GCC banks back on double digit growth path, but gaps between banks are widening
A recent study by The Boston Consulting Group shows that Middle East banking revenues continued to grow and reach double digit rates in 2013 with a 10.7 percent increase, whilst profits increased by 10.3 percent. At an aggregate level, provisions for bad loans grew slightly again, by 2.5 percent. Increases in operating costs exceeded revenue growth significantly with 13.9 percent. The main customer segments; retail and corporate banking, however, remain significantly behind the overall revenue growth rate with 7.2 percent and 6.9 percent growth rates respectively. The difference is attributable to growth in international business including acquisitions of banks as well as in treasury. “We observe that the gaps between banks' developments are widening: While about 10 to 15 banks achieve double digit growth rates both in revenues and in profits, 3 to10 banks had to accept negative growth in revenues or profits overall or in customer segments”, said Dr. Reinhold Leichtfuss, Senior Partner & Managing Director in BCG's Dubai office and leader of BCG’s Financial Institutions practice in the Middle East. Again, the performance of Middle East banks clearly exceeded that of their international counterparts, a number of which experienced further revenue declines in 2013.