GCC banks’ profits surge 62% to $8.4bn in Q1

GCC banking sector net profits witnessed remarkable recovery during the first quarter (Q1) of 2021 with profits reaching $8.4 billion, up 62% year-on-year (y-o-y) and 14.2% sequentially backed by growth across the region, a report said.

Out of 59 banks in the region, merely six reported a quarter-n-quarter (q-o-q) decline in profits during Q1-2021 while 17 banks reported a y-o-y decline, according to the latest GCC Banking Sector report published by Kuwait-based financial powerhouse Kamco Invest.

The improvement was mainly led by a 41% or $2.5 billion q-o-q drop in loan loss provisions (LLP) that reached a six-quarter low level of $3.6 billion in Q1-2021. This was partially offset by a decline in the top line as banks continue to deal with the low interest rate environment.

At the country level, aggregate profits for banks in Kuwait, UAE and Bahrain more than doubled q-o-q, whereas Saudi Arabian banks reported a profit growth of 34.0%.

Shareholders of banks in the GCC received significantly less cash dividends for FY-2020 as banks in the region were either virtually barred from paying dividends due to the regulatory relaxations for Covid-19 or made a much smaller dividend payment.

Aggregate dividend payments for FY-2020 dropped by USD6.6 billion to $8.0 billion as compared to payments of $14.6 billion as cash dividends for FY-2019.

The decline came after 17 banks in the region cancelled FY-2020 dividend payments with the bulk of them due to Covid-19 related issues. Dividend for the year FY-2019 had also declined as some banks slashed dividends even last year. Dividend payments for FY-2019 dropped by 21% from $18.5 billion as dividend payments for FY-2018.

The decline in cash dividend payments was seen across the board in the GCC with banks in all the countries slashing dividends.

Bahraini banks made the biggest percentage cuts to dividends at 72.4%. Saudi Arabian banks were next slashing cash dividends by 64.1% or $2.4 billion to $1.3 billion as payments for FY-2020, while UAE-listed banks slashed dividends by 36.4% to $3.3 billion, the highest absolute payments in the GCC during the year. On the other hand, Qatari banks witnessed the smallest decline during the year at 25.4% and made payments of $2.1 billion. – TradeArabia News Service

Source: http://www.tradearabia.com/news/BANK_383165.html


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