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Moving at Variable Speed
The GCC banking industry’s situation is extremely varied. While it is worrying in Bahrain and Kuwait, in Saudi Arabia and Qatar it is boom time once again, says Ranvir Nayar.
May 21, 2012 3:43 by kippreport
The Qatari banking system’s total assets grew by an average of 31 percent between 2002 and 2011, and S&P views this high-paced credit growth as a potential risk factor. Additionally, the Qatari banking system displays high concentration in lending to cyclical sectors, such as real estate and construction, which increases the credit risk for Qatar’s banks.
Peter Vayanos, a Partner at Booz & Co, is also confident about the situation in Saudi Arabia and Qatar. “The financial services industries in these two countries are buoyant, largely due to the strength of the underlying macro economical situation. These two countries have lined up large programmes with lots of infrastructure spending, due to oil and gas revenues. Besides strengthening and expanding the oil- and gas-related infrastructure, the aim is to build up capabilities like roads, hospitals, and in the case of Qatar, necessary sporting and tourism infrastructure required for the Football World Cup tournament, which will be held there in 2022. We see both these countries as being very stable, and unless there is a major event, like say the Iran war, we expect the build-up and stability to continue.”
UAE: Work in progress
The situation in the UAE continues to improve, even though analysts agree it is pretty much a case of a work in progress. Although lending growth by the banks in the UAE has come back to the positive territory, it remains far from the levels that are necessary to ensure that companies have access to adequate credit, in order to ensure growth in the non-oil economy.