1. QNB Economics
economics@qnb.com.qa
10 March 2013
Public project spending drove GCC banks asset growth in
2012
The GCC Banking Sector continues to remain facilities increased by 26% in 2012, pushing up
robust with assets increasing by 11% in 2012 to banking sector assets by 18%. The public sector
US$1.47trn. Higher energy prices and increased has been the key contributor to credit growth in
hydrocarbons production have provided for large Qatar. Credit facilities to the public sector
public spending programs, which, coupled with a increased by an average of 43% over the past
pick up in construction and real estate activities, three years, which can mainly be attributed to
have driven growth in credit facilities. This has bank financed public spending on infrastructure
resulted in overall asset gains, according to QNB projects. The real estate and construction sector
Group. was the second largest recipient of credit facilities
in Qatar and grew by 10.5% in 2012 as growth in
GCC Banking Sector Assets (2008-12) those sectors picked up.
(US$trn and % share)
GCC Banking Sector Credit Facilities (2011-
12)
1.47 Om an (US$bn and % growth)
7.7%
1.33 4% 5% Bah rain **
1.23 11% Kuwait 12%
1.15
1.09 17%
15% Qatar 302 2011 2012
270 267
228
32% Saudi
26%
140 4%
111
33% UAE* 92 96
14%
6%
33 37
17 18
2008 2009 2010 2011 2012
* As at November 2012 UAE* Sa udi Qa ta r Kuwa it Om a n Ba h ra in **
** Retail Banks Ara bia
Source: Central banks and QNB Group analysis
* As at November 2012
** Retail Banks
Credit facilities form the largest component of Source: Central banks and QNB Group analysis
overall GCC banking sector assets and
accounted for 58% of overall assets in 2012. The UAE has the largest banking sector in the
They alone grew by 14% in 2012 to US$859bn. region, accounting for 33% of overall GCC
banking assets, with total assets at US$489bn as
The GCC banking sector is characterised by a at November 2012. Credit facilities went up by
high concentration of local banks. The top 20 12% in 2012, supporting the expansion in total
GCC banks made up 66% of overall banking banking assets by 8% in 2012. Loans to the
sector assets in 2012. QNB is the largest bank in construction sector form the largest portion of
the GCC with assets at US$101bn as at year-end credit facilities in the UAE and after declining in
2012. 2010-11, started to pick up in 2012. Additionally,
credit facilities to other major sectors, such as the
Among the GCC countries, Qatar, which public sector and wholesale trade, also increased
accounted for 15% of total GCC banking assets in 2012.
in 2012, stood at the forefront of growth. Credit
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2. QNB Economics
economics@qnb.com.qa
Saudi Arabia has the second largest banking
assets in the GCC at US$462bn. Credit facilities
went up by 17% in 2012 as loans for trade and
manufacturing grew.
Kuwait’s credit facilities grew a slow pace of 4%
in 2012, driven mainly by the increase in loans to
the construction and real estate sector. Oman
experienced strong growth in bank financing
which went up by 14% in 2012 as personal and
public sector loans increased.
The banking systems in the GCC region have
remained relatively sound even with strong
growth in the balance sheet of banks. This is
mainly due to the good asset quality of GCC
banks as the non-performing loans (NPL) ratio
has remained low for the GCC region. The NPL
ratio for GCC banks stood at 4.5% for 2012,
based on Bloomberg data.
Apart from traditional bank financing, corporate
debt capital markets have also emerged as a
good funding option for governments and
corporates in the region. While bank financing
has traditionally been the preferred source of
funding for GCC government and institutional
borrowers, they have in recent years started to
diversify their funding sources, through access to
the capital/bond market. In 2012, a total of 919
bonds were issued in the GCC amounting to
US$111bn, according to data from Bloomberg.
This is in comparison to the US$107bn in credit
facilities that were granted by GCC banks. Even
as bonds have emerged as an alternative, bank
financing will remain as the primary source of
funding for institutional and corporate borrowers,
according to QNB Group.
** Ends **
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