Bank of the Year Awards 2022 — Middle East

The Middle East’s top lenders from 2022

Bahrain
Al Salam Bank

In a competitive category, Al Salam Bank has been awarded the title of Bank of the Year for Bahrain in recognition of its strong financial performance and its acquisition of Ithmaar Holding’s retail business.

After a challenging 2020, Al Salam Bank rebounded strongly in 2021, with Tier 1 capital and assets growing by 7% and 19%, respectively. The bank posted a 133% rise in profits, with return on assets rising to 7.2%, comfortably above pre-Covid-19 pandemic levels. Costs were little changed for the year, while non-performing loans improved from 5.1% in 2020 to 2.1% in 2021.

The highlight of the year was Al Salam’s acquisition of the consumer banking business of domestic rival Ithmaar Bank, a 26% stake in Bank of Bahrain and Kuwait and various other assets, as part of a $2.2bn deal with Ithmaar Holding. The transaction, agreed in October 2021 and completed in July, confirms the bank’s status as the largest Islamic lender in Bahrain, with the bank benefiting from an expanded customer base, human resources and infrastructure network.

Beyond the acquisition, the bank pressed on with its digital transformation programme, using Oracle Integration Cloud to significantly reduce the lead time to integrate with third parties from weeks to less than a day. As a result, the bank is now able to test and conduct proof-of-concept exercises with third-parties and fintechs with greater efficiency, ease and speed.

On the product front, Al Salam Bank launched its Life Planning Account campaign, offering customers competitive profit rates on minimal investments for short-term savings, with the added benefit of accompanying insurance products, including life, children’s education and Covid-19 coverage. In February 2022, the product was expanded to offer more flexible monthly savings options, with the option of a tenor of up to 20 years.

Iran
Bank Pasargad

Iran is one of the most challenging banking environments in the Middle East, with local lenders operating under a heavy sanctions burden. Bank Pasargad retains its title of Bank of the Year for the country in 2022, in continued recognition of its ongoing progress in the digital space.

One of the most significant initiatives for the review period was the launch of Bank Pasargad’s neobank, Wepod. In addition to standard banking services, Wepod’s features include digital authentication via facial recognition, virtual debit card issuance, electronic promissory notes and smart credit scoring mechanisms. The Wepod app had been downloaded 200,000 times by the end of 2021. The bank has reported strong uptake in remote areas and small villages that are not served by physical branches.

The bank has subsequently upgraded Wepod to offer microcredit, with customers validated and given access to funds within five minutes. Bank Pasargad notes that 17,000 microcredit loans were granted in the service’s early months, with a third of loans going to customers in rural areas.

Last year also saw the launch of the bank’s digital banking branch, which enables customers to open accounts and transact from home. Furthermore, the digital banking branch enables customers to connect into the bank’s ‘Project on Digital Banking Smart Land’, the bank’s emerging platform that forms the basis of an ecosystem for producers, consumers and other sub-platforms. In the past year, around 70,000 customers have opened digital accounts and are fully conducting their banking transactions via the digital banking branch service.

Such initiatives are all part of the increased digitisation at Bank Pasargad in recent years, with 97% of the bank’s documents issued digitally during 2021.

Israel
Bank Leumi

The Bank of the Year award for Israel goes to Bank Leumi, in recognition of the lender’s strong financial performance, its expanded presence in the US and its deepening investment in Israel’s burgeoning fintech sector.

The country’s second-largest lender by assets, Bank Leumi’s net profits tripled to NIS6m ($1.75m) in 2021, with Tier 1 capital and assets growing by 10% and 18%, respectively. The cost-to-income ratio fell for the second consecutive year, while non-performing loans recovered to pre-pandemic levels.

“Our strategy is to provide our clients with the most convenient and innovative banking experience,” says Hanan Friedman, Bank Leumi’s president and CEO. “Within this framework, we have implemented multi-channels of service to our customers, based on digital tools and advanced artificial intelligence (AI) models. This has enabled us to achieve impressive growth, reduce expenses, present the best efficiency ratio in the Israeli banking industry and maintain our position as the leading bank in Israel according to market cap.”

The bank signed an agreement in September 2021 to merge its US subsidiary Bank Leumi USA with Valley National Bank. Completed in April 2022, the merger created the 29th largest bank traded on the US stock market, with Bank Leumi retaining a 14.2% stake as the bank’s largest non-controlling shareholder. Active in New Jersey, New York, Florida, Alabama, California and Illinois, the deal is set to see Valley National Bank expand its presence across the country.

Back in Israel, the bank announced a new fund called ‘The Garage’, with the intention of investing in 15 local start-ups over a five year period. Established via the bank’s non-financial arm, Leumi Partners, in conjunction with three ex-intelligence services entrepreneurs, the fund will prioritise investment in fields including finance, cyber security and AI.

Jordan
Arab Bank

Arab Bank has once again been crowned Bank of the Year for Jordan, with 2022 being a year of financial recovery that saw the country’s largest lender make large strides in its digital transformation programme.

Perhaps the most visible aspect of the bank’s digital initiatives was the launch in September 2021 of Reflect, the country’s first neobank. Targeted at customers aged 18 to 35, Reflect has so far seen more than 200,000 downloads and 40,000 customers fully onboarded. The bank also launched Arabi Next — the first banking app aimed at the country’s small- and medium-sized enterprise community — in June 2022, offering features including self-registration for companies and the ability to view company accounts with enhanced dashboarding features.

Arab Bank also introduced a series of new features to its Arabi Mobile app, including a buy now, pay later facility; an instant loan service; and a bancassurance simulator allowing customers to create their own simulations for a variety of products, such as education saving plans, retirement saving plans and term life insurance policies.

The bank’s finances saw an improvement in 2021 following the easing of Covid-19 restrictions, with profits rising by 61% for the year. Tier 1 capital, which slipped in 2020, grew by 19% in 2021, with assets increasing by 17%, boosted by the finalisation of Omani subsidiary Oman Arab Bank’s acquisition of Alizz Islamic Bank. Customer deposits grew by 22% to reach $47.1bn, while loans grew by 30%, to reach $34.6bn.

Return on assets improved from 2.1% to 3.0%, but remains significantly lower than the pre-pandemic figure of 9.3%. The cost-to-income ratio rose from 47.1% to 49.4%, while the rate of non-performing loans dropped from 6.8% to 6.3%.

Kuwait
National Bank of Kuwait

In 2020, Kuwait experienced its deepest recession since the Iraqi invasion of 1990, as the economy reeled from the impact of Covid-19 lockdowns and a collapse in oil prices. Two years later, resurgent oil prices have given the country some respite, even as political paralysis continues to hold up vital economic reforms.

In one of the Middle East’s most contested categories, National Bank of Kuwait (NBK) has risen to the top as the country’s Bank of the Year for 2022, in recognition of its improved financial performance, sustainable financing framework and the launch of new digital bank Weyay.

“The operating environment has gone through a period of rapid changes and has been impacted by economic recovery, higher consumer spending and rising interest rates,” says Salah Y Al-Fulaij, NBK’s CEO for Kuwait. “Nonetheless, we stayed the course and continued to follow the main pillars of our strategy, thanks to our flexible business model, our solid financial position and our focus on core banking activities.”

The bank launched its sustainable financing framework in March 2022, in a bid to enable and promote responsible business practices to help steer the Kuwaiti economy towards long-term value creation, as well as supporting the country’s National Adaptation Plan addressing climate change. The framework is aligned with the green bond principles, social bond principles and sustainability bond guidelines published in June 2021 by the International Capital Market Association.

“All our sustainability plans are designed to achieve business growth and maintain our leading position in the local market,” says Mr Al-Fulaij. “In doing so, we continue to invest heavily in enhancing our technological infrastructure and improve our digital channels to attract and retain new customers, with special focus on the youth segment.”

Oman
Ahlibank

In a highly competitive category, Ahlibank has been named Bank of the Year for Oman, with the judges highly impressed by the bank’s digital innovation programme.

Ahlibank’s ‘Tamkeen’ peer-to-peer crowd-funding initiative is one of the stand-out achievements in the digital realm during the review period. The initiative, launched in June 2022 in conjunction with Beehive, is aimed at supporting the country’s burgeoning small- to medium-sized enterprise (SME) sector (which grew by nearly 50% during the year), with cutting-edge digital lending solutions, a shorter processing time and a competitive pricing structure.

With SME funding often difficult to come by, Tamkeen is designed to narrow this funding gap by enabling entities to access financial packages ranging between OR20,000 ($52,000) and OR80,000. Funding comes from a selection of investors including Ahlibank itself, local non-banking financing institutions, regional multilateral organisations, high-net-worth individuals and retail investors via a fully digital platform.

Another highlight was the launch in November 2021 of a new app for the bank’s Ahli Islamic window, offering digital onboarding and account opening in less than 90 seconds. Since the app’s launch, more than 80% of Ahli Islamic new accounts have been opened digitally, generating over OR15m of revenue in six months.

“We always strive to meet and surpass the demands and expectations of our expanding customer base through research into and application of global industry trends,” says Ahlibank CEO, Said Abdullah Al Hatmi.

“The worldwide shift toward digitalisation has been a major force behind Ahlibank’s transformation, enabling us to enhance our services and therefore establish a new benchmark for banking in the country.”

Palestine
Bank of Palestine

Bank of Palestine (BoP) claims the Bank of the Year award for Palestine, thanks in no small part to its impressive financial performance during challenging circumstances.

The territory’s largest lender by assets, BoP’s finances rebounded strongly in 2021 after a year beset by Covid-19 and other challenges. The bank reported a 151% growth in profits for 2021, with return on equity rising to 11.29%, comfortably above pre-pandemic levels. Tier 1 capital and assets grew by 14% and 12% respectively, with both non-performing loans and costs lower than 2019.

“BoP has focused on the real economy, modernisation, financial inclusion and sustainability, which have played an essential role in setting out our business strategy,” says BoP’s CEO Mahmoud Shawa. “With the market dynamics and favourable demographics, we see huge potential for onboarding new clients whether they are youth (75% of our population are under the age of 34), small- and medium-sized enterprises (constituting 90% of the economy), women, start-ups or diaspora Palestinians.”

Sustainability was a key priority during the review period, with the bank joining the Global Impact Investing Network during the first half of 2022. January 2022 saw the signing of the Sunref II Green Programme in conjunction with the EU and Proparco, a French development finance institution. The programme, consisting of a $30m Proparco credit facility, is aimed at boosting the Palestinian economy, supporting sustainable green investment and Covid-19 economic recovery.

On the product side, the bank launched a services bundle aimed at female Palestinian entrepreneurs in May 2022, with tailored offerings for small businesses at different stages of maturity. The bundles allow businesswomen and entrepreneurs to access privileged banking products and services, alongside a non-financial advisory service to assist women in managing their business financially and promote their integration in the Palestinian economy.

Qatar
Commercial Bank

Despite strong competition from larger domestic rivals, Commercial Bank has been named as this year’s Bank of the Year for Qatar, thanks to a combination of strong finances and innovative digital strategies.

One of the key initiatives that impressed the judges was the bank’s use of TikTok as a means of engaging with a younger customer base. In response to a study indicating that Middle Eastern millennials prefer to manage finances on their own rather than seek help directly, Commercial Bank has begun to offer tailored financial guidance via TikTok. One of the bank’s most popular series is ‘Rashed’s Financial Tips’, presented weekly by branch area manager Rashed Al Boainain.

The use of TikTok coincides with an impressive increase in the use of digital channels across the board for Commercial Bank in 2021, with active digital users increasing by 15%, and a 30% increase in business owners and decision-makers using the bank’s mobile solutions to approve transactions. Within the bank’s transaction banking arm, 90% of payments, 99% of salaries and 93% of trade transactions are now conducted digitally.

On the financial side, profitability recovered to pre-Covid-19 pandemic levels in 2021, with return on equity increasing from 5.9% in 2020 to 10% in 2021. While non-performing loans inched up during the year, the banks cost-to-income ratio improved from 26% to 24.1%. Tier 1 capital and assets grew by 2.7% and 7.7%, respectively, during the year.

“Commercial Bank remains committed to its strategy of client experience and digital innovation and creativity based on a sound compliance foundation,” says Joseph Abraham, Commercial Bank of Qatar’s group CEO. “We are working to strengthen the bank’s environmental, social and governance credentials, and support the economic development of Qatar as part of the National Vision 2030.”

Saudi Arabia
Saudi National Bank

For the second year in a row, Saudi National Bank (SNB), the Middle East’s largest lender by Tier 1 capital, is the winner of the Bank of the Year award for Saudi Arabia, in recognition of the bank’s digitisation efforts and strong financial performance.

In the wake of SNB’s creation in 2021, via the coming together of National Commercial Bank and Samba Financial Group, the bank has made significant progress on the digitisation of its integrated operations. Digital penetration grew to 79% in 2021, while digital transaction migration reached 99%.

On the sales front, SNB established a robust acquisition engine delivering a significant digital contribution in account opening, resulting in 88% of accounts being opened digitally in 2021. The bank further empowered clients with seamless digital sales capabilities, which contributed to 62% of total retail sales being made digitally

In wholesale, continued investment in the bank’s eCorp and eTrade platforms further empowered customers with advanced product capabilities and instant fulfilment of services. Digital adoption rose, with financial transaction migration reaching 98% and digital account-opening penetration reaching 51% of the total. The point-of-sale (POS) network further expanded to total 213,776 terminals, taking SNB’s POS market share to more than 21%.

The bank’s retail arm continues to benefit from strong growth in the Saudi mortgage market. Residential financing reached SR118.5bn ($31.51bn) at end 2021, with net financing increasing by 27%.

Return on equity slipped for the year following the merger, even as net profits rose by 10.7% in 2021. Cost-to-income increased from 30.8% to 32.2% because of the merger, while non-performing loans remain low and on a downward trajectory.

The bank’s strategic imperatives for the coming years include growing financing and profitability, maintaining cost and risk discipline, and unlocking further merger benefits.

UAE
Abu Dhabi Islamic Bank

In the highly competitive market of the UAE, the Middle East’s second-largest economy after Saudi Arabia, Abu Dhabi Islamic Bank (ADIB) has prevailed to be named the country’s Bank of the Year for 2022.

The judges were particularly impressed by ADIB’s launch of its Amwali neobank in August 2021. Devised in collaboration with UAE-based entrepreneurship group the Founders Club, Amwali is targeted squarely at Generation Z, offering a suite of banking products and innovative technology to enable younger customers to enjoy a whole new way of banking that is paperless, branchless and signature-free.

Amwali offers a dedicated digital banking experience, access to financial knowledge and personalised offers that fit the customer’s lifestyle, all with appropriate parental controls. ADIB opened 7400 accounts via Amwali by the end of 2021.

Amwali’s launch is one example of the increased digitisation across ADIB’s operations. The bank’s main app has been downloaded by nearly 90% of its customer base, with the app handling more than two million transactions per month. The bank recorded 64% digital usage for the maintenance of current accounts, with 29% of all current accounts opened digitally.

Digital finance applications are increasing steadily, with 36% of personal finance applications taking place digitally, while the ADIB received and processed 95% of payment fund transfer requests through straight-through processing.

ADIB recorded an improvement in its finances in 2021, even as profitability fell short of pre-Covid-19 pandemic levels. Assets increased by 7% to Dh136.9bn ($37.27bn). Costs decreased significantly for the year, with cost-to-income improving from 45.7% to 40.7%. Non-performing loans declined from 19.4% to 8.9%, well below the pre-pandemic level of 17.9%.