The banking industry in the Middle East shows signs of recovery, indicating that the worst of the global financial crisis may be over, a study has revealed.

Banking revenues and profits continued to grow in the Middle East last year, though at a slower pace than in the past, despite an increase in loan loss provisions, according to a study by the Boston Consulting Group (BCG).

This continues to position Middle East banks more favourably in comparison with their international counterparts.

Based on the 2009 annual results reported by banks in the first quarter of this year, the new study is part of BCG's annual banking and retail banking indices measured by the development of banking revenues (operating income) and profits for leading global banks.

In April last year, BCG launched the first edition of the banking performance index in the Middle East, creating a customised index specifically for the Middle Eastern banking markets, with 2005 revenues and profits as starting benchmarks.

The index covered the largest banks in Bahrain, Kuwait, Qatar, Saudi Arabia and the UAE. The second edition of the index, announced in October last year, covered 25 banks and included the biggest banks from all GCC states, including Oman.

This year, the BCG index has expanded further to include 33 banks from across GCC countries.

'The latest BCG index represents over 75 per cent of the total regional banking sector in the GCC,' said BGC senior partner and managing director in Dubai Dr Reinhold Leichtfuss.

'In addition, further to the retail banking segment the report, for the first time, also takes a closer look at the corporate banking segment.

'We have also broadened the international sample to 21 banks from eight countries, to provide additional insights and points of comparison'.

Banking revenues in the Middle East are still outperforming the international benchmark. Twenty-two out of the 33 banks covered by the index grew their revenues from 2008 to last year, even though the moderate growth rate of 7 per cent is well below the double digit growth of the previous years.

In contrast, since 2006 international banks' revenues remained relatively stagnant on BCG's Index, with profits decreasing.-TradeArabia News Service