4 18,268.2 0.9% 622.6 1,523.7 40.9% 791.9 1,262.4 62.7% NBF 72.2 6,201.6 1.2% 153.3 914.9 16.8% 377.2 826.0 45.7% SIB 71.9 7,302.4 1.0% 36.8 609.0 6.0% 247.1 416.5 59.3% RAK 186.1 7,624.0 2.4% 158.3 658.7 24.0% 243.5 482.9 50.4% Total 342.6 59,689.2 0.6% 489.8 3,404.5 14.4% 1,557.4 2,918.4 53.4%
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Saudi United Arab 60 GCC listed banks’ results Bahrain Kuwait Oman Qatar Arabia Emirates
Net provision charge on loans (US$ million) 31 December 2019 31 December 2020
Bank Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Δ y-o-y ADCB (4.3) 0.1 634.3 630.1 9.9 97.5 1,191.3 1,298.6 106.1% ADIB 18.3 (147.2) 258.6 129.8 (12.3) 9.8 592.1 589.6 354.4% CBD (46.5) 86.3 161.9 201.7 40.7 31.7 292.0 364.4 80.7% DIB 16.6 (11.1) 446.5 452.1 15.4 61.3 955.6 1,032.4 128.4% ENBD (9.9) 396.2 1,004.8 1,391.1 (23.0) 478.7 1,688.2 2,143.9 54.1% FAB 102.4 (10.9) 409.8 501.3 248.7 82.4 381.8 712.9 42.2% Mashreq 8.4 (3.8) 352.3 356.9 37.9 213.0 634.0 884.9 147.9% NBF 14.6 22.5 111.5 148.6 12.1 79.5 269.3 360.9 142.9% SIB (6.0) 3.3 22.4 19.7 20.7 11.4 34.7 66.9 239.6% RAK 90.3 7.6 283.0 380.8 135.8 50.5 276.4 462.6 21.5% Total 184.0 343.0 3,685.1 4,212.1 486.0 1,115.7 6,315.3 7,917.0 88.0%
Total loans subject to ECL - By stages as at 31 Total loans subject to ECL - By stages as at 31 December 2019 December 2020 Bank Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 ADCB 89.3% 6.8% 3.9% 87.2% 6.7% 6.1% ADIB 86.4% 7.1% 6.5% 82.8% 8.4% 8.8% CBD 81.7% 11.2% 7.0% 80.4% 12.1% 7.5% DIB 88.3% 7.7% 4.0% 86.1% 8.0% 5.9% ENBD 89.2% 5.2% 5.6% 88.1% 5.6% 6.2% FAB 95.1% 3.0% 1.9% 95.3% 2.8% 2.0% Mashreq 88.6% 7.1% 4.3% 86.8% 7.2% 6.0% NBF 85.5% 8.8% 5.7% 78.1% 11.5% 10.4% SIB 89.6% 5.2% 5.2% 87.7% 7.3% 5.0% RAK 89.9% 6.3% 3.8% 87.0% 7.5% 5.5% Average 91.3% 5.1% 3.6% 90.4% 5.2% 4.4%
For detailed sources, refer to Appendix III: Sources.
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 61 GCC listed banks’ results
Appendices
Appendix 3
Country analysis
Data tables Sources
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 62 GCC listed banks’ results Sources
Bahrain Qatar 1. Ahli United Bank 1. Ahli Bank 2. Al Baraka Banking Group 2. Al Khaliji Commercial Bank 3. Al Salam Bank Bahrain 3. Doha Bank 4. Bahrain Islamic Bank 4. Masraf Al Rayan 5. Bank of Bahrain and Kuwait 5. Qatar International Islamic Bank 6. Ithmaar Holding (formerly known as Ithmaar Bank) 6. Qatar Islamic Bank 7. Khaleeji Commercial Bank 7. Qatar National Bank 8. National Bank of Bahrain 8. The Commercial Bank Source: Bahrain Stock Exchange and company website Source: Qatar Exchange and company website
Kuwait Saudi Arabia 1. Ahli United Bank 1. Al Rajhi Bank 2. Al Ahli Bank of Kuwait 2. Alinma Bank 3. Boubyan Bank 3. Arab National Bank 4. Burgan Bank 4. Bank Albilad 5. Gulf Bank 5. Bank AlJazira 6. Kuwait Finance House 6. Banque Saudi Fransi 7. Kuwait International Bank 7. Riyad Bank 8. National Bank of Kuwait 8. SAMBA Financial Group 9. The Commercial Bank of Kuwait 9. The National Commercial Bank 10. Warba Bank 10. The Saudi British Bank Source: Kuwait Stock Exchange and company website 11. The Saudi Investment Bank Source: Saudi stock exchange Oman 1. Ahli Bank United Arab Emirates 2. Bank Dhofar 1. Abu Dhabi Commercial Bank 3. Bank Muscat 2. Abu Dhabi Islamic Bank 4. Bank Nizwa 3. Commercial Bank of Dubai 5. HSBC Bank Oman 4. Dubai Islamic Bank 6. National Bank of Oman 5. Emirates NBD 7. Oman Arab Bank 6. First Abu Dhabi Bank 8. Sohar International 7. Mashreq bank Source: Muscat Stock Exchange 8. National Bank of Fujairah 9. Sharjah Islamic Bank 10. The National Bank of Ras Al-Khaimah Source: Company website
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 63 GCC listed banks’ results
Other sources 1. S&P, Trading Economics, Bahrain, Kuwait, Oman, Qatar and Saudi Arabia 2. Moody’s, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE 3. Fitch Rating, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE 4. Share prices as available on the respective stock exchange websites (Bahrain Bourse website, Kuwait Stock exchange, Muscat Securities market, Qatar Exchange, Saudi Stock Exchanges (Tadawul), Abu Dhabi Stock Exchange and Dubai Financial Market PJSC). Additionally, ThomsonOne has been used for missing data points. 5. CBO publications 6. The below currency conversion rates from Oanda.com have been used: a. Bahraini Dinar (BD)/US$ [2020: 2.6596, 2019: 2.6596] b. Kuwaiti Dinar (KD)/US$ [2020: 3.282, 2019: 3.300] c. Omani Rial (RO)/US$ [2020: 2.5974, 2019: 2.5974] d. Qatari Rial (QAR)/US$ [2020: 0.2747, 2019: 0.2747] e. Saudi Riyal (SAR)/US$ [2020: 0.2669, 2019: 0.2668] f. UAE Dirham (AED)/US$ [2020: 0.2722, 2019: 0.2722]
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 64 GCC listed banks’ results Notes
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 65 GCC listed banks’ results Notes
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 66 GCC listed banks’ results Notes
© 2021 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. Country contacts
Mahesh Balasubramanian Bhavesh Gandhi Financial Services Leader Head of Financial Services Partner, KPMG in Bahrain Partner, KPMG in Kuwait T: +973 17224807 T: +965 2228 7000 E: [email protected] E: [email protected]
Ravikanth Petluri Omar Mahmood Head of Financial Services Head of Financial Services Partner, KPMG in Oman Partner, KPMG in Qatar T: +968 2474 9290 T: +974 4457 6444 E: [email protected] E: [email protected]
Ovais Shahab Abbas Basrai Head of Financial Services Head of Financial Services KPMG in Saudi Arabia Partner, KPMG in the UAE T: +966 1 2698 9595 T: +971 4403 048 E: [email protected] E: [email protected]
We would also like to acknowledge the contribution of the core team members in this publication:
Prithwish Ghosh Senior Analyst Financial Services Global Collaboration & Knowledge KPMG Global Services
Other members: Shubham Kumar, Ishani Mukherjee, Ragini Singhal
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