Qatar-based lenders’ price-to-book value is estimated to be more than 2% in 2015 compared to the GCC average of less than 2%.

By Santhosh V Perumal/Business Reporter


Qatar’s banking sector is expected to have the highest return on equity (ROE) among the Gulf lenders this year, according to Global Investment House.
The ROE of Qatar-based banks, whose higher net interest and fee incomes as well as lower provisioning helped improve net profitability in 2014, is estimated to reach about 18% in 2015, Global said in its report.
In comparison, the Gulf Co-operation Council (GCC) is expected to see an average 14% ROE, Saudi Arabia little over 14%, the UAE more than 13% and Kuwait 10%.
The Qatar-based lenders’ price-to-book value is estimated to be more than 2% in 2015 compared to the GCC average of less than 2%.
The GCC banks reported stronger bottom line with net earnings expanding 21.2% year-on-year in the fourth quarter (Q4) of 2014 with Kuwait reporting 52.9% growth, the UAE 32.7%, Saudi Arabia 17.5% and Qatar 9.8%.
However, on quarter-on-quarter (q-o-q) basis, net profit of the GCC aggregate declined 6.8%, with Qatar leading the fall (13%), followed by Saudi Arabia (6.9%) and the UAE (5.2%); while Kuwait witnessed a 5.3% rise.
The q-o-q fall in profit can be ascribed to higher provisions and flat top-line, Global said.
Provision expenses of its GCC coverage declined 15.7% y-o-y during Q4, 2014, with those of Saudi Arabia and the UAE declining 46.3% and 22.8% respectively; even as those of Qatar and Kuwait rose 6.8% and 5.7% respectively, partially offsetting the growth of the aggregate bottom-line. On q-o-q basis, provisions grew 34.4%.
The collective loans disbursed by the GCC banks under its coverage increased 9.1% in Q4, 2014 with Qatar leading (13.7%), followed by Saudi Arabia (9.2%), Kuwait (8.6%) and the UAE (5.9%).
However, margins remained under pressure on annual basis due to a 31 basis points (bps) decline in the yield on assets, leading to 13bps shrinkage in net interest margin (NIM), it said.
The net interest income (NII) of GCC banks increased 4.8% y-o-y; however, it remained flat on quarter-on-quarter basis.
The NII of banks in UAE grew the most (8.5% y-o-y), followed by Qatar (6.9%), Kuwait (4.7%) and Saudi Arabia (0.8%).
Non-interest income of the GCC banks grew 12.8% y-o-y during the fourth quarter due to strong growth in fee income with Kuwait leading the pack (24%), followed by Qatar (13.6%), the UAE (13.5%) and Saudi Arabia (2.8%), it said.
Fee income, the main growth driver of non-interest/financing income of its GCC coverage increased 11.6% y-o-y, with banks in UAE remaining at the top with a growth of 37.6% in Q4, 2014, followed by those in Kuwait (16.7%), Qatar (12.7%), while those in Saudi Arabia declined 7.2%.
Total assets of GCC banks expanded 10.4% y-o-y in Q4, 2014. Qatar banks witnessed the strongest growth in total assets (11.2%), followed by banks in Kuwait (10.6%), the UAE (10.2%) and Saudi Arabia (9.7%).



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