Banking

Changing consumer habits amid COVID-19 accelerates decline of Saudi Arabia bank branches

Bank branches operating in Saudi Arabia have reduced by 4.6% y/y in Q2 2021 to 1,969 branches (SAMA). The number of branches had been on a year-on-year declining trend since Q3 2020, with the current quarter posting the highest decline. The number of ATMs has also decreased by 9% y/y in Q2 2021. Operational considerations and uptake of digital banking, accelerated by COVID-19, seem to have contributed to the trend. Total Bank Branches in Saudi Arabia Source: SAMA According to...

Profits at UAE’s major lenders reached USD 4 billion in H1 2021

Profits at the four largest UAE banks rose during the first half of 2021 after an improvement in the operating environment led to lower loan-loss provisions, rise in non-interest income and improvement in operating efficiency. The combined net profit of four major banks, First Abu Dhabi Bank (FAB), Emirates NBD (ENBD), Abu Dhabi Commercial Bank (ADCB), and Dubai Islamic Bank (DIB) reached USD 4 billion in H1 2021, up 17% from the same period last year. The four big banks...

Kuwaiti banks – Earnings report Q2’2021

All major Kuwaiti banks reported their financial results for the second quarter of 2021. The Kuwait banking sector reported a healthy growth in net income after taxes for Q2’21 compared to that of Q2’20, mainly due to the reduction in provisions and impairment charges for bad loans that were recorded in the prior quarters due to higher expected credit losses. Due to historically low interest rates and increased provision for bad debts, profitability of the Kuwait banking sector was impacted...

MSCI Emerging Markets Index – How is the GCC placed?

With a total market capitalization of USD 8.3 trillion, the MSCI Emerging Markets (EM) Index has emerged as one of the most important global indices tracked by many ETFs and mutual funds. Inclusion in the index has become sought after not only due to the potential inflows from overseas funds, but also the credibility it gives to the included country’s capital markets. Weightage of GCC nations in the MSCI EM index is quite low Among the GCC, companies from UAE...

Saudi Arabia Banking Sector – The worst might not be over yet

COVID-19 pandemic has pressurized banking asset quality and increased the demand for credit. As signs of normalcy returns, banks face the challenging task of managing the asset quality while expanding balance sheets. The strength of a country’s banking sector is often reliant on its underlying economic conditions. As is the case for Saudi Arabia, which has the second largest banking industry in the GCC by total assets, with roughly 29% of the region’s total banking assets. According to estimates from...

COVID-19’s direct and indirect impact on GCC banking sector

The Current economic crisis due to the COVID-19 pandemic is likely to impact many sectors, none more so than Banking. The Banking sector will be directly impacted by lower profitability, increased non-performing loans (NPLs), deterioration in capital adequacy, etc. and also indirectly impacted by the effect of the various lockdowns and restrictions on the other sectors to which GCC banks are exposed which would impact their operations and profitability in the long run. Direct Impact due to COVID-19 The operations...

Do GCC Banks have adequate capital buffers?

The term liquidity is defined as the banks’ ability to fund rising assets and to meet its obligations on time. Therefore, when banks are unable to perform the primary tasks of funding assets and paying its obligations, it faces liquidity risk. Effective liquidity management is important to promote macro-financial stability. In the GCC countries, fixed exchange rate regimes provide reliable nominal anchors, but when combined with open capital accounts, they result in limited independence of monetary policy. At the same...

Novel liquidity instruments need of the hour for Islamic financial institutions

This article was originally published in Islamic Finance News. Islamic finance is still a relatively small part of the broader financial services industry. Compared to the conventional industry, Islamic finance lacks adequate liquidity instruments as Shariah restrictions limit the number of instruments that could be used for liquidity management. Islamic interbank and money markets also lack the volume and diversification of conventional markets leading to a sectoral disadvantage from the outset. Review of 2018 Since 2015, there has been a...

Knitting Digital Worlds Together through APIs

Imagine that you are riding an Uber or Didi Ride back home. In the middle of the ride, you realised that there’s nothing cooked for dinner at home and time is short as you are already late. And you suddenly placed an online order for some fancy food with a newly discovered app and paid it by Paypal or VISA. When you reach your destination, you pay Uber by Paypal and a few minutes later, Mint app pops up a...

The Fintech Race between UAE and Bahrain

Bahrain, with the launch of dedicated FinTech Hub in Feb 2018 (Zawya), become the second country in the MENA region to have exclusive FinTech infrastructure followed by UAE. UAE is considered to be the leading hub for FinTech in the region (The National 2017), continuing boosting innovation and collaboration. UAE developed region’s first regulatory sandbox allowing new products to be tested for two years without full regulatory compliance.  FinTech in both the countries is in different stages where service domains...