Although not unaffected by the global financial crisis, the Arab banking sector has continued to expand, with the UAE banks accounting for a growing proportion of asset growth. Writer Stephen Timewell

The Top 100 Arab banks were relatively isolated from the excesses of the global financial crisis, but 2008 results were not unaffected by the downturn that began with the Lehman collapse more than a year ago. While only a handful of banks, led by Bahrain's Arab Banking Corporation and Gulf International Bank, actually suffered losses in 2008 as a result of their international exposures, 21 banks across the region saw profits decline compared to 15 the previous year.

Although banks could not remain immune from the impact of the global credit crisis this year, they have continued to expand, unlike most banking sectors around the world. The aggregate Tier 1 capital for the Top 100 Arabs in the 2009 listing grew by 11.3% compared with the previous year, to reach $138.2bn. This is well down on the 2008 listing growth of 19.7%, but still ahead of the average 9.7% growth shown in the Top 1000 World Banks listing in July. Although Arab banks are expanding, they are still relatively small on the global stage, with the Top 100 aggregate Tier 1 capital only amounting to 3.2% of the Top 1000 aggregate capital of $4276bn.

GCC retains domination

The Gulf Co-operation Council (GCC) banks continue to dominate the listing, with banks from the six states providing 58 banks in the Top 100. But their role is more pervasive in monetary terms, with these banks accounting for 79.6% of aggregate Tier 1 capital (78.5% last year) or $109.9bn, with a similar figure for aggregate assets.

The 2008 results in the 2009 listing showed that the largest Arab banks maintained healthy asset growth. The top 10 banks by assets was led by Emirates NBD and all were from the GCC except for Jordan's Arab Bank, largely reflecting growth in particular domestic markets. Saudi Arabia's Al Rajhi Bank and Riyad Bank produced strong asset expansion of 32.1% and 31.6%, respectively, while Qatar National Bank and Abu Commercial Bank, with growth of 32.9% and 39.1%, respectively, also showed the huge potential for Gulf markets, despite the difficult international conditions.

Saudi Arabia remains not only the largest economy in the Middle East but also the biggest banking sector. The country's 11 banks have an aggregate Tier 1 capital of $37.9bn, which accounts for 27.4% of the Top 100 total (29.2% last year). Two of the three most profitable Arab banks are Saudi - Al Rajhi Bank leads the ranking with pre-tax profits of $1740m and Samba Financial Group is in third place with profits of $1138m. National Commercial Bank again heads the Top 100 with capital of $6680m but is nevertheless relatively small on the global stage, coming 120th in the latest Top 1000.

UAE expansion

Saudi dominance of the Top 100, however, is slipping. The UAE's 17 banks are gaining ground and in the 2009 listing they account for 23.3% of aggregate Tier 1 capital, just 4.4% behind the Saudis, compared with 8.9% behind in the previous year. Together, the 28 Saudi and UAE banks account for more than 50% of the Top 100 total capital, with Kuwait's seven banks and Bahrain's 11 banks providing a further 10.2% and 9%, respectively.

The UAE expansion is amply demonstrated by the table of the Top 10 Arab banks by asset growth, in which UAE banks account for seven of the 10. Led by Bank of Sharjah, with asset growth of 107.5%, two other UAE banks, National Bank of Fujairah and Sharjah Islamic Bank, also grew by more than 100%.

Looking at performance measures, the UAE's Rakbank heads the Top 10 by return on average capital with a strong 48.8% return. The Ras Al Khaimah bank, focused on small business lending, has also reported 10% profit growth in the first half of 2009. It is followed in the ranking by Egypt's Commercial International Bank (Egypt) with 46.2% and Qatar Islamic Bank with a 42.8% return.

With regard to return on assets, Qatar Islamic Bank leads this ranking with a strong 6.24%, followed by Bahrain's Khaleej Commercial Bank and Al Salam Bank, with returns of 5.87% and 4.61%, respectively.

The 2009 listing contained 13 new entrants, which were led by the long-established offshore Libyan Foreign Bank, the UAE's Al Masraf Bank and Qatar International Islamic Bank.

Where they come from

Where they come from

Tier 1 capital (%)

Tier 1 capital (%)

Top Arab Banks by Asset Growth (as at 31/12/2008)

Top Arab Banks by Asset Growth (as at 31/12/2008)

Top New Arab Banks by Tier 1 Capital Growth (as at 31/12/2008)

Top New Arab Banks by Tier 1 Capital Growth (as at 31/12/2008)

Top New Arab Entrants by Tier 1 Capital (as at 31/12/2008)

Top New Arab Entrants by Tier 1 Capital (as at 31/12/2008)

Top Arab Banks by Assets (as at 31/12/2008)

Top Arab Banks by Assets (as at 31/12/2008)

Top Arab Banks by Return on Average Capital (ROAC) (as at 31/12/2008)

Top Arab Banks by Return on Average Capital (ROAC) (as at 31/12/2008)

Top Arab Banks by Profits (as at 31/12/2008)

Top Arab Banks by Profits (as at 31/12/2008)

Top Arab Banks by Return on assets (as at 31/12/2008)

Top Arab Banks by Return on assets (as at 31/12/2008)

Top 100 Arab Banks by Country

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