GCC banking sector’s net profits record 7-year low in 2020 amid higher provisions

GCC banking sector’s net profits record 7-year low in 2020 amid higher provisions

Mubasher: The net profits of the GCC banking sector hit their lowest levels in seven years, affected by the decline in the fourth quarter (Q4) net profits by almost third quarter-on-quarter (QoQ) 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 2019, recording the steepest decline since at least 2002.

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

Meanwhile, Saudi Arabia's banking sector reported a decline in net profits of 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 hit hard the sector.

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

Saudi Arabia's total credit facilities quarterly rose by 3% in Q4-2020 to SAR 1.78