In its Standpoint Commentary, RAM Ratings has reviewed the 20 largest GCC banks by asset size, representing about 57 per cent of the region’s total
banking assets.
The study has revealed that the GCC banks had remained resilient during the recent global financial crisis, thanks to various government measures to protect the respective systems.
“The publication forms part of our efforts to continuously expand on our coverage in the GCC, and supplements our publications on the GCC-based financial institutions in our rating portfolio,” says Liza Mohd Noor, RAM Ratings’ Chief Executive Officer.
According to the RAM Ratings’ Standpoint Commentary, the GCC banking systems are well regulated and majority of the top 20 banks are government-controlled. In the 2006-2008 period, almost all GCC banking institutions charted year-on-year double-digit growth in their financing portfolios as contributions from the oil sector fuelled government spending and economic growth.
In the aftermath of the global financial crisis, the ensuing loss of confidence had widespread implications on GCC economies and by association, their banks. Increased levels of asset impairment charges and a largely stagnant financing portfolio had also weakened profitability of most financial institutions in the region in 2009.
Throughout the economic crisis, RAM Ratings has observed a clear trend of government support and commitment to their respective banking systems manifested through outright capital injections, conversions of government deposits into capital, or via deposit or loan guarantees. The study further notes that the regulatory capital requirements in the GCC region are usually higher than those recommended by Basel II to provide
additional buffers.
RAM Ratings highlights that the key strength of the GCC banking sector is the high capitalisation of its banks with an average Tier-1 risk-weighted capital-adequacy ratio (RWCAR) of 14 per cent and an overall RWCAR of 18 per cent as at end-December 2009. The GCC governments had also provided liquidity facilities to the banks amid the tight liquidity conditions in 2008 and 2009.
According to ranking Emirates NBD is top on the list with assests as at the end of 2009 US 76.7 billion dollars, National Commercial Bank of Saudi Arabia is on the second position with assests of $68. 6 billion and National Bank of Abu Dhabi is on the third place with $53.6 billion assests during the
same period
