The Middle Eastern banking sector has not had a particularly positive 12 months. In 2010, following regional crises concerning Dubai World and the defaults by Saudi business conglomerates, 90 banks from the region made it into the Top 1000 rankings – this year, that figure slumped to just 83. Globally, the region now accounts for 3.32% of total Tier 1 capital for the 1000 banks in this year's rankings, down from 3.58%.
Banks based in the Gulf Co-operation Council (GCC) states – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates – remained dominant, accounting for 54 of the total Middle Eastern banks in the overall ranking and, more strikingly, 19 of the regional top 25. Gulf-based banks boasted stronger growth too, with only two Lebanese and one Iranian bank in the 10 highest movers.
Saudi Arabia’s National Commercial Bank held on to the regional top spot after a strong year. The Jeddah-based bank's Tier 1 capital increased to $8.31bn from $7.64bn in last year’s ranking. Emirates NBD, which is known to have had exposure to Dubai World’s debt obligations, held steady in second place.
Outside of the GCC grouping, Israeli banks were among the strongest performers in the top 25. Bank Hapoalim enjoyed a particularly good year relative to its contemporaries. It netted third place thanks to boosting Tier 1 capital from $5.99bn to $7.07bn.
With an increase in Tier 1 capital of 45.32%, Bank of Beirut was the Middle East's highest mover, reflecting strong growth in the Lebanese banking sector. By contrast, Abu Dhabi Commercial Bank suffered the most severe drop in Tier 1 capital among all Middle East banks. It fell 5.18% to the current figure of $4.41bn and dragged the bank down to 192nd position in the Top 1000 ranking, from last year's 167.
New entrants from the Middle East in the Top 1000 declined from five in 2010 to only two this year, although the Trade Bank of Iraq made a welcome appearance. The Baghdad-based bank, which was not included in last year's Top 1000, debuted in at 418th in the overall ranking, having grown to be the country’s largest financial institution since its US-sponsored establishment in 2003.
While Middle Eastern banks are hardly experiencing explosive growth, there are some reasons to be positive. Qatar, UAE, Jordan and Kuwait are all safely within the top 10 cost-to-income ratios by country. Similarly, the regional average climbed just 0.04% (from 41.33% to 41.37%) despite operating costs increasing by an average of 9.41%, indicating substantial increases in profits.
