JEDDAH: KPMG has released its first GCC listed bank results report, analyzing the published financial statements of 56 leading listed commercial banks across Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, and the UAE.

The report covers over 90 percent of the region’s listed banking assets, and indicates that the regional banking sector has entered a new paradigm.

However, banks have on the whole, fared well during 2015 and the outlook for the coming years remains relatively positive given the expectation of continued government support for the sector and committed infrastructure investment.

Omar Mahmood, head of financial services for KPMG in the Middle East & South Asia, said: “The banking sector in the region has moved a long way from the days of excess capital and liquidity. Our report reveals that the sector is no longer growing at double-digit growth rates. Banks are experiencing new challenges as a result of the current economic environment, greater regulatory oversight, supervision and stiffer competition. However the sector is still growing, although at a slower pace than previous years.”

The report suggests that the coming year is likely to see further capital and fundraising activity to support growth and to manage Basel III capital and liquidity requirements, particularly given that capital adequacy and liquidity levels fell in 2015 compared with the previous year.

The report also suggests that consolidation in the form of mergers and/or reorganizations could possibly take place in the near future as a result of stiff competition and increasing pressures on costs.

Net impairment charges have declined year on year by an average of 9.2 percent, reflecting the more cautious approach to lending adopted by banks in previous years.

This trend may not continue due to a lag from the impact of the oil price decline on the wider economy.

It is clear that the sector is looking for ways to mitigate current financial pressures as cost-to-income ratios have reduced by 7.4 percent on average since 2014.

Increasing regulation, despite creating additional pressure on banks, is having a positive impact on the sector – a trend which is expected to continue in the long-term. Basel III regulations, which are being adopted across the GCC, will continue to improve the sector's resilience against financial and economic stress, improve risk management and governance and strengthen banks' transparency.

Adrian Quinton, head of financial services at KPMG in Saudi Arabia commented: “Saudi Arabia has maintained its position as the largest banking market in the GCC, and while it still shows growth, solid capital ratios and stable impairment, there are pressures on liquidity, margins and impairment as the market heads in 2016 in common with the region as a whole.”

The report titled ‘GCC Listed Bank Results: A New Paradigm’, analyses the results of selected listed banks in Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the UAE. It summarizes bank’s results against selected key performance indicators for the year ending Dec. 31, 2015 and compares these with the same information for the year ending Dec. 31, 2014.