Banking On Banks: How Are They Faring?

For as long as people have existed, banking has existed, even in its most non-descript form.

- Zainab Mansoor

Prior to the first currencies being minted, merchants granting grain loans to farmers and traders transporting goods through various cities were touted as the first prototypes of banks. The first proper bank too was no more than a series of vaults for people to store valuables in. Since then, banking worldwide has graduated from bullions in a vault to a plethora of financial products and offerings for consumers and corporate entities, nurtured and propelled by ingenuity, innovation and digitalisation.

GCC’s banking landscape

The GCC’s banking landscape is as diverse as it is sheer. On the heels of regulatory reforms, customer-centric approaches, consolidation, technological investments and omnichannel approaches, the regional ecosystem in recent years has exploded. There are more than 70 listed banks across six GCC countries; Qatar National Bank remains the biggest lender in the GCC by assets – which total $262bn – followed by the UAE’s First Abu Dhabi Bank ($227bn), according to data published by Bloomberg in July.

In recent years, the Gulf’s banking sector has shown resilience, recording formidable growth in terms of assets and profitability, despite political and economic headwinds.

GCC banks recorded an increase of 16.9 per cent in net profits in 2019, totaling $36.5bn, while total assets went up by 12.8 per cent to $2.3 trillion, a KPMG report, summarising the performance of select 55 GCC-based listed banks for the year-ended December 31, 2019, revealed. Meanwhile, bank share prices trended upwards with an average increase of 9.5 per cent over 2019, it found.