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Sunday , September 25 2022

Banking sector hit due to Covid-19

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Expected to make strong comeback – 2020 was particularly difficult for Kuwaiti economy

KUWAIT CITY, Aug 28: The ranking of the 100 largest Arab banks for the year 2021 shows that the banking sector is suffering from a slowdown in asset growth and a sharp decline in profitability, in light of the severe blow to which the region was subjected to in 2020 due to the outbreak of the corona pandemic that forced the closures and put restrictions on businesses and the significant drop in oil prices, reports Al-Rai daily quoting the ‘The Banker’ magazine.

People out at recreation spots despite hot weather which reached above 40s even into the evening. Hot wind accompanies the searing temperature over the last few days.

The Banker indicated that the past year was particularly difficult for the Kuwaiti economy, which shrank by 8.1 percent, in the worst economic downturn in the Gulf Cooperation Council (GCC) countries, noting that 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 expectation of an improvement in their profitability accompanied by good growth in their assets, indicating that despite the challenges of the past year, Arab banks maintained its profitability compared to other banks in the world. And 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 and Egypt banks achieving 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 in oil prices back to pre-crisis levels by mid-2021, banks are poised to recover strongly in 2021/2022.