Retail Banking To Outpace Corporate Banking In The GCC

Retail banking is growing faster than corporate banking in GCC countries except for the UAE and Qatar, according to a new report by A.T Kearney.

This is in contrast to the pre-crisis period when retail banking only saw rapid growth in the UAE.

The region’s young population, economic well-being and a steadily rising GDP per capita are forecast to contribute to the growth of retail banking.

“Government interventions, such as the push for Saudisation in the Kingdom, the support of small and medium-size enterprises (SMEs) in various GCC countries, and the setting up of credit bureaus in Qatar and UAE will also add positive momentum,” said the report.

GCC banks, which were in a high growth mode prior to 2008, have slowed down considerably in the years following the crisis.

Asset growth averaged 10 per cent between 2010 and 2012, ranging from three per cent in Bahrain to 20 per cent in Qatar, compared to strong double-digit growth recorded in all GCC countries before the crisis.

But the report also said that, post-crisis, GCC regulators are opting for a more prudent approach in order to safeguard the region’s stable and resilient banking industry.

Rise of credit bureaus, along with other sophisticated regulatory frameworks, such as guidelines for repossessing mortgaged real estate, will further help in developing more risk management approaches, it added.

GCC banks are also improving customer services to survive tough competition in the market and have added more digital offerings to attract tech-savvy customers, the report said.

Banks in the region saw a growth in profits in 2013, driven by increased loan asset growth, wider interest margins, greater fee and commission income and generally lower loan loss provisioning charges.

Net profit growth in the first six months to June 2013 for the GCC banking sector grew by a much higher than estimated rate of 14 per cent, up from six per cent in the first half of 2012.