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GCC banking sector's profits record seven-year low in 2020

GCC banking sector's profits record seven-year low in 2020
The aggregate net profit of the GCC listed banks plunged by 32.2% YoY

Mubasher: The net profits of the GCC banking sector hit their lowest levels in seven years, affected by the decline of profits in the fourth quarter (Q4) by almost a third on a quarterly basis to $5.3 billion due to higher provisions, according to Kamco Invest.

The aggregate net profit of the 62-listed banks in the GCC plunged by 32.2% to $25 billion in 2020, compared to $36.9 billion during fiscal year (FY) 2019, recording the steepest decline since at least 2002.

Bahraini banks witnessed the biggest decrease in net profits by 53.6%, followed by Kuwait with 55.5% and the UAE with 44.2%.

Meanwhile, Saudi Arabia's banking sector reported a decline in net profits by 22.8%.

The listed banks in the GCC reported loan loss provisions (LLP) of $20.3 billion during 2020, with a rise seen across all the six countries due to the coronavirus (COVID-19) pandemic that negatively impacted the sector.

The GCC banking sector witnessed mixed trends, with Saudi Arabia and Qatar registering strong growth amid economic recovery.

Saudi Arabia's total credit facilities rose in Q4-2020 by 3% quarter on quarter (QoQ) to SAR 1.78 trillion, increasing by 14.8% on an annual basis.

In the meantime, the UAE banking sector reported a marginal growth in lending by 0.3% to AED 1.6 trillion in 2020.