The report published by the Banker magazine shows the ranking of the 100 largest Arab banks nosedived in 2021 due to the slowdown in asset growth and a sharp decline in profitability.
The magazine cited the outbreak of the Covid-19 pandemic in which affected businesses all over the world in 2020 with closures and restrictions on business. It exacerbated the impact of the significant drop in oil prices.
In dealing with the situation of Kuwaiti banks, “The Banker” indicated that the past year was a particularly difficult year for the Kuwaiti economy, which shrank by 8.1 percent, in the worst economic downturn in the Gulf Cooperation Council countries.
The magazine noted noting the banking sector in Kuwait witnessed the lowest growth in the first tier of capital and assets, compared to any Arab country included in this year’s list.
As for assets, Kuwaiti banks accounted for 8.14 percent of the assets of the banks included in The Banker’s list of the 100 largest Arab banks.
In its report, The Banker expected that with the International Monetary Fund predicting the return of all Arab economies to grow in 2021, Arab banks will overcome the worst stages of the crisis with the expected improvement in their profitability accompanied by good growth in their assets.
The magazine indicated despite the challenges of the past year, Arab banks maintained its profitability compared to other banks in the world.
While the return on assets in this year’s rating has fallen from 1.54 to 0.92 percent over the course of 2020, this is still much better than the 0.51 percent average recorded by The Banker’s top 1,000 banks, with Saudi and Qatari banks achieving Al-Masria had particularly strong returns during the year.
The magazine stated that the overall growth story of Arab banks remains the same, as three quarters of the 100 largest Arab banks recorded increases this year in assets and the first tranche of capital, amid strong growth in Saudi Arabia and Egypt in particular, noting that with the acceleration of the pace of vaccine and recovery of oil prices back to pre-crisis levels by mid-2021, banks are poised to recover strongly in 2021/2022.