GCC banks return to double-digit growth path

Updated 09 April 2014
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GCC banks return to double-digit growth path

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, while 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 Reinhold Leichtfuss, senior partner and MD 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.
Based on the banks’ 2013 annual results released in the first quarter of 2014, the newest study is part of BCG’s annual banking performance indices measuring the development of banking revenues (operating income) and profits for leading Middle East banks.
“The 2013 BCG index includes 35 banks from across the GCC, capturing nearly 80 percent of the total regional banking sector,” Leichtfuss added.
While revenues of banks in Qatar grew by 20 percent and banks in the UAE are back to double-digit growth overall, Saudi, Omani and Bahraini banks are experiencing single digit growth rates. The spread of profit growth rates was particularly wide: while banks in Bahrain enjoyed 30 percent profit increase and 19 percent in the UAE, banks in Kuwait had to cope with double digit reductions.
In 2013, loan loss provisions varied significantly by country.


Iraq to ask US for exemptions on some Iran sanctions

Updated 22 August 2018
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Iraq to ask US for exemptions on some Iran sanctions

BAGHDAD: Iraq’s economy is so closely linked to Iran that Baghdad is going to ask Washington for permission to ignore some US sanctions on its neighbor, Iraqi government and central bank officials said.

US President Donald Trump withdrew the US from an international deal aimed at limiting Iran’s nuclear program earlier this year and reimposed trade sanctions.

Washington has said there will be consequences for countries that do not respect the sanctions.

Baghdad is in a difficult position. Iraq imports crucial supplies from ally Iran, but its other major ally is the US, which provides security 
assistance and training.

The request would mark an 
important change in political tactics for Iraqi Prime Minister Haider Al-Abadi. He initially said Baghdad would respect all the US sanctions, but faced heavy criticism from rivals.

The officials told Reuters a delegation will travel to Washington to ask for exemptions in applying the sanctions. They did not say when that trip would take place.

“The government plans to ask Washington for a waiver. It’s going to happen soon,” one central bank 
official said.

An official in Abadi’s office declined to comment. An official in the US State Department said it was discussing Iran policy with its partners around the world.

“We have given the same message to all countries around the world that the President has said, the United States is fully committed to enforcing all of our sanctions,” the official said.

“Iraq is a friend and important partner of the US and we are committed to ensuring Iraqi stability and prosperity.”

Iraqi officials fear shortages of key items if Baghdad complies with all the sanctions, which could lead to political turmoil at a delicate time in Iraqi politics.

Iraq imports a wide range of goods from Iran including food, agricultural products, home appliances, air conditioners and spare car parts. The goods element of Iranian imports to Iraq was about $6 billion for the 12 months to March 2018, about 15 percent of Iraq’s total imports for 2017.

Energy contracts between the two countries contributed to a volume of trade of $12 billion last year.

The officials said they were asking each ministry to put together a list of imports that are essential for Iraq’s economy. Those items will make up the request for exemptions.

The US sanctions that came into 
effect earlier this month target Iran’s trade in gold and other precious metals, its purchases of US dollars and its car industry. Other sanctions will come into force in November.