There is no doubt that the COVID-19 Pandemic had a severe impetus upon the GCC Banking arena that’s outcome resulted in record provisions booked in for Fiscal 2020.
This in turn resulted out that the economic action was completely taken aback and grievously hit due to the pandemic-induced lockdowns as well as boundaries in drive among GCC nations, the lesser oil rates for most of the year also witnessed the state revenues decreased for the oil producing members.
UAE Banks also in turn witnessed the enormous upsurge in LLP during the year with an elevation of 3.4 billion, or 72 percent, to touch around 8.2 billion. On the other hand, Saudi Arabian banks retained the lowest percentage intensification in LLP at 37.6 percent, or 1.3 billion, to touch $4.6 billion during the year.
Kamco Invest in a report stated as on Wednesday, that overall, 62 listed banks in the GCC depicted loan loss provisions (LLP) of $20.3 billion during 2020 with intensifications witnessed in all the six nations of the bloc.
The Banks across the territory also had set aside a $6.4 Billion doubtful credit within the Q4-2020, its highest ever for the quarter as noted for the territory.
While most of the memberships conveyed the progression extending from 1 percent to 2.5 percent in gross lending during Q4-2020, UAE testified a deterioration of 1.2 percent.
Kamco also stated that: “Nevertheless, lending progress sustained unabated in the region assisted by economic recovery with gross loans (excluding Kuwaiti banks) reaching $1.4 trillion with a on quarter evolution of 1.1 percent during Q4-2020.”
The inclination in net loans was almost identical, witnessing an overall progression of 1.4 percent with only UAE displaying a marginal deterioration of 0.3 percent. As an outcome, earning assets touched a record high of $2.1 trillion with an overall q-o-q progress of 1.6 percent. This hard-pressed total assets for the banking sector in the territory to a new record high of $2.6 trillion, according to Kamco.
The upsurge in client credits was relatively marginal during the quarter with progress of 0.4 percent to touch only $1.9 trillion. Even then, only Saudi Arabia, Qatar and Bahrain exhibited progression, while UAE, Oman and Kuwaiti banks witnessed a marginal deterioration.
UAE banks reported the initial tumble in client credits in 16 quarters at -3.7 percent q-o-q. The net influence of a quicker growth in lending versus deposits during the last quarter was a rise in aggregate loan-to-deposit ratio to above the 80 percent mark for the first time in three quarters at 80 percent.
In terms of productivity, the deterioration in interest rates were replicated in lower net interest margins (NIM) for almost all the local banks. The aggregate NIM for the territory plummeted below the 3.0 percent mark at 2.9 percent.
However, Bahraini banks conveyed the highest NIMs in the territory at 3.45 percent, surveyed by Saudi Arabian banks with aggregate NIM at 3.3 percent, down 13 bps (basis points) on the quarter.