Gulf banks have lost nearly a third of their profits during 2020, affected by the Coronavirus pandemic repercussions and the measures taken to confront the recession.
A report by the Kuwaiti Kamco Invest company said banks listed in the Gulf capital markets lost 32.2% of their profits compared to 2019.
Based on data from 62 banks listed on the Gulf stock markets, the report found that these banks recorded profits of $25 billion in 2020.
Gulf banks recorded profits of $36.9 billion in 2019.
The recorded decline in profits is the lowest in 18 years when financial markets were affected by the US mortgage crisis in 2008.
Banks net profits during 2020 were the lowest in seven years, with record allocations to avoid loan defaults.
The report indicated that the decline in net profit in Kuwait was the most severe, by 55.5% which is about $1.5 billion, then Bahrain, down with 53.6% and $700 million, followed by the UAE, by 44.2%and $7 billion.
Saudi banks recorded a decline of 22.8$ which is about $9.3 billion, followed by Oman, which recorded a decline of 22.2% which is $700 million.
As for Qatar, it recorded the lowest decline in profits, by 12.4%, to $5.9 billion.
Attempts to recover
The value of loan loss provisions increased last year to $20.3 billion, a noticeable increase in the six Gulf countries, compared to less than $5.5 billion in 2019.
The region’s banks allocated $6.4 billion to doubtful debts in the fourth quarter of 2020, which is the highest level recorded on a quarterly basis in the region.
The Gulf countries are also trying to recover from the worst economic and financial crisis in their history resulted from the negative consequences of the Coronavirus pandemic and the drop in oil prices.
The region’s main source of income is oil, amid a decline in global demand.
Standard & Poor’s said earlier last month that the economic recovery from the Coronavirus crisis in the oil-rich Gulf region will be slow, which will negatively affect the banking sector in the region.
During the past weeks, credit rating agencies have lowered the rating of a number of Gulf banks.