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.


Relief for UK buyers as consumer prices drop more than expected

Updated 17 October 2018
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Relief for UK buyers as consumer prices drop more than expected

  • Consumer prices rose at an annual rate of 2.4 percent, more than reversing August’s jump to a six-month high of 2.7 percent
  • The figures are likely to reassure Bank of England officials

LONDON: British inflation fell more than expected in September to a three-month low, offering some relief to consumers who have been squeezed financially since the Brexit vote.
Consumer prices rose at an annual rate of 2.4 percent, more than reversing August’s jump to a six-month high of 2.7 percent, the Office for National Statistics said.
That was well below the consensus forecast of 2.6 percent in a Reuters poll of economists.
Sterling fell against the dollar and euro while British government bond prices rose.
The figures are likely to reassure Bank of England officials who forecast in August that inflation would average around 2.5 percent over the July-September quarter.
“Coupled with the gradual up-tick in wages, the slowing rise in prices will deliver a boost to consumers’ real take-home pay packets, which will also be welcome news for retailers,” said Tej Parikh, senior economist at the Institute of Directors.
“The Bank of England will be unruffled by this week’s data releases, and remains unlikely to budge on interest rates as it continues to monitor the impact of Brexit developments.” The BoE expects it will need to raise interest rates gradually in response to rising wages, assuming Britain manages to strike a deal with the European Union to smooth its exit from the bloc.
On Tuesday, the ONS said the basic wages of workers had risen at their fastest pace in nearly a decade over the summer months.
But wage growth of 3.1 percent remains meagre by historical standards when adjusted for inflation.
The BoE expects inflation to drift down but stay just above its 2 percent target in two years’ time as it gradually raises borrowing costs.
Consumer price inflation hit a five-year high of 3.1 percent in November, when the inflationary effect of the pound’s tumble after the Brexit vote in June 2016 reached its peak.
The ONS said food prices, particularly of meat and chocolate, represented the biggest drag on September’s inflation rate.
Ferry prices dropped from a “surprisingly high” summer peak.
Still, there could be more short-term pressure in the pipeline for consumer prices.
For manufacturers, the cost of raw materials — many of them imported — was 10.3 percent higher than in September 2017, up from a revised 9.4 percent in August.
That was a bigger jump than any economist had forecast in the Reuters poll, which anticipated a rise of 9.2 percent.
Manufacturers increased the prices they charged by 3.1 percent compared with 2.9 percent in August, again stronger than all forecasts in the poll, which had pointed to a 2.9 percent increase.
The ONS said house prices in August rose by an annual 3.2 percent across the UK as a whole, the smallest rise since August 2013 and compared with a 3.4 percent increase in July.
Prices in London alone slipped 0.2 percent.