Profits Of Commercial Banks To Recover After Fall In 2020-21

Global ranking of the top 100 banks in the Arab world nosedived in 2020-21,due to a slowdown in asset growth and a sharp decline in profitability, reported The Banker, the UK-based leading international financial affairs publication.

With regard to banks in Kuwait, the magazine noted that COVID-19 dealt a heavy blow to the country’s economy, which shrank by 8.1 percent in 2020, marking the worst economic downturn among the six-nation Gulf Cooperation Council (GCC) states.

Accordingly, the banking sector in Kuwait witnessed the lowest growth in the first tier of capital and assets, compared to any Arab country included in this year’s list.

As for assets, Kuwaiti banks accounted for 8.14 percent of the assets of the banks included in The Banker’s list of the 100 largest Arab banks.

The magazine indicated that despite the challenges of the past year, Arab banks maintained their profitability compared to other banks in the world. While the return on assets in this year’s rating has fallen from 1.54 to 0.92 percent over the course of 2020, this was still much better than the 0.51 percent average recorded by The Banker’s top 1,000 banks. Saudi and Qatari banks in particular performed well and notched strong returns during the year.

The report added that with the International Monetary Fund (IMF) predicting the return of all Arab economies to growth in 2021, Arab banks would overcome the worst stages of the crisis with the expected improvement in their profitability accompanied by good growth in their assets in the 2021-22 period.

The magazine stated that the overall growth story of Arab banks remains the same, as three-quarters of the 100 largest Arab banks recorded increases this year in assets and the first tranche of capital, amid strong growth in Saudi Arabia and Egypt in particular, noting that with the acceleration of the pace of vaccine and recovery of oil prices back to pre-crisis levels by mid-2021, banks are poised to recover strongly in 2021/2022.

 

SOURCE  :   TIMES KUWAIT

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