Total provisions booked by GCC banks since start of crisis reached $11.7b

In a presentation for the performance of the GCC banking sector, KIPCO Asset Management Company (KAMCO) Research Department presents a detailed analysis for the financial statements for 58 banks with the purpose of shedding the light on the repercussions of the crisis on the financial position of the banking sector in the GCC Region which represents a key sector for any country's economy.

Moreover, total provisions booked by the GCC banking sector since the start of the financial crisis in September 2008, have reached USD 11.7 billion of which USD 4.72 billion or 40% booked by Kuwaiti banks. It is worth noting that the provisions of Gulf Bank reached USD 1.76 billion, representing 37% of the total provisions booked by Kuwaiti banks since the start of the financial crisis in Sep-08.

However, Saudi and UAE banks' provisions are expected to increase over the last quarter of 2009 as a consequence of banks' exposure to Dubai World's debt as well as the debt of Saudi conglomerates SAAD Group and Al Gosaibi Group. The asset quality of GCC banks might deteriorate further in 2010 which in turn will force banks to book additional provisions, ultimately placing a downward pressure on banks' bottom line results and a further deterioration in profitability and capital adequacy ratios.