WP/10/87

The GCC Banking Sector: Topography and Analysis
Abdullah Al-Hassan, May Khamis, and Nada Oulidi

© 2010 International Monetary Fund

WP/10/87

IMF Working Paper Monetary and Capital Markets and Middle East and Central Asia Departments The GCC Banking Sector: Topography and Analysis Prepared by Abdullah Al-Hassan, May Khamis, and Nada Oulidi Authorized for distribution by Daniel Hardy and Abdelhak Senhadji April 2010

Abstract This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

In this paper, we analyze the evolution of the Gulf Cooperation Council (GCC) banking sectors in the six member countries including ownership, concentration, cross-border linkages, balance sheet exposures and risks, recent trends in credit growth, and financial soundness. We identify risks to the banking sector's financial stability in the context of the current global crisis and their mitigating factors.

JEL Classification Numbers: G20; G21 Keywords: Gulf Cooperation Council; banking sector; credit growth; financial statements Authors’ E-Mail Addresses: aalhassan@imf.org; mkhamis@imf.org; noulidi@imf.org

2 Contents Page

I. Introduction ............................................................................................................................4 II. Structure of the GCC Financial System ................................................................................5 III. Recent Trends in Credit Growth ..........................................................................................9 IV. GCC Banking Sector Balance Sheets: Stylized Facts .......................................................10 V. Credit Concentration and Risks ..........................................................................................14 VI. Financial Soundness ..........................................................................................................19 VIII. Conclusion and Policy implications ................................................................................27 References ................................................................................................................................43 Tables 1.  2.  3.  4. 

Total Banking Sector Assets ..........................................................................................5  Ownership Structure of the Domestic Banking System ................................................9  Contribution of Balance Sheet Items to Private Sector Credit Growth .......................15  Financial Soundness Indicators....................................................................................20 

Figures 1.  Average Annual Private Sector Credit Growth, 2003–08 .............................................9  2.  Selected Emerging Countries: Private sector Credit to GDP, 2008.............................10  3.  Oil Prices and Private Sector Credit Growth ...............................................................10  4.  Deposits as Percent of Non-oil GDP ...........................................................................10  5.  Banking Sector Liability and Equity Structure, 2008 ..................................................11  6.  Banking Sector Assets Structure, 2008 ........................................................................12  7.  Foreign Liabilities to Total Liabilities .........................................................................13  8.  International Comparison of Banks’ Holdings of Securities .......................................14  9.  Bank Loans Sectoral Distribution ................................................................................16  10.  Distribution of Household Credit.................................................................................17  11.  Income Analysis of GCC Banks, 2005–Q1 2009 ........................................................22  12.  Banks’ Provisions and Investment Income, 2005–Q1 2009 ........................................24  13.  Change in Bank Profitability, 2007–09 .......................................................................24  14.  Banks’ External Financing...........................................................................................25  15.  Banking Sector Liquidity in Selected Countries, 2007................................................25  16.  Commercial Banks’ Reserves with Central Bank, December 2007 ............................25  17.  Liquidity Indicators of GCC Banking Sectors .............................................................26  Box 1.

Highlights of the GCC Financial Sector ........................................................................6

3 Appendixes I. List of Commercial Banks in GCC Countries .............................................................28 II. Concentration of the Banking Sector ...........................................................................31 III. Ownership Structure of GCC Domestic Banks ...........................................................34 IV. Aggregated Financial Statements of the GCC Banking Sector ...................................37

Saudi Arabia. and understanding how these systems could be affected with changing economic conditions. The remainder of this paper is organized as follow. Second. All GCC countries are large oil exporters with fixed exchange rate regimes. the banking sectors in the GCC countries were buttressed by high profits and capital buffers in the run-up to the 2008-09 global recession and international financial crisis. shareholders and capital base structures. and high exposures to the real estate and construction sectors and equity prices. First. and straining the rollover of private sector external debt. These have supported to a large extent GCC banks’ resilience to the financial crisis. Kuwait. With except to Kuwait. devoid of analyses or regional comparisons of GCC countries’ financial systems. the high share of the traditional banking book in banks’ on.E. the predominance of domestic banks across the region minimized direct cross-border spillovers through the ownership channel within GCC and from international banks. reversing short-term capital inflows to the GCC region.g.).4 I. and financial soundness. Section I describes the structure of the financial sector. procyclical government spending. and the United Arab Emirates (U. The similarities in economic structure imply common sources of strengths and vulnerabilities of their financial systems. the GCC banking systems had some vulnerabilities that were revealed by the recent global crisis and the impact it had on the economies of the GCC countries. including cross-border ownership within the GCC. While credit growth was essentially funded by a relatively stable domestic deposit base. Section II analyses the balance sheet of the banking sector including recent trends in credit growth and its contributing factors. however. During the 2003–08 oil price boom. INTRODUCTION The economies of the country members of the Gulf Cooperation Council (GCC)1 share a number of commonalities. Third. 2 . where its currency is begged to a basket of currencies.. Oman. The existing literature is. Section III examines the funding sources for banks and the importance 1 Includes Bahrain.and off-balance sheets limited losses from exposures to structured products and derivatives to a few isolated cases. asset price bubbles). which exhibits a number of common structural characteristics across countries. we examine GCC banking sectors’ balance sheet exposures. As analysis of GCC banking sectors is essential in gauging sources of strengths and vulnerabilities. Among those are increased reliance on external financing. Qatar. In this paper. The 2008–09 global recession put an end to the boom by diminishing oil revenues. We show that the financial systems in the region are dominated by the banking sector. funding sources. and bullish consumer and investor sentiments spurred non-oil real sector and rapid credit growth with associated build-up of domestic imbalances (e. abundant banking sector liquidity. However.A.2 which exposes them to the vagaries of international oil prices. more volatile external funding became increasingly important.

1/ The increase in 2007 for Bahrain is due to the fact that some wholesale banks were re-licensed to retail banks. and Appendix II for bank concentration. and Section VI concludes with policy lessons. the largest five banks are domestic and account for 50–80 percent of total banking sector assets. Table 1. with some exceptions. they are present. controlling on average 24 percent of the region’s banking system assets. Kuwait has 95 Investment companies (ICs) with total assets under management of more than 100 percent of GDP at end-2008. See Appendix I for a list of banks operating in the GCC. of which. asset quality and concentration. Section IV examines the loan portfolio exposures and the resulting credit risk. 42 percent is 3 In this paper.E. The discussion below on the GCC nonbank financial system is based on International Monetary Fund (2010). 2002–08 (In percent of GDP) 2002 2003 2004 2005 2006 2007 1/ 2008 Bahrain 106 106 108 105 123 254 258 Kuwait 120 103 94 81 84 101 84 Oman 52 52 50 45 50 64 66 Qatar 85 84 76 80 85 103 94 Saudi 68 64 65 61 61 71 68 U.A. Section V analyzes the financial soundness of the banking sector with regard to capitalization.4 Most mutual investment funds are bank-owned. and Table 1). GCC: Total Banking Sector Assets. In all six countries. which is relatively concentrated with a few domestic players dominating the market (Box 1. Saudi Arabia.E. the term “domestic banks” refers to banks that are majority-owned by domestic shareholders. 4 . in Bahrain. The latter are mostly in the form of foreign bank branches. II. earnings quality and sustainability. and the U. although they tend to remain largely focused on domestic equity and real estate. Nonbank financial institutions (NBFIs) have limited presence in the GCC.5 of external funding in view of the current drought in international capital markets. although on a limited basis. Investment funds have been growing rapidly in several countries.A.3 Islamic banks have grown in recent years to become a prominent source of financial intermediation in the Gulf countries. and liquidity. 111 105 107 120 133 162 142 Sources: IFS. while foreign banks refer to banks with majority foreign ownership. and authors' estimates. STRUCTURE OF THE GCC FINANCIAL SYSTEM The financial sector in the GCC is generally dominated by the banking sector.

These provide interest free loans for public policy purposes. with assets amounting to close to 260 percent of GDP at end-2008. The entry of foreign banks under the Qatar Financial Center has increased competition. and the Saudi Fund for Development) that dominate the primary market for government securities. National Bank of Bahrain. but local banks still have well-established franchises in domestic business. Foreign banks are essentially engaged in financing large infrastructure projects and investment banking.. with combined lending amounting to around 16 percent of banks’ officially reported real estate lending and 3 percent of banks’ private sector credit.A. but these have a marginal share of financial sector assets.E. and Ahli United Bank) constitute 41 percent of the total banking sector’s assets. The rest of the nonbank financial institutions (NBFIs) account for a marginal share of the total financial system’s assets. The sector is highly concentrated with the three largest local banks (Qatar National Bank. The financial sector altogether contributes about one-third of the country’s GDP and employs around 3 percent of its workforce.E. the General Organization for Social Insurance. The three largest retail banks (Bank of Bahrain and Kuwait. U.E. Public ownership (including quasi government) is fairly extensive in four banks and reaches 80 percent in the largest bank. investment banking. Qatar. there are three specialized government-owned banks operating mainly in developmental and housing projects. has the second largest banking sector in the GCC after Bahrain. . with assets at around 68 percent of GDP at end-2008. Highlights of the GCC Financial Sector The following are the main highlights of the structure of the financial sector in the individual GCC countries. and Doha Bank) accounting for close to 70 percent of total assets. Bahrain. The banking system in Qatar is the third largest after Bahrain and the U. Saudi Arabia. Together with the U. includes two important Islamic mortgage finance companies. The banking system is the smallest in the region with a share of 66 percent of GDP. the financial sector of the U. The sector is only moderately concentrated with the three largest banks (National Commercial Bank. and Al Rajhi Bank) accounting for 45 percent of total assets. the National Commercial Bank. This sector has been strongly affected by tight global liquidity conditions and falling asset prices.A. with the ability to obtain funding through deposit taking. Bank ownership is still predominantly held by the government.A. with total assets accounting for over 140 percent of GDP. The U. In addition to the banking sector. The authorities are currently considering the possibility of converting the two companies to a bank. The retail banking sector is the largest in the region. The banking sector is highly concentrated with the largest two banks (Bank Muscat and the National Bank of Oman) controlling more than 55 percent of the sector’s assets. Emirates Bank International. Kuwait. The two companies have been highly dependent on short-term funds from the domestic banking sector to finance their long-term lending operations. The banking sector is highly concentrated with the two largest banks (National Bank of Kuwait and Kuwait Finance House) accounting for half of the banks’ total assets. Bahrain’s retail banking sector is the least concentrated among the GCC systems.The two companies are being restructured by a federal committee after the Government announced in November 2008 that they were to be merged. the wholesale banking sector has been strongly affected by the global crisis. As a result. and project finance services to the rest of the region.A. and Abu Dhabi Commercial Bank) account for 32 percent of total assets.E. Bahrain also has a vibrant wholesale banking sector1—the largest of which is Arab Bank Corporation—which provides off-shore. The banking system is the least concentrated and the three largest banks (National Bank of Abu Dhabi..and off-balance sheet) of around 102 percent of GDP—around 42 percent of which is on account of proprietary trading. In addition to the banking sector. In addition to banks.6 Box 1. There are also three autonomous government institutions (the Pension Fund. Commercial Bank of Qatar. The banking sector is relatively small. There are five sizable specialized credit institutions with asset size close to half that of the banking sector.E. In addition to banks. Oman. Bahrain is home to a number of investment funds with assets under management close to 80 percent of GDP. with assets around 94 percent of GDP at end-2008. In view of its linkages with global financial markets. Samba Financial Group. with total assets at around 1200 percent of GDP.A. there are 95 Investment companies (ICs) with total assets (both on. some of the largest government projects are directly financed by foreign banks. in addition to six finance and leasing companies.

E. forward trading.5 63.A. respectively. Local debt markets are underdeveloped. 2007 Bahrain Kuwait Oman Qatar Saudi Arabia U.000 million.0 81. pension fund assets amounted to 3. but fell back to $650 billion (73 percent of GDP) by mid-2009. but larger. However. proprietary. Moody's. and 20. GCC issuers boosted the use of sukuk until mid-2008 when sukuk issuance worldwide grew from around $5 billion per year in 2001–04 to $32 billion in 2007. The insurance sector remains small and is focused on property/casualty risks. portfolio management.A. and private placements) and private equity.5 percent in Bahrain (end-2006). Investment banks in Bahrain are fewer. before falling to $15 billion in 2008. and authors' estimates. acquisitions. local and international fund management and financial services such as corporate finance advisory services (mergers. Nonbank finance companies are scarce.5 66. For example. particularly as governments drew down outstanding debt in recent years.E. and locallyincorporated banks (domestically owned and subsidiaries of foreign banks). (as percent of total banking sector assets) Top 3 banks Top 5 banks 40.5 49.E.. Minimum domestic loan sizes and deposits are $27 million and $100. GCC markets generally lack institutional investors whose long-term horizons help dampen volatility. had lending worth only about 3 percent of the banking sector’s loans. They contribute little to the accumulation of long-term resources for investment. “pay-as-you-go” schemes. now in restructuring.2 percent of GDP in Saudi Arabia (end-2007). Contractual savings are underdeveloped and dominated by public pension systems. 5 . Loan limits do not apply to interbank loans or to investments in locallyincorporated banks.7 percent in U.8 47. Stock market capitalization has grown strongly in recent years. and are most important in the U. 2. although the two largest companies. underwriting.4 79.5 Their relatively large asset size and increasing reliance on the banking sector for financing has raised their systemic risk and possible spillover effects on the banking sector. Wholesale banks include branches of global banks. IPOs.6 Sources: Country authorities.1 67.7 45. banks from the Middle East and South Asia.0 31. ICs provide asset management services such as brokerage.6 81.7 GCC: Concentration of the Banking System.A. __________________________ 1/ Wholesale banks are prohibited from accepting retail deposits (both domestic and foreign) and are subject to minimum loan limits to the domestic economy. which are mainly defined benefit. GCC market capitalization leapt from $117 billion (29 percent of GDP) in 2003 to $1. (end-2007). most of it dollar-denominated by GCC entities.0 65.1 trillion (177 percent of GDP) in 2005.

A.A. 12 percent in Oman. although the majority of this is attributed to quasi government ownership.A. (Table 2.A.’s domestic banking system stands out with almost half of the domestic sector’s assets owned by the public sector. 7 . respectively). The domestic banking sector in the GCC (i. all GCC countries have limits on foreign ownership: Oman (35 percent).E.E. and are negligible in Kuwait and the U. Data on bank ownership is as of end-2007 in order to abstract from capital injections by the public sector in 2008 and 2009 in response to global developments. the cross-border presence of GCC banks and other foreign banks is limited and is mostly in the form of branches. is important.5 percent) and the Royal family (10.E.E. and 10 percent in Kuwait. with some exceptions. and Qatari governments in 2008-09. and Bahrain and Oman have sizeable joint ventures in the domestic banking system with foreign investors.A. Saudi Arabia (40 percent for non-GCC nationals and 60 percent for GCC nationals).A.E. However. 10 percent in Qatar. Market shares of foreign banks by total assets in the rest of the GCC are 2 percent in Saudi Arabia. Therefore. and Appendix III).7 Oman and Saudi Arabia have a relatively high public sector ownership (30 percent and 35 percent. As noted above.E. Joint ventures in the domestic banking sector in Saudi Arabia are small. except in the U.3 percent). mostly by non-GCC investors (around 13 percent of the domestic sector’s assets).8 The ownership structure of banks6 The banking sector is largely domestically owned. (40 percent). a significant amount of which is attributed to direct ownership by the Government (41. the U. at 57 and 21 percent of total assets. including GCC banks. and U. as these should be viewed as temporary. direct cross-border linkages within the GCC and also with other foreign jurisdictions through cross-border ownership are relatively low.A.. and Bahrain have important foreign bank presence in the banking sector. royal family ownership in the GCC is almost nonexistent. In view of the above. in many cases as single branches. foreign bank presence in Bahrain and the U. ranging between 13 percent in Kuwait and over 52 percent in the U. mostly from the GCC.e. Contrary to common perceptions. banks that are majority owned by domestic shareholders) continues to have significant public and quasi public sector ownership.E.A. 6 The discussion below is based on end-2007 data to abstract from the impact of capital injections by the U. respectively. Except for Bahrain. The U. Kuwait and Qatar (49 percent). This reflects entry barriers and licensing restrictions for foreign banks.E. but its extent varies considerably.

Sources: Bank's annual reports. end-2007 1/ (In percent of total assets) Public Total 20. 1/ The domestic banking system refers to banks that have domestic majority ownership. 10 credit to the private sector in the GCC 5 0 registers the highest rates among Bahrain Kuwait Oman Qatar Saudi Arabia U. high rates of credit growth witnessed in some GCC countries during 2003–08 have increased these systems’ vulnerability to a downturn in economic activity.E.0 12.0 30.2 … Bahrain Kuwait Oman Qatar Saudi Arabia U.9 Table 2.6 52. Qatar and the U. experienced significant private sector credit growth at around 45 and Figure 1.3 Quasi Domestic Government 2/ Royal Family Government 2/ 11.0 0.0 … 19.0 18.E.3 Private Domestic Total 41.0 16.E. GCC: Ownership Structure of the Domestic Banking System.4 13.A.7 3.2 0. When 20 15 measured in relation to non-oil GDP.A.0 52.0 0. RECENT TRENDS IN CREDIT GROWTH The GCC region has witnessed in recent years rapid credit growth to the private sector (Figure 1). Therefore. and authors' calculations. emerging countries.0 75. III. positive impact of increasing bank intermediation in the GCC on economic activity.5 10.3 20.0 10. Over the period 2003–08.0 … 13.A.0 40.1 … … … 30.7 0.4 9.0 14.0 47. respectively. GCC: Average Annual Private Sector Credit Growth.5 41. Notwithstanding the Source: Country Authorities.8 87. In view of this 40 35 growth. as international experience shows. the ratio of private sector credit 30 to GDP compares favorably to other 25 emerging countries (Figure 2).4 … 17.7 3.0 … 1.0 20.0 13. high rates of credit growth during an economic upturn almost invariably lead to high levels of credit defaults when economic activity slows.6 Private Foreign Total GCC Non-GCC 37.8 34. 2003-2008 35 percent. while Oman (In Percent) 50 had the slowest rate in the region at 45 around 20 percent. 2/ Quasi government includes public pension funds and social security.0 3.7 35.0 … 0.0 1. .

The impact was translated into a concomitant increase in the demand and supply of credit. Selected Emerging Countries: Private Sector Credit to GDP.8 Higher oil prices have boosted government spending and non-oil GDP growth and.A.10 Figure 2. deposits in the banking sector grew as private sector income increased (Figure 4). and authors' estimates. This in turn boosted banks’ lending capacity. Interbank liabilities are significant in Kuwait and also important 8 See Crowley (2008) and Hesse and Poghosyan (2009). GCC BANKING SECTOR BALANCE SHEETS: STYLIZED FACTS The banking sector in the GCC still relies on the traditional deposits and loans as the main sources and uses of funds (Figures 5 and 6. and authors' estimates. Oil Prices and Private Sector Credit Growth Growth of Credit to Private Sector (LHS) Average Oil Pirces (RHS) ($) 80 Figure 4. GCC. GCC: Deposits as Percent of Non-oil GDP 2002 2008 160 140 60 120 100 80 40 60 40 20 20 0 0 Bahrain Kuwait Oman Qatar Source: IFS. Saudi Arabia U. as a result. Albeit indirectly. (%) 40 30 20 10 0 2002 2003 2004 2005 2006 2007 Source: IFS. As for demand. and Appendix IV). IV. spurred business confidence and local and regional private sector activities and investments. although it has increased in some countries particularly in 2006 and 2007 (Figure 7).E. . credit to the private sector has been spurred by the increase in international oil prices (Figure 3). 2008 (In percent) 100 90 80 70 60 50 40 30 20 10 0 Qatar Turkey UAE Russia Oman Jordan South Africa Kazakhstan Egypt Saudi Arabia Morocco Kuwait India Brazil Bahrain Ukraine Tunisia Lebanon Colombia Source: IFS and World Economic Outlook (IMF). banking sector credit was reoriented from the public to the private sector. where the latter expanded economic activities and investments (see Figure 9). The role of foreign liabilities as a source of funding is still limited. As regard to supply. Figure 3.

A. .11 Figure 5. 11% 1% 27% 1% 72% 50% Due to Banks Customers Deposits Bonds Other Liabilities Minority Interest Total Shareholders' Equity Source: Banks' Annual Reports f rom Zawya.E. and authors' estimates. 2008 Bahrain 10% 2% 9% 1% 5% 10% 24% Kuwait 15% 64% 60% Oman 14% 5% 2% 5% 1% 16% 16% Qatar 16% 63% 62% Saudi Arabia 14% 5% 8% 11% U. GCC: Banking Sector Liability and Equity Structure.

with CB Due from Banks Loans/Islamic Finance Products Securities Investments Fixed Assets Other Assets Source: Banks' Annual Reports f rom Zawya.12 Figure 6. 2008 Bahrain 2% 6% 8% 9% 16% Kuwait 2% 9% 13% 8% 8% 59% 60% Oman 1% 2% 1% 9% 8% 12% 8% Qatar 9% 5% 16% 68% 61% Saudi Arabia 16% 10% 9% U.A. GCC: Banking Sector Assets Structure. .E. and authors' estimates. 1% 8% 6% 5% 1% 22% 51% 71% Cash & Bal.

13 Figure 7. The funding pattern. which increases 9 Islamic banks’ finance products include Murabaha. to a lesser degree. and IMF staff estimates. 16.) of banks’ portfolios. This has exacerbated the maturity mismatches between assets and liabilities in GCC banks in general. up to 23 percent in Saudi Arabia. Mudaraba. GCC banks continue to have a very small share of bond financing (up to 2 percent of total liabilities). Istisnaa.A.E. GCC: Foreign Liabilities to Total Liabilities. In the current crisis. An analysis of the 50 top GCC banks (conventional and Islamic) based on Bankscope data indicates that. respectively. which is an important share of banks’ balance sheets by international comparison (Figure 8). however. has been relatively volatile. Ijara. 2003–08 (In percent) 30 Kuwait Oman Saudi Arabia 30 Qatar U. equities. Banks’ assets are mainly composed of loans and. in Oman and Qatar at 27. although there is no indication that these assets were held in high risk asset classes. Of which. securities investments. Note: Bahrain is excluded from the chart as the relicensing of some wholesale banks into retail banks in early 2007 complicates the analysis of the ratio of foreign liabilities to total liabilities. International Monetary Fund (2009). 10 . and other Islamic banking products. or financial derivatives.10 Funding of credit growth A breakdown of credit growth during 2002–08 into its contributing factors confirms that client deposits have been the main contributor to credit growth for the six countries over the period (Table 3). banks have registered significant losses related to these investments through mark-to-market valuations of their trading portfolios. Loans and Islamic finance products constitute between 50 percent (Saudi Arabia) and 71 percent (U. banks in the GCC held 18 percent of their portfolios in securities at end-2008. Musharaka. 9 and securities range between 8 percent in Qatar. only about 1 percent was held in equities or derivatives (2 percent in the case of Islamic banks). and 16 percent of the total balance sheet (end-2008).Dec-05 Jul-06 Feb-07 Sep-07 Apr-08 Nov-08 05 Sources: Country authorities.E.A. 25 20 15 10 5 0 25 20 15 10 5 0 Jan-03 Aug-03 Mar-04 Oct-04 May. on average.

CREDIT CONCENTRATION AND RISKS The concentration of credit portfolios in GCC countries varies considerably within the GCC (Figure 9).E. As oil prices declined in the second half of 2008.A.11 A closer look shows that foreign liabilities have played a significant role in explaining the rapid credit growth for the U.A.E. the increase in the four countries reflects short-term capital inflows in speculation of an appreciation of GCC currencies. Banks’ exposures to the construction and real estate sectors are significant in Kuwait and Bahrain and are also important in Qatar and the U. Aj are bank assets other than credit to the private sector. but more importantly to direct external financing of large real 11 The break down follows the following formula: k CPRt Lit At j Lit 1 At j1  i   j  CPRt 1 i Lt 1 CPRt 1 j 1 At 1 CPRt 1 Where CPR is credit to the private sector. in 2006 and for Oman. international capital markets dried out.E. to a lesser extent. relates largely to banks’ issuance of foreign debt to support credit growth and also to address asset/liabilities maturity mismatches through the issuance of medium-term notes. This exposure increased sharply since 2002 in Qatar and Bahrain and.14 banks’ funding risk generally. V.A.E.A. This could be attributed to the presence of domestic real estate and mortgage finance companies (although these are relatively small). banks’ exposure to the construction and real estate sectors appears relatively low in view of the construction and real estate boom that the country witnessed during this period. Figure 8: International Comparison of Banks' Holdings of Securities 45 40 35 30 25 20 15 10 5 0 India Turkey Indonesia Norway Colombia Canada Germany Thailand Spain Lebanon Saudi Arabia Costa Rica Malaysia United States Mexico Korea Philippines Bahrain New Zealand Sweden South Africa Singapore Hungary Kuwait Oman UAE Qatar Panama Australia (in percent of total assets) Source: A. in 2007. In 2007. and Li are bank liabilities including capital . Sy (2005).E. foreign financing markedly declined as speculative capital inflows reversed and. Qatar. U. to a lesser extent. Kuwait. and the U.A. The increase in 2006 in net foreign liabilities in the U. Saudi Arabia.

and authors' calculations. GCC: Contribution of Balance Sheet Items to Private Sector Credit Growth. WEO.15 Table 3. 2002-08 (percent) Cash and Reserves Bahrain 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 -13 -68 2 -20 -4 -57 6 23 46 11 -21 -23 -10 26 -248 -285 38 -46 -11 -76 -3 19 -7 -12 -8 -4 -49 16 -132 76 -6 -1 -48 -56 7 14 -14 -25 -9 -15 -104 37 Net claims on Government 18 -18 11 -9 14 12 14 28 12 53 24 24 -24 -2 379 -127 51 65 10 9 25 205 6 23 26 34 2 -109 -4 -182 1 13 3 -23 -39 20 -42 1 7 -6 -3 20 Foreign assets -12 -84 -47 -35 -292 -604 -116 -53 1 -51 -30 -47 -48 -30 -832 -39 -114 -55 -85 -3 -20 137 -80 -101 -65 -94 -55 -17 21 64 -14 1 -96 -18 -3 -90 3 -35 -52 -51 21 -2 Foreign liabilities 11 105 82 -4 188 532 161 59 -6 -7 22 28 63 -14 -446 -183 -43 -26 47 48 1 -10 29 56 11 58 95 48 -89 -13 7 16 -24 45 5 0 2 29 46 82 85 -13 Net foreign liabilities -1 21 35 -39 -105 -72 45 6 -5 -58 -9 -19 15 -44 -1277 -223 -157 -80 -39 44 -19 127 -51 -46 -54 -36 40 31 -68 51 -7 17 -120 28 1 -90 5 -6 -6 32 106 -16 Client deposits 61 170 24 135 95 127 56 51 41 83 68 90 101 115 1096 117 44 142 108 95 51 -179 95 93 91 93 70 131 252 129 78 49 267 128 38 103 125 109 79 63 97 34 Other debt … … … … … … … 56 -4 -29 -19 8 4 -18 0 0 0 4 5 -1 30 5 1 3 0 -1 3 11 -5 10 -2 -2 -2 -1 7 0 0 0 0 0 0 11 Other items net 12 -26 11 10 54 39 -21 -75 -3 19 31 9 -12 24 88 455 85 -2 16 -21 0 -42 26 -15 18 -12 3 9 36 10 25 3 -56 3 19 26 9 2 3 3 -11 2 Capital 23 21 18 23 46 52 0 11 14 20 25 12 27 -2 62 162 39 18 11 49 15 -34 29 54 27 25 31 21 21 6 11 19 56 21 16 28 17 19 27 23 16 12 Kuwait Oman Qatar Saudi Arabia UAE Source: IFS. .

Saudi Arabia. which is as of end-2008. which lowers the risk of lending to this category. although credit to government declined from much higher levels witnessed in the early 2000s.E. 2008 data for Kuwait reflects end-September 2008. estate projects. Kuwait. Within household lending. lending to the public sector has declined sharply as GCC governments benefited from rising oil prices in recent years and therefore a decline in the need to finance domestic projects through bank borrowing.. Saudi Arabia. . and lending for equity investment in Kuwait (Figure 10). Direct credit to the government constitutes a marginal share of loans in most countries with the exception of Qatar. where it constitutes more than 27 percent of loans. GCC banks have a relatively high concentration of credit to large business groups and high net worth individuals.and for the U. As regards large exposures. inculde both residential and commercial. fir the U.16 Figure 9. On the other hand. and the U.A. although risks remain in 12 Detailed data on household lending is only available for Bahrain.A. 0 Households Real Estate and Constructions Trade Manufacturing Financial Others Government 5 0 Households Real Estate and Constructions Trade Manufacturing Financial Others Government Source: Country authorities.12 Household loans in the GCC are generally limited to salaried individuals.A. GCC: Bank Loans Sectoral Distribution (in percent) 60 40 35 30 25 20 15 10 5 0 Households 45 40 35 30 25 20 15 10 5 0 Households 35 30 25 20 15 10 10 Real Estate and Constructions Trade Manufacturing Financial Others Government 30 Real Estate and Constructions Trade Manufacturing Financial Others Government 20 10 0 Households Real Estate and Constructions Trade Manufacturing Financial Others 40 30 Bahrain 50 Kuwait 2002 2008 Oman 50 45 40 35 30 25 20 15 10 5 0 Households Real Estate and Constructions Qatar Trade Manufacturing Others Government Saudi Arabia 25 20 UAE 15 1/5Data for Bahrain relates to the retail banking sector only. 2008 data reflects end.E. and the U. with levels specifically high in Kuwait.E.E. Note: Construction and Real estate in Bahrain. and authors' estimates.E. Households sector in Oman and Qatar might inculde residential mortgages.E it reflects end-June except for CAR. Household lending in Saudi Arabia for consumption or possibly equity investment appears to have also increased as indicated by the increase in the “other” category from around 46 percent of household loans to 72 percent during 2002–08.. Kuwait.A. Credit to nonbank financial entities has witnessed a notable increase in Kuwait and the U.A. there has been a marked increase in consumer lending in the U.. in particular by Dubai corporates.A.

This increases the credit risk associated with this category. The following is an analysis of the main risk exposures for the GCC. Kuwait. the retail banking portfolio in Bahrain is highly exposed to construction and real estate (33 percent of total loans) and the household sectors (23 percent).14 Additionally. these are mainly composed of loans facilitating equity margin purchases (36 percent of total household lending. Household loans (excluding mortgages) and nonbank financial institutions (mainly to investment companies) are also important in banks’ loans portfolios accounting for 16 and 12 percent of total loans. in cases where there is a significant slowdown in economic activity). Overall. The Real estate loans for households are included in the “construction and real estate. or close to 12 percent of banks’ loan portfolios in 2008). household loans in Bahrain are mainly secured by salary which mitigates the risk of default. which constitute close to 50 percent of total loans. 14 13 . Bahrain. banks are highly exposed to Kuwait’s troubled investment companies.” These account for around 52 percent of household lending. The banking portfolio is highly exposed to the real estate and construction sectors. To address pressures created by the current global crisis. by country.17 relation to situations that involve significant layoffs of expatriate workers (for example. With regard to household loans.13 This highly exposes Kuwaiti banks to market induced credit risk. However. respectively. the Central Bank of Kuwait has recently prevented banks from liquidating margin trading accounts that fall below margin to limit the impact on the market and also on households.

The loan portfolio appears well diversified with respect to the corporate sector with trade being the main sector at 25 percent of total loans (mirroring the structure of the economy). construction and real estate. corporate governance and transparency are still modest. The banking sector is highly exposed to the construction sector and the highly speculative real estate sector (25 percent of total loans. and government sectors. similar to other GCC countries. GCC central banks do not report bank lending for equity purchases separately.15 Rising consumer indebtedness raises concerns as Omani households are highly leveraged with household loans accounting for 17 percent of GDP. similar to the rest of the GCC countries. Oman. concentration of credit to high net worth individuals could pose risks. an important share of these loans might be for securities investments. Real estate loans in Saudi Arabia are marginal compared to the rest of the GCC at less than 10 percent of total loans. excluding household mortgages). personal loans in GCC countries might have been used for this objective. is that household loans are largely extended to those with a salary assignment. Additionally. The exposures are mostly to family-owned businesses.18 stressed domestic investment companies have put strains on the banking sector during the current crisis. However. which account for 26. Except for Kuwait. and 27 percent of total loans.A. The banking sector is mostly concentrated in the household.E. This has posed important risks to Omani banks historically: banks’ asset quality deteriorated in 2000–02 due to the financial troubles faced by large corporate clients to which most banks were exposed. Qatar. respectively. although data is not readily available on the uses of these loans. See Mansur and Delgado (2008). Two of the largest investment companies. . have already defaulted on some or all of their debt (the events occurred in January and May 2009). where despite improvements. including household mortgages). U. mainly active in the real estate and stock markets. Prudential regulations in Saudi Arabia curb credit growth risks by requiring banks to obtain Saudi Arabia Monetary Authority’s approval for foreign lending and by imposing statutory caps on individual indebtedness. however. which accounts for approximately 40 percent of total loans. a high proportion of the corporate loan portfolio is in a handful of large exposures. Oman’s banking sector is highly exposed to the household sector. However.16 This could be a potential risk due to risk concentration and the difficulty arising from monitoring margin lending. As regards the household sector. Household loans in turn are well diversified with no dominating sub-sector. but are in the process to negotiate or have successfully completed debt restructuring agreements. some margin lending for equities could be a source of risk. Trade is also an important sector in bank loans accounting for 13 percent of total loans. One mitigating factor. and to the household sector (20 percent. However. Saudi Arabia. 20. The banking portfolio 15 16 The Central bank of Oman established a lending cap limiting personal loans to 40 percent of total loans.

as regard to the different categories of banks.E. raising their CAR to 17. declining significantly from 2005 when it stood at 17 percent. Risks to capital adequacy. was the lowest among the GCC countries in 2008 at 13. banks have received capital injections by the government in 2009. Financing.19 The latter could impact banks’ CARs through the valuation of risk weighted assets.18 The high capitalization levels of the banking sectors is related to high profitability.3.9 percent in 2008 (versus 17 percent in 2007).3 in 2008 (versus 16 percent in 2007).E.E has raised its minimum CAR in response to the current crisis from 10 percent to 11 percent. is mainly directed to large private business groups or governmentowned related enterprises and there is currently a high level of concentration of credit risk due to large financings of a few family-owned businesses and sizeable government-related entities. 19 18 . In 2008.1 percent in 2008 (versus 21 percent in 2007). 2009. in addition to the risk of credit rating downgrades of U. The U. In Bahrain. For Islamic wholesale banks. Standard and Poor’s downgraded several Dubai government related entities as a result of a plan to restructure debt by Dubai World. 17 Currently. The CAR of the banking sector in the U. exist as the fallout from the crisis on the asset quality of banks continues to unfold.E. although they have declined significantly in recent years as a result of rapid credit growth and increasing leverage. 2010. the locally incorporated retail banks held the lowest CAR at 18. U. VI. which accounts for around two-thirds of total loans. however.6 percent by June 2009 and making them among the best capitalized in emerging markets. FINANCIAL SOUNDNESS Capitalization The banking sectors in the GCC countries are well capitalized across the board with capital adequacy ratios (CAR) well above minimum CARs (Table 4).3 percent (versus 19 percent in 2007). while their Tier 1 capital to RWA stood at 17. Financial Stability Report).A. however. However.A. while their Tier 1 capital to RWA still stood at a comfortable 10.19 is concentrated in the corporate sector.A.A. corporates by major rating agencies. 10 percent in Oman and Qatar.4 percent. Conventional wholesale banks held a CAR of 19. the profitability of the banking sectors have been affected by the higher provisioning requirements related to the crisis. and comfortable leverage ratios by international comparisons. 11 percent in the UAE. and to 12 percent. the minimum regulatory CAR is 8 percent in Saudi Arabia. At end of November 2009. the CAR was also robust at 25 percent in 2008 (Central Bank of Bahrain.17. and 12 percent in Bahrain and Kuwait. impacting the ability of banks to increase capital internally. to become effective June 30. effective September 30. Islamic retail banks’ CARs stood at very high levels as well with a CAR of 22 percent and Tier I capital of 24.

9 13.3 22.1 9.8 11.4 … 12.3 2.3 3.6 5.9 4.0 0.8 16.5 24.6 28.6 … … 113. and November for the U.3 3.E.1 2007 21.5 1.5 95.8 17.6 … … … … … 10.0 18.8 90.1 26.0 6.7 … 18.3 83.3 30.9 2.1 2.9 16.4 2.7 77.4 18.4 4.1 20.9 2.1 … … 2.9 27.7 2.7 2. 2003-08 1/ 2003 Capital Adequacy Ratio Bahrain Kuwait Oman Qatar Saudi Arabia United Arab Emirates Capital to Assets Bahrain Kuwait Oman Saudi Arabia United Arab Emirates Return on Equity NPLs to Total loans Bahrain Kuwait Oman Qatar Saudi Arabia United Arab Emirates Provisions to NPLs Bahrain Kuwait Oman Qatar Saudi Arabia United Arab Emirates ROA Bahrain Kuwait Oman Qatar Saudi Arabia United Arab Emirates ROE Bahrain Kuwait Oman Qatar Saudi Arabia United Arab Emirates 23.7 18.8 5.2 13.6 5.0 2.8 25. which is for end-2008).4 14.5 … … 14.0 111. 1/ Data for Bahrain reflects the retail banking sector only.0 6.7 15.1 12.4 2.7 21. GCC: Financial Soundness Indicators.9 100.5 21.2 2.1 3.1 14.7 2.0 14.5 22. 2009 data is as of June for Oman.2 2.5 2.7 4.5 20.0 21.0 84.3 67.6 21.8 2.5 10 10.7 17.8 31.8 20.0 … 4.3 16.3 11.4 27.3 202.3 68.5 2.4 84.3 6.5 4.7 … 12.3 85.3 11.9 9.3 98.5 22.2 88.3 18.1 1.7 107.2 153.2 20.5 38.3 4.9 … 12.6 94.8 27.8 8.7 12.4 2.4 128.1 16.4 2008 18.0 14.8 95.8 109.8 17.1 2. September for Qatar (except for the provisioning rate.3 3.6 2.0 84.3 1.9 15.6 2009 … … 15. 2008 data for Kuwait is as of September 2008.5 15.2 1.5 22.1 17.5 87.8 2.8 3. .9 74.2 2.0 … 12.8 17.20 Table 4.8 12.2 20.0 18.6 15.1 Source: Country authorities.3 17.7 78.3 67.3 18.3 3.6 175.4 17.2 2.3 3.6 14.1 87.3 15.8 12.2 9.6 24.8 … … 79.4 94.0 2.9 21.7 13.3 103.5 15.6 25.3 19.4 7.2 97.3 2.0 92.5 1.2 3.3 … 11.1 5.9 17.4 2006 22.2 3.0 7.7 8.6 … 1.9 2.3 18.6 2.2 2.0 2.0 11.6 8.1 16.4 18.1 3.7 13.1 3.0 1.5 68.7 14.8 18.9 … 10.4 (Percent) 2004 2005 25.4 28.0 182.2 2.2 1.A.8 20.6 1.8 12.1 12.8 11.2 2.0 13.9 8.9 16.7 142.4 28.8 2.0 2.2 1.7 127.0 … … 2.2 43.9 8.0 1.0 82.0 4.6 … 11.

Additionally. ranging from 53 percent of gross operating income in Qatar in 2008 to 80 percent in Saudi Arabia (Figure 11). Dubai World owns two subsidiaries. Nakheel and Limitless.5 in 2007). The coverage ratio of provisions to NPLs across the GCC is very high by international standards.2 percent. However. 2009 that it will seek a debt standstill and restructuring on debt related to parts of its business. Net interest margins represent the main source of income. NPLs stood at low levels in 2008 by international comparisons despite the crisis.20 There are. a number of GCC banks also had significant exposures.2 for the wholesale conventional (versus 2. 21 20 . as these sectors have been hit hard throughout the GCC. continued risks of a possible worsening of asset quality as the fallout from the crisis continues to materialize on banks’ balance sheets. while the Islamic wholesale banks had the highest NPL ratio at 4. and possibly 2010. and in systems that have significant concentration in construction and real estate. In addition to profitable subsidiaries such as Dubai Ports. This risk is heightened in countries with the highest credit growth rates prior to the crisis. however. the recent announcement by Dubai World— one of the three major Government-related holding companies in Dubai—on seeking a debt standstill and restructuring could have an important impact on U. although the underlying trend is masked by the high credit growth rate during this period. Returns on equity (ROE)—hovering around 20 percent—and As regard to the different categories of banks in Bahrain. 21 The impact. Profitability The banking sectors in the GCC have stable sources of earnings from traditional banking. conventional retail banks had the lowest NPL ratio at 2.A. while loan loss provisioning affected Kuwaiti banks most. in addition to Saudi banks’ exposure to these two groups.2 for the Islamic (versus 3. The ratio of nonperforming loans (NPLs) to total loans has been on a declining trend since 2003.3 percent.21 Asset quality The asset quality of GCC banks has improved significantly over the past five years. These have been affected significantly by the tightening of global financial conditions and the bursting of the real estate bubble in Dubai in late 2008.E. the supervisory authorities in the GCC have required banks to take substantial general loan loss provisions in anticipation of rising amounts of NPLs in 2009. Notwithstanding. (Central Bank of Bahrain. Dubai World is a Government-related holding company and is fully owned by the Dubai Government. however. Investment losses mostly affected Saudi and Bahraini banks. mainly real estate. which are engaged in mega real estate projects. is still unclear pending the conclusion of the debt restructuring process. losses from investments in securities in addition to increasing provisions have weighed on banks’ operating profits in 2008-2009 across the GCC (Figures 12–13). banks and other GCC banks that have exposure to this group. Dubai World announced on November 25. Wholesale banks’ NPL ratio increased in 2008 with a ratio of 3. The high concentration on lending to large business groups is also an issue as indicated by the recent default of two prominent Saudi conglomerates. Financial Stability Report). when it was at double digits.5 in 2007) and 4.

In view of limited global linkages.1 percent compared to an ROA of 0. The wholesale banking sector in Bahrain was also hit significantly as a result of the crisis. the Oman banking sector has been little affected by the global crisis.6 percent in 2007 (Central Bank of Bahrain.1 billion and $0. although the latter has been affected relatively more by the current crisis (Figure 13). respectively) as a result of impairments to their investment portfolios in advanced economies. 24 23 22 .A. The bank was recapitalized through a combination of capital injections by shareholders (68 percent) and the government (32 percent) via the Kuwait Investment Authority (KIA). with Bahrain and Oman being the least profitable.E. Banks have also had significant government support that helped reduce their losses. Islamic retail banks in Bahrain continued to be very profitable (with an ROA of 5 percent.. the government purchased equity and real estate assets of banks up to $6 billion (6 percent of GDP) during the first half of 2009. it was negatively affected by global and domestic developments in the first half of 2009.9 billion. up from 4 percent in 2007). more recent data indicate that while bank profitability increased in 2008. In the U. Wholesale banks suffered an overall net loss in 2008 with an ROA at -0.22 returns on assets (ROA) stood at comfortable levels by international comparisons. Gulf Bank. the banking sector in Kuwait has been one of the most profitable within the GCC in recent years. while banking fees and commissions. Profitability is likely to be further jeopardized by increasing provisions due to the continuing slowdown in economic activity and the bursting of the real estate bubble. ROA and ROE data for Kuwait is for Q32008 and therefore does not reflect higher provisions incurred in Q4 2008. While the Qatari economy is more open. Financial Stability Report). Provisions could also potentially rise in relation to exposures to Dubai World. Together with Saudi Arabia. and investment income constitute the rest. Gulf International Bank and Arab Banking Corporation derived massive losses ($1.24 On the other hand. FX income.23 The retail banking sector in Bahrain has been the least profitable in the region in the last few years and returns have further suffered in 2008 and 2009. the economy (and consequently banks) have been least affected by the global crisis due to the thriving gas sector. the third largest bank in Kuwait. It is also worthwhile noting that Qatari banks have the most diversified income within the GCC with net interest margins contributing with 50 percent.22. suffered significant losses in 2008 on account of customerrelated foreign exchange derivatives transactions.

GCC: Income Analysis of GCC Banks.Q1 2009 (In percent of gross income) Bahrain 200 150 100 50 0 -50 -100 2005 2006 2007 Oman 120 100 80 60 40 20 0 2005 2006 2007 2008 2009 120 100 80 60 40 20 0 2005 2006 2007 U. 120 100 80 60 40 20 0 -20 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 2008 2009 2008 2009 120 100 80 60 40 20 0 -20 2005 2006 2007 Qatar 2008 2009 Kuwait Saudi Arabia 120 100 80 60 40 20 0 -20 Net interest income FX income Fees & Commissions Investments income Source: Banks' annual and quarterly reports from Zawya.E. .A.23 Figure 11. 2005. and authors’ estimates.

. GCC: Change in Bank Profitability 2007-2009 (In percent) 40 20 0 -20 -40 -60 -80 Bahrain Kuwait Oman Qatar Saudi Arabia Abu Dhabi Dubai GCC 2008/2007 Q3 2009/Q3 2008 40 20 0 -20 -40 -60 -80 Source: Kamco Research. 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Provisions Investment income Sources: Banks' annual and quarterly reports from Zawya. and Authors' estimates. excluding investment income) Bahrain 40 30 20 10 0 -10 -20 -30 -40 -50 -60 60 40 20 2005 2006 2007 2008 2009 0 -20 -40 -60 -80 2005 2006 Kuwait 2007 2008 2009 Oman 25 20 15 10 5 0 -5 -10 -15 60 50 40 30 20 2005 2006 2007 2008 2009 10 0 -10 2005 2006 Qatar 2007 2008 2009 Saudi Arabia 15 10 5 0 -5 -10 -15 -20 -25 -30 30 25 20 15 10 5 0 -5 -10 -15 -20 U. Figure 13.24 Figure 12.A. GCC: Banks' Provisions and Investment Income.E. and Fund staff estimates. 2005-Q1 2009 (As percent of gross operating income.

A. Figure 16.25 Liquidity Liquidity in the GCC banking sector has been severely squeezed in 2008 with the reversal of speculative foreign deposits and tight liquidity in international capital markets.E. Banking Sector Liquidity in Selected Countries. and U. The 100 injection of liquidity by the GCC 80 authorities via central bank repos and 60 direct placements of government deposits restored liquidity conditions 40 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 quickly. Liquidity ratios for all countries ranked on the low side by international comparisons. Figure 14. 1/ Includes foreign currency interbank lending extended by foreign bank branches in GCC countries. Saudi Arabia. inflows as indicated by the significant rise in its liquidity ratios in 2007. GCC: Commercial Banks' Reserves with Central Bank.A. Figure 15. GCC banks had become increasingly reliant on external financing. GCC: Banks' External Financing 1/ 35 30 25 20 15 10 5 Bahrain Oman Saudi Arabia Qatar U. 180 160 140 120 100 80 60 40 . indicators show that liquidity conditions have returned to their 2006 levels or even above by March 2009. which increased fourfold since 2003 peaking to $103 billion in September 2008 (Figure 14).E.A.A. Liquidity was 140 squeezed further following Lehman’s 120 collapse in September 2008. The Short-term assets to customer and short term funding U. December 2007=100 Liquidity conditions started to tighten 180 Bahrain Kuwait in early 2008 as speculative capital Oman Qatar 160 Saudi Arabia U. received the bulk of these Source: Bankscope.S. and authors' estimates. The majority of the issuances were by Bahrain.E. dollar billions) Kuwait 35 30 25 20 15 10 5 0 0 Mar-03 Dec-03 Sep-04 Jun-05 Mar-06 Dec-06 Sep-07 Jun-08 Mar-09 Source: BIS Consolidated Banking Statistics. Narrow and broad liquidity Sources: GCC central banks. inflows reversed. entities.E. 2007 (In percent) 80 70 60 50 40 30 20 Liquidity peaked in GCC countries in 10 2007 reflecting the inflow of capital in 0 speculation of an appreciation of GCC currencies (Figures 16–17). (In U. reflecting the relatively high asset/liability maturity mismatches in GCC banks (Figure 15).

. Narrow liquidity ratio is calculated as cash and reserves at the central bank to total liabilities.26 Figure 17. The broad liquidity ratio is calculated as cash. Liquidity Indicators of GCC Banking Sectors 16 14 12 10 8 6 4 2 0 2005 40 35 30 25 20 15 10 5 0 2005 35 30 25 20 15 10 5 0 2005 2006 2007 2008 Mar-09 Kuwait Bahrain Saudi Arabia Qatar Oman 2006 2007 2008 Mar-09 Kuwait Saudi Arabia Bahrain UAE Oman Qatar 2006 2007 2008 Mar-09 Qatar Kuwait Oman Bahrain Saudi Arabia Liquidity Ratio (Narrow) UAE Liquidity Ratio (Broad) Liquid Assets to Short-Term Liabilities UAE Source: Banks' Annual and Quarterly Reports and authors' estimates. reserves at the central bank. and securities holdings as a share of total liabilities.

both in the context of lending to a few obligors and large exposures to sectors that are highly subject to market price fluctuations and asset bubbles (such as real estate and equities). and in systems that have significant concentration in construction and real estate. While household lending in the GCC is generally secured by borrowers’ salaries. Policy makers are encouraged to evaluate policy measures that could dampen the impact of oil prices on economic activity and the financial sector. These would typically be associated with a slowdown in economic activity and massive layoffs of expatriate workers. Additionally. As indicated above. sharp declines in oil prices have brought about a slowdown in economic activity. some GCC countries witnessed rapid credit growth in the oil boom period preceding the financial crisis. liquidity management practices in GCC banks in general would need to be evaluated. Second. This was demonstrated in the current crisis as banks’ liquidity was squeezed with the tightening in global liquidity conditions.27 VII. some GCC banking systems have high exposures to households. GCC banks generally have significant concentration risk. Notwithstanding the general soundness of GCC banks. household defaults could pause risks. however. This risk is heightened in countries with the highest credit growth rates prior to the crisis. There are. the fact that banks continue to have a very small share in bond financing complicates banks’ ability to manage the maturity mismatches between assets and liabilities. along with a worsening of banks’ asset quality and strains on their liquidity. CONCLUSIONS AND POLICY IMPLICATIONS The moderate impact of the global financial crisis on the GCC banking sectors has generally demonstrated the soundness of these systems. Furthermore. This linkage presents risks and introduces significant liquidity volatility for banks. . this rise in available bank liquidity and the consequent increase in lending rates have been indirectly associated with higher oil prices. GCC banks appear to maintain low liquidity levels by international comparison. the increasing dependence of banks on external financing in some GCC countries in recent years has increased banks’ vulnerability to external credit conditions. as these sectors have been hit hard throughout the GCC. there are issues that need to be addressed in relation to banks’ asset management practices. As observed in the current crisis. The banking sectors in the GCC countries continue to be well capitalized across the board with capital adequacy ratios well above minimum standards and comfortable leverage ratios by international comparisons. Third. International experience indicates that rapid credit growth in periods of high real economic growth is likely to result in high levels of asset impairment once economic conditions reverse. While the banking sector in the GCC still relies on relatively stable deposits as the main source of funds. our analysis indicates some weaknesses associated with the operational aspects of GCC banks and the characteristics of the GCC economies. risks of a possible worsening of asset quality as the fallout from the crisis continues to materialize on banks’ balance sheets. These would need to be evaluated and addressed by GCC policy makers. First.

LIST OF COMMERCIAL BANKS IN GCC COUNTRIES Table 1. Bank Melli Iran National Bank of Abu Dhabi Bank Saderat Iran State Bank of India Bank of Beirut Qatar National Bank .28 APPENDIX I. GCC: List of Commercial Banks in GCC countries (2008) Local Banks Kuwait Bahrain Oman Ahli United Bank Bahrain Development Bank Bahraini Saudi Bank BBK BMI Bank Eskan Bank Future Bank National Bank of Bahrain Oasis Capital Bank Al Baraka Islamic Bank* Al-Salam Bank –Bahrain* Bahrain Islamic Bank* Khaleeji Commercial Bank* Kuwait Finance House* Shamil Bank of Bahrain * National Bank of Kuwait Kuwait Finance House* Gulf Bank KSC Commercial Bank of Kuwait Al Ahli Bank of Kuwait Burgan Bank SAK Bank of Kuwait & The Middle East Kuwait International Bank* Boubyan Bank* National Bank of Oman Oman Arab Bank Oman International Bank Bank Muscat Bank Dhofar Bank Sohar Ahli Bank Foreign Banks Arab Bank plc BNP Paribas Credit Libanais Citibank HSBC Bank Middle East Limited Habib Bank ICICI Bank MashreqBank psc National Bank of Abu Dhabi National Bank of Kuwait Rafidain Bank Standard Chartered Bank State Bank of India The Housing Bank for Trade and Finance United Bank Limited Bank of Bahrain and Kuwait BNP Paribas HSBC Bank Middle East Limited National Bank of Abu Dhabi Citibank Qatar National Bank Doha Bank HSBC Bank Middle East Standard Chartered Bank Habib Bank Ltd.

GCC: List of Commercial Banks (2008. Qatar National Bank Commercial Bank of Qatar Doha Bank Qatar Islamic Bank* Ahli Bank International Bank of Qatar Masraf Al Rayan* Qatar International Islamic Bank* Al Khalij Commercial Bank National Commercial Bank Samba Financial Group Al Rajhi Bank* Riyad Bank Banque Saudi Fransi Saudi British Bank Arab National Bank Saudi Hollandi Bank Saudi Investment Bank Bank Al-Jazira Bank AlBilad* Alinma Bank* National Bank of Abu Dhabi Abu Dhabi Commercial Bank Union National Bank The National Bank of Dubai Commercial Bank of Dubai Dubai Islamic Bank* Emirates Bank International Emirates Islamic Bank Mashreq Bank* Sharjah Islamic Bank Bank of Sharjah United Arab Bank The National Bank of Ras-Al Khaimah Commercial Bank International National Bank of Fujairah National Bank of Umm-Al Qaiwain First Gulf Bank Abu Dhabi Islamic Bank* Dubai Bank* Noor Al Islam Bank* Al Masraf Invest Bank Al Hilal Bank* Foreign Banks Arab Bank Limited Mashreq Bank HSBC Bank Middle East Gulf Bank Saderat Iran Bank United Bank Standard Chartered Bank Emirates Bank National Bank of Kuwait Deutsche Bank BNP Paribas National Bank of Kuwait Bank Muscat National Bank of Bahrain Rafidain Bank Arab Bank Banque Du Caire El Nillien Bank National Bank of Oman Calyon-Corporate Bank of Baroda BNP Paribas Janata Bank . continued) Local Banks Qatar Saudi Arabia U.E.29 Table 1.A.

E. . concluded) Foreign Banks Qatar Saudi Arabia U. Notes: *Islamic bank. HSBC Bank Middle East Arab African International Bank Banque Libanaise Pour Le Commerce (France) S.30 Table 1. Al Ahli Bank of Kuwait Barclays Bank Habib Bank Habib Bank AG Zurich Standard Chartered Bank CitiBank Bank Saderat Iran Bank Melli Iran Blom Bank France Lloyds TSB Bank PLC ABN Amro Bank United Bank Doha Bank Samba Financial Group Source: GCC central banks.A. GCC: List of Commercial Banks (2008.A.

31 APPENDIX II.4 1.6 74.2 88. 2007 (In percent) Bank name National Bank of Kuwait Kuwait Finance House* Gulf Bank Commercial Bank of Kuwait Burgan Bank AlAhli Bank of Kuwait Bank of Kuwait and the Middle East Boubyan Bank Notes: * Islamic bank.0 81.0 63.0 Cumulative Share of Total Assets 40.6 4.0 3.4 4.5 53.0 7.0 11.5 40.0 7.0 74.0 2. CONCENTRATION OF THE BANKING SECTOR Table 2.0 Source: Moody’s Kuwait Banking System Profile (April. 2008).0 11.5 10. Bahrain: Concentration of the Banking Sector.1 65.0 51.3 10.8 55.0 12.0 2. Kuwait: Concentration of the Banking Sector.5 45.2 6.4 2.0 30.3 Table 3. Table 4. 2008).8 81.0 91.0 22. Oman: Concentration of the Banking Sector.0 88.9 64.9 61.3 62. and authors' estimates.6 1.1 3.3 4.8 14. Notes: * Islamic bank.4 Cumulative share of total assets 19.5 9.0 Cumulative share of total assets 29.5 58. Share of total assets 29. .0 4. 2007 (In percent) Bank Name BankMuscat National Bank of Oman Oman International Bank Bank Dhofar Oman Arab Bank Bank Sohar Ahli Bank Share of Total Assets 40.1 49.5 56.0 93. 2007 (In percent) Bank name Bank of Bahrain and Kuwait National Bank of Bahrain Ahli United Bank Shamil Bank of Bahrain* Kuwait Finance House* Bahrain Islamic Bank* Future Bank Al-Salam Bank* Albaraka Islamic Bank* Khaleeji Commercial Bank* Bahraini Saudi Bank Source: Authors' estimates. Notes: * Islamic bank.2 Sources: Moody’s Oman Banking Statistical Supplement (July.1 85.0 3. Central Bank of Oman. Share of total assets 19.

8 45. Share of Total Assets 19.0 3.5 Cumulative Share of Total Assets 19. .5 3.1 83.2 67. 2008). Share of Total Assets 37.7 4.4 Sources: Moody’s Saudi Arabia Banking System Profile (July.4 14. Notes: * Islamic bank.0 1. Saudi Arabia: Concentration of the Banking Sector.3 7.7 66.5 19.9 94.4 11.7 83.7 3.2 5.7 79.4 1.9 88.7 Cumulative Share of Total Assets 37.3 92.4 72.0 Table 6. and authors' estimates.0 75.7 10.4 56.3 9.8 4.5 57.32 Table 5.4 86. 2007 (In percent) Bank Name Qatar National Bank Commercial Bank of Qatar Doha Bank Ahli Bank Qatar Islamic Bank* International Bank of Qatar Masraf Al Rayan* Qatar International Islamic Bank* Al Khalij Commercial Bank Source: Authors' estimates.3 9.3 2.9 96.1 8.6 92.9 90.4 33. 2007 (In percent) Bank Name National Commercial Bank Samba Financial Group Al Rajhi Bank* Riyadh Bank Banque Saudi Fransi Saudi British Bank Arab National Bank Saudi Hollandi Bank Saudi Investment Bank Bank Al-Jazira Bank AlBilad* Notes: * Islamic bank. Qatar: Concentration of the Banking Sector.6 11.

33 Table 7. .4 77.6 72 75.E. and authors' estimates.1 Source: Moody’s Saudi Arabia Banking System Outlook (December.5 1. 007).8 47.2 1 Cumulative Share of Total Assets 11.4 2.3 6.1 80.2 22.1 4.9 79.4 3.2 11.5 8 7.9 61. 2007 (In percent) Bank name National Bank of Abu Dhabi Emirates Bank International Abu Dhabi Commercial Bank National Bank of Dubai HSBC Middle East First Gulf Bank Mashreqbank* Dubai Islamic Bank* Union National Bank Abu Dhabi Islamic Bank* Commercial Bank of Dubai Dubai Bank* National Bank of Ras Al-Khaimah Notes: * Islamic bank Share of Total Assets 11.8 7.5 67.8 39. U.3 31.: Concentration of the Banking Sector.A.1 9.6 6.6 54.

A.0 76.6%) is owned by Bank Mellin Iran and Bank Saderat in Iran. Bankers’ Almanac.5 100. while the remaining shares are owned by a royal family member from Kuwait.0 3/ 50.6 5/ Foreign GCC Ahli United Bank Bank of Bahrain and Kuwait National Bank of Bahrain Shamil Bank of Bahrain* Bahrain Islamic Bank* Al-Salam Bank Bahrain* Albaraka Islamic Bank* Khaleeji Commercial Bank* Bahraini Saudi Bank Kuwait Finance house* Future Bank 5/ Sources: Bankscope.0 33. Quasi Gov. 2/ The Kuwaiti government owns 9%.1 26. Bankers’ Almanac.5 32. 4/ Part of Albaraka Banking Group (Saudi Arabia).3%.1 51. Private Domestic Foreign GCC National Bank of Kuwait Kuwait Finance House* Gulf Bank Commercial Bank of Kuwait Al Ahli Bank of Kuwait Burgan Bank Bank of Kuwait & The Middle East Kuwait International Bank Boubyan Bank 20. Notes: * Islamic bank. 1/ Quasi-government entities from both Kuwait and Qatar own 21%.0 4.0 33. and the remainder (66. 49.0 94. Private Domestic 62.0 50. Kuwait: Ownership Structure of the Domestic Banking Sector (2007) (In percent) Bank name Gov.0 86. and authors' estimate. 3/ Represents share of different private corporations from the U.0 84.0 4/ 57. OWNERSHIP STRUCTURE OF GCC DOMESTIC BANKS Table 8.8 19.0 100.0 51. and authors' estimate.0 100. Notes: * Islamic banks.3 35. Bahrain: Ownership Structure of the Domestic Banking Sector (2007) (In percent) Gov.2 10.0 100.E.0 Non-GCC Royal Family 49.0 100.0 Non-GCC Royal Family Table 9.0 100.3 5/ 66.0 Sources: Bankscope. 1.9 100.8 5.0 4.0 42.1 6.0 .34 APPENDIX III.5 62. that are owned by Sheikh Mohammed bin Rashid Al-Maktoum.8 2/ 65.0 12.7 1/ 48. 5/ Ahli United bank owns 33.0 10. Quasi Gov.

8 7. Quasi Gov.9 63.0 2/ Non-GCC Royal Family Sources: Bankscope.0 100.0 1/ 15.0 1/ 30.0 100.0 50.0 50. Notes: * Islamic bank. Bankers’ Almanac.35 Table 10.0 34.5 14. and authors estimates.2 23.7 42. Quasi Gov. 2/ Represents the share of Ahli United Bank in Bahrain. Private Domestic Foreign GCC Bank Muscat National Bank of Oman Oman International Bank Bank Dhofar Oman Arab Bank Bank Sohar Al Ahli Bank 14.0 19.0 70.0 100.0 10. 1/ Represents the share of Arab Bank PLC incorporated in Jordan.0 70.0 100.1 89.1 24.0 72. Private Domestic Foreign GCC Qatar National Bank Commercial Bank of Qatar Doha Bank Qatar Islamic Bank* Ahli Bank International Bank of Qatar Masraf Al Rayan* Qatar International Islamic Bank* Al Khalij Commercial Bank 18.0 10. Table 11.1 Non-GCC 25.0 40.0 Royal Family Sources: Bankscope. Qatar: Ownership structure of the Domestic Banking sector (end-2007) (In percent) Bank name Gov.0 60.0 50. Oman: Ownership Structure of the Domestic Banking Sector (2007) (In percent) Bank name Gov.7 48.0 2/ 49.9 10.0 35. 1/ Represents the share of Ahli United Bank from Bahrain. Bankers’ Almanac. 2/ Represents the share of National bank from Kuwait. and authors' estimates.0 27.0 100.0 16. .

0 21.0 10.0 52.8 9.0 Source: Bankscope.8 9. 10.6 38.0 17.0 12.0 15.0 27.4 5.0 23.0 68. Private domestic 23. Notes: * There is no Islamic bank license in Saudi Arabia and most banks offer a combination of conventional and Islamic banking products. 3/ Represent the share of Dubai holding LLC.5 70.5 10.2 56. Bankers’ Almanac. Saudi Arabia: Ownership Structure of the Banking Sector (2007) (In percent) Bank name National Commercial Bank Samba Financial Group Al Rajhi Bank* Riyadh Bank Banque Saudi Fransi Saudi British Bank Arab National Bank Saudi Hollandi Bank Saudi Investment Bank Bank Al-Jazira Bank AlBilad* Source: Bankscope.0 90. 6.0 Gov.0 20.0 Quasi gov.0 65. 2/ Abu Dhabi Ruling Family.3 20. United Arab Emirates: Ownership Structure of the Banking Sector (2007) (In percent) Bank Name Emirates Bank International 1/ National Bank of Abu Dhabi Abu Dhabi Commercial Bank National Bank of Dubai Mashreqbank* Dubai Islamic Bank* First Gulf Bank Union National Bank Abu Dhabi Islamic Bank* Commercial Bank of Dubai Emirates Islamic Bank National Bank of Fujairah Commercial Bank International National Bank of Ras Al-Khaimah Dubai Bank* Sharjah Islamic Bank Bank of Sharjah National Bank of Umm Al Qaiwain 60. Notes: * Islamic bank.5 53.8 94.0 73.9 70.6 49.0 60. 77.1 50.0 52.2 100.0 77.2 50.1 50.9 7.5 Gov.5 9. . 70. since Emaar owns 30 of Dubai Bank.1 39.4 86.7 4/ 27.8 Private domestic GCC 20.0 80.0 58.8 9.5 30.0 39.36 Table 12.0 Quasi gov.0 64. Bankers’ Almanac.0 4.8 2/ Foreign GCC Non-GCC Royal family United Arab Bank 68.0 22.0 20.8 14. and authors' estimates.0 46.0 30. These two banks offer only Islamic banking products.9 40.3 12. 1/ Emirates Bank International and National Bank of Dubai completed merger on 17-10-2007 to become Emirates NBD.0 5.9 43.0 31.4 53.0 95.8 Foreign Non-GCC 3.0 11. and IMF staff.0 54.0 3/ 29.0 35.0 40.0 23.0 40.5 Royal family Table 13. which is owned by Sheikh Mohammed bin Rashid Al Maktoum 4/ Through the share of government in Emaar properties.0 15.0 3.0 15.0 100.

032 -5 1. Includes conventional and Islamic banks.900 819 4.731 1. and authors' estimates.067 4.731 2. and authors' estimates.446 41.768 5.458 1.379 785 131 2.808 850 230 3.812 36.752 38. 2005–0925 Table 14.334 896 4.115 14.715 -813 902 237 11 -192 257 622 -449 -55 524 0 0 417 280 2007 2. Table 15.096 11. Bahrain: Income Statement of the Banking Sector 1/ (USD millions) 2005 Gross Interest Income Gross Interest Expense Net Interest Income Banking Fees & Commissions FX Income Income from investments Tot.793 3. 1.157 2.949 516 6.964 41.310 778 3.730 40. .361 428 8.049 318 6 -53 395 821 -619 -52 717 0 0 581 366 2008 2009 (Q 1) 1.281 281 3. & Shareholders' Equity 1/ Based on data for listed banks only.214 23.029 3.316 22.140 1.949 35.752 18.398 22.052 2006 2007 2008 2009 (Q1) Sources: Banks' Annual and Quarterly Reports from Zawya.901 216 4.502 23. Bahrain: Balance Sheet of the Banking Sector 1/ (USD 000) 2005 Assets Cash & Reserves at CB Loans Securities Fixed Assets Other Assets Total Assets Liabilities Due to Banks Customers Deposits & CD's Bonds Other Liabilities Total Liabilities Minority Interest Shareholders' Equity Paid-up Capital Reserves Retained Earnings/ Accumulated losses Total Shareholders' Equity Total Liab.410 330 9.782 14.186 -1.102 32.705 2.707 3.349 20.781 -931 850 274 0 256 277 786 -651 -170 703 0 0 562 312 391 -9 382 37 0 -132 121 257 -155 -68 205 0 -1 167 112 1.359 278 4.125 33.060 5.150 5.37 APPENDIX IV: BANKS AGGREGATED FINANCIAL STATEMENTS.469 765 5.423 162 5.203 6.361 183 10.074 40.042 398 9.276 4. Non Interest Income Total Operating Income Operating Expenses Provisions Operating Profit Net Non-Operating Income (Expense) Other Expenses Net Profit Before Taxes Net Profit After Taxes 1/ Based on data for listed banks only.047 28.052 2.945 5.473 38.240 32.675 26.811 20.793 2.027 169 18 -103 219 468 -327 -52 405 2 -23 355 318 Source: Banks' Annual and Quarterly Reports.137 1. 25 2006 1.336 1.707 2.403 5.705 2.341 27.983 23.

236 883 8.469 2.381 1.703 156.929 4.248 2006 -3.317 1.857 79.426 7.587 4.827 17. Kuwait: Income Statement of the Banking Sector 1/ (USD millions) 2005 Gross Interest Expense Net Interest Income Banking Fees & Commissions FX Income Income from investments Tot.154 12. and authors' estimates. Table 17.107 2.970 35.997 13.528 67.508 -422 3.172 4.027 2. with Central Bank Gross Loans & Advances Securities Investments Fixed Assets Other Assets Total Assets Liabilities Due to Banks Customers Deposits & CD's Bonds Other Liabilities Total Liabilities Minority Interest Shareholders' Equity Paid-up Capital Reserves Retained Earnings/ Accumulated losses Total Shareholders' Equity Total Liab.245 -2.576 93.027 1.892 14.675 16.936 3. Kuwait: Balance Sheet of the Banking Sector 1/ (USD millions) 2005 Assets Cash & Bal.734 103.260 1. and authors' estimates.550 -1.924 1.357 1.548 13.258 2007 -4. -697 3.554 38.427 0 0 1.456 152.810 16.214 9.870 88.604 7.172 13.827 4 -4 2.687 2008 -4.314 5.879 36.961 2.091 103.148 704 120 809 1.930 890 51.824 89.016 404 1.897 1.049 14.967 163.761 9.056 78.133 200 7.106 53.715 79.020 245 49 -118 198 939 -592 -153 789 0 0 525 402 Source: Banks' Annual and Quarterly Reports.033 131.915 581 22.879 -988 -421 2.175 5.789 1.767 -2.565 1.239 67.679 2.121 61.587 15.612 20.532 41.977 4.852 72 4.446 -2.154 2006 2007 2008 2009 (Q1) Source: Banks' Annual and Quarterly Reports from Zawya.121 -9 404 733 3.349 9.094 144.069 -354 5.245 11. .569 1.154 50. Non Interest Income Total Operating Income Operating Expenses Provisions Operating Profit Net Non-Operating Income (Expense) Other Expenses Net Profit Before Taxes Net Profit After Taxes 1/ Based on data for listed banks only. & Shareholders' Equity 1/ Based on data for listed banks only.076 163.736 156.349 3.846 903 128 1.245 5.058 32.694 75.973 2.369 16.403 624 25.725 -1 -1 2.267 3.260 0 -1 3.350 9.722 708 36.718 4.895 137.936 2.515 10.592 97.152 53.363 2.326 558 2009 (Q1) -934 1.464 1.053 152. 2.38 Table 16.566 1.

220 11.380 2.105 -489 616 179 30 31 275 891 -370 1 522 14 -2 534 467 2008 1.265 -514 752 220 33 10 301 1.961 2.333 1.285 21.503 17.512 455 3.640 468 1.355 1.551 220 553 27.338 1. and authors' estimates.128 978 90 338 14.141 11.340 19.691 1.330 24.919 2006 2007 2008 2009 (Q1) Source: Banks' Annual and Quarterly Reports from Zawya.053 -433 -36 584 -44 0 540 471 2009 (Q1) 431 -135 250 57 11 89 168 418 -150 -20 248 -1 0 247 214 .510 1.755 27.547 869 754 408 2. 607 -34 404 68 13 8 114 517 -220 -43 253 27 0 280 243 2006 927 -369 558 147 21 38 229 787 -316 -20 451 11 0 462 406 2007 1. Oman: Income Statement of the Banking Sector 1/ (USD millions) 2005 Gross Interest Income Gross Interest Expense Net Interest Income Banking Fees & Commissions FX Income Income from investments Tot.968 17.413 15.171 1.450 449 1.314 19.566 26.609 2.996 2.39 Table 18.961 1.008 433 1.711 4.205 18.923 13.681 392 3. & Shareholders' Equity 1/ Based on data for listed banks only.610 310 1.183 15.314 12.298 55 1. and authors' estimates.053 173 526 21.202 2.510 2.547 1. 1/ Based on data for listed banks only.996 1. Table 19.232 393 651 12. Non Interest Income Total Operating Income Operating Expenses Provisions Operating Profit Net Non-Operating Income (Expense) Other Expenses Net Profit Before Taxes Net Profit After Taxes Sources: Banks' Annual and Quarterly Reports.066 10.121 17. Oman: Balance Sheet of the Banking Sector 1/ (USD millions) 2005 Assets Cash & Reserves at CB Loans Securities Fixed Assets Other Assets Total Assets Liabilities Due to Banks Customers Deposits & CD's Bonds Other Liabilities Total Liabilities Minority Interest Shareholders' Equity Paid-up Capital Reserves Retained Earnings/ Accumulated losses Total Shareholders' Equity Total Liab.919 1.388 2.666 225 805 26.938 14.206 3.623 480 3.355 90 463 17. 805 748 330 1.451 23.

548 74.523 19.513 66.134 2006 2007 2008 2009 (Q1) Sources: Banks' Annual and Quarterly Reports from Zawya.068 62.346 5. and authors' estimates.902 19.161 10.815 103.40 Table 20.523 36.827 1.257 10.353 -72 -2.860 -939 32.083 324.339 7.761 232.655 822 224.538 3.016 26.708 1.259 369.554 754.260 -14.721 923.387 1.421 11.390 398.062 8.371 1.413 61.604 722.662 15. Qatar: Balance Sheet of the Banking Sector 1/ (USD millions) 2005 Assets Cash & Bal.848 -23.014 53.548 -47 16.370 444 6.966 10.114 41.659 8.733 14.268.810 -534 -4.592 16.226 -6.352 -7.484 6. .018 861 5.639 401.548 11.483 0 17.525 2009 (Q1) 14.560 31.353 707.101 923.667 6 -2.932 1.260 3.574 36.603 61.486 590.429 4.509 17.069. 14.014 64.549 1. & Shareholders' Equity 1/ Based on data for listed banks only.193 590.698 76.900 102.678 195.232 774.933 577.591 37.027 69.479 197.436 6.462 1.073 134.531 290 93.515 54.074 -2.644 768 20.126 401.783 5.067.557 221.600 8.169 6. Qatar: Income Statement of the Banking Sector 1/ (USD millions) 2005 Gross Interest Income Gross Interest Expense Net Interest Income Banking Fees & Commissions FX Income Income from investments Operating Expenses Provisions Operating Profit Net Non-Operating Income (Expense) Other Expenses Net Profit Before Taxes Net Income 1/ Based on data for listed banks only. and authors' estimates.603 43.480 510 874 -3.439 15.697 264.115 -3.386 6.070 78.340 -6.181 10. with Central Bank Gross Loans & Advances Securities Investments Fixed Assets Other Assets Total Assets Liabilities Due to Banks Customers Deposits & CD's Bonds Other Liabilities Total Liabilities Minority Interest Shareholders' Equity Paid-up Capital Reserves Retained Earnings/ Accumulated losses Total Shareholders' Equity Total Liab.114 486.574 -401 11.268.917 154. Table 21.408 102.676 207 51.787 101.911 6.359 432 200.721 1.027 82.264.005 -13.953 9.818 362.278 2.149 0 32.844 19.997 29.392 69 22.771 768.431 29.702 36.879 -9.187 119 -1.272 6. 17.983 109.925 2008 54.229 Source: Banks' Annual and Quarterly Reports.777 1.717 545.606 68.513 59.264.197 -28.824 -5.418 2006 28.811 2007 40.134 23.062 346.

388 -1.679 -2.145 -656 8.604 7.969 1.911 8.907 169. Non Interest Income Total Operating Income Operating Expenses Provisions Operating Profit Net Non-Operating Income (Expense) Other Expenses Net Profit Before Taxes Net Profit After Taxes Net Income Sources: Banks' Annual and Quarterly Reports.005 4.224 195.183 2006 13.730 4.953 678 -1.276 .716 4. and authors' estimates.159 165.421 3.441 2007 14.739 14.923 8.801 6.944 39.115 341.457 13.512 134.593 295.810 466 9.946 341.165 47 -29 4.208 365 403 2.032 -5.501 8.846 82 12.769 9.089 195.359 -2 -15 1.872 26.536 26.740 174.103 46.509 3.872 33.101 16.608 340.769 5.183 17.567 52.483 -467 2.344 4.183 28.171 -893 7.579 12.192 3.376 477 25.709 -4.989 7.098 1. & Shareholders' Equity 1/ Based on data for listed banks and the National Commercial Bank.678 2 -31 5.442 4.263 15 25.589 -617 9.467 25.182 2.461 -3.572 2. Saudi Arabia: Income Statement of the Banking Sector 1/ (USD millions) 2005 Gross Interest Income Gross Interest Expense Net Interest Income Banking Fees & Commissions FX Income Income from investments Tot.531 30.182 1.794 251.578 68. and authors' estimates.473 9. Table 23.455 2.415 195.510 276.723 3.890 10.180 42.866 221.023 4.153 12.236 1.606 3.996 2.632 580 620 2. 9.956 6.019 340.755 2.180 73.153 14.728 12.437 62.325 27 -44 4.945 2.506 15.919 3.557 7.403 140.038 394 971 3. Saudi Arabia: Balance Sheet of the Banking Sector 1/ (USD million) 2005 Assets Cash & Reserves at CB Loans Securities Fixed Assets Other Assets Total Assets Liabilities Due to Banks Customers Deposits & CD's Bonds Other Liabilities Total Liabilities Minority Interest Shareholders' Equity Paid-up Capital Reserves Retained Earnings/ Accumulated losses Total Shareholders' Equity Total Liab.378 4.711 30.021 -1.536 25.638 36.514 75.312 67.300 12.222 2006 2007 2008 2009 (Q1) Sources: Banks' Annual and Quarterly Reports from Zawya.127 276. 1/ Based on data for listed banks and the National Commercial Bank.277 161.572 -3.515 14.949 53.196 807 166 67 516 2.721 -5.904 221.604 4.377 7.919 -5.027 8.329 80 28. 9.117 1.750 44.668 101.899 240.343 2.222 15.233 -5.049 -535 7.059 2008 2009 (Q1) 16.454 110.079 14.367 3.209 120 -42 4.333 245.41 Table 22.212 294.162 190.

175 2.410 7.344 4.041 79.467 7.962 16.023 -3.840 2.928 2. and authors' estimates.214 3.643 336 1.641 1.343 1.508 285 10.886 4. United Arab Emirates: Balance Sheet of The Banking Sector 1/ (USD millions) 2005 Assets Cash & Reserves at CB Loans Securities Fixed Assets Other Assets Total Assets Liabilities Due to Banks Customers Deposits & CD's Bonds Other Liabilities Total Liabilities Minority Interest Shareholders' Equity Paid-up Capital Reserves Retained Earnings/ Accumulated losses Total Shareholders' Equity Total Liab.063 1.729 37.213 261.359 21.023 92.787 18.198 7.326 18.430 677 -236 2.050 1.753 1.343 280 32.030 117.300 115 857 2.583 5.494 4.130 79.943 2.301 7.181 145.616 92.500 -241 4. and authors' estimates.725 35.483 6.106 126.254 21.975 65.593 350 5.304 5.144 2.829 40. -1.062 5.011 3.286 149 511 1.039 2007 -6.210 12.106 -2.907 23.713 -1. & Shareholders' Equity 1/ Based on data for listed banks only.582 -403 5.540 245.233 144. .42 Table 24.823 13.787 6.377 1.656 530 22.074 33.257 3.233 291.121 16.729 5.932 2.602 1.087 26.899 554 68 -104 688 2.409 4.255 295.266 7.536 398 28.377 126.467 245.789 4.467 19.645 76. Table 25.007 110.011 3.587 3.872 4.907 2006 -3.353 625 7.198 2006 2007 2008 2009 (Q1) Source: Banks' Annual and Quarterly Reports from Zawya.938 56.400 64.362 860 31.834 295.003 2. United Arab Emirates: Income Statement of the Banking Sector 1/ (USD millions) 2005 Gross Interest Expense Net Interest Income Banking Fees & Commissions FX Income Income from investments Tot.462 30.485 10.743 4.878 2.263 7.275 -958 -389 1.717 2.695 -999 -412 3.351 48.692 -1.970 145.933 218.847 195.870 376 33.057 3.972 8.136 49. 3.866 2009 (Q1) -1.693 84.561 63.101 260.465 2.532 291.876 8. Non Interest Income Total Operating Income Operating Expenses Provisions Operating Profit Net Profit Before Taxes Net Income 1/ Based on data for listed banks only.420 2008 -6.368 201.769 6.286 4.335 Sources: Banks' Annual and Quarterly Reports.

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