Runaway profits at Arab financial institutions show no signs of slowing down, as this yearís Top 100 proves. Profits at major Arab banks, particularly those in the oil-rich Gulf states, continue to boom. Third quarter results this year at leading banks indicate that 2005 is likely to significantly exceed the record-breaking profits of 2004.
The latest results show stunning increases, with Q3 net profits up 82% on the previous year at Saudi Arabiaís Al-Rajhi Banking; up 54% at National Bank of Kuwait; up 51% at Saudi British Bank; up 57% at Arab National Bank; up 59% at Kuwait Finance House; and up a whopping 174% at Abu Dhabi Commercial Bank. Most of these banks have already exceeded 2004 profit levels and continuing high oil revenues, high liquidity and the expansion of retail banking in the region are expected to provide yet another bumper year in 2005.
While growth this year may be even higher, the 2004 results shown in The Bankerís Top 100 Arab banks listing broke all records. Aggregate Tier 1 capital rose 10.7% to reach $59.6bn and aggregate assets rose 8.7% to reach $711.1bn. Pre-tax profits shot up by 35.6% (16.4% growth the previous year) to reach $11.9bn, up from $8.8bn in last yearís listing.
GCC out in front
The banks from the six states of the Gulf Cooperation Council (GCC), led by Saudi Arabia, continue to dominate the listing, accounting for not only 55 banks but also 72.5% of aggregate Tier 1 capital and a huge 81% of aggregate pre-tax profits at a total of $9.6bn. Saudi Arabia, while only providing 10 banks in the listing, nevertheless accounts for a growing 27.1% of total Tier 1 capital and a massive 37.8% or $4.5bn of the Top 100 total profits. Saudi profits at $4.5bn were up 36.4% from $3.3bn in last yearís listing and, along with the other Gulf banks, the GCC banks look set to top $14bn in profits in 2005. Meanwhile, Saudi Arabiaís National Commercial Bank and Samba again top the listing, followed by Jordanís Arab Bank, again in third place.
In this yearís listing the UAE provides the largest number of banks (18) and comes second behind Saudi Arabia in all the aggregates, providing $1.9bn in profits or 16.4% of the total. Outside the Gulf, banks from Egypt (16), Lebanon (10), Jordan (4) and Morocco (5) head the rest, but while Egyptian and Lebanese banks account for more than one-quarter of the listing their profitability is low, together accounting for just 7.3% of total profits. Algerian banks were excluded this year because their results were too old.