The fifth edition of KPMG’s GCC listed banks results report, which analyses the published results of listed commercial banks across the region during 2019, has attributed the performance to the marginal recovery of the oil sector due to planned maintenance in Q1-2018, along with the continued growth of the non-oil sector at a slower pace.
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The banks have also reported an average increase in net profits by 1.5pc compared with the prior year and have reported healthy capital ratios.
During the year, Central Bank of Bahrain (CBB) continued to take various measures towards encouraging fintech companies and digital banking in the country.
CBB is also cognisant of the risks arising from money laundering and cyber security and has continued to enhance the regulations around these areas, with an aim to make the financial sector more resilient, says the report titled New Age Banking.
A key finding in the report is that although regional banks have remained resilient in terms of profitability and asset growth, they do, however, continue to focus on managing the credit quality of their loan portfolios to ensure this resilience can be maintained.
Commenting, KPMG Bahrain financial services partner Mahesh Balasubramanian said,
“Conventional and Islamic banks in the region have been rapidly consolidating to create larger, stronger and more resilient financial institutions, as they seek to remain competitive in the current challenging times. We expect that this consolidation drive will continue in 2020 across the region, with numerous talks or potential further transactions.”
The Covid-19 pandemic is having unprecedented impact on financial markets globally and locally and creating a unique situation for the industry because of the implications for operating models, employees, suppliers, customers and the drop in oil prices that all affected financial results.
Banking experts agree that the sector will be dealing with the effects of this pandemic for the foreseeable future, leading the sector to evolve, and only agile and flexible banks that are willing to transform will succeed. “I believe banks are well positioned to weather the current economic and political challenges, given the expectation of continued government support and committed infrastructure investment, which will be somewhat offset by uncertainties arising from oil prices fluctuations and the Covid-19 impact, resulting in stable growth in the sector,” said Mr Balasubramanian.
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