The banking sector in Bahrain maintained a year-on-year growth in 2017 with 6.4 per cent growth in net profit and 5.6 per cent growth in total assets, said KPMG in its recently released version of the ‘GCC listed banks results’ report.

The report, titled ‘Shifting Horizons’, analyzed the published results of listed banks across the region for the year ended December 31, 2017.

Jalil Al Aali, partner and head of Financial Services at KPMG in Bahrain, said: “We are delighted to launch the third edition of KPMG’s Gulf Cooperation Council (GCC) listed banks results report for 2017, which analyses the financial results for leading listed commercial banks in Bahrain and across the GCC. This report provides industry leaders with succinct analysis, insights and forward-looking views.”  

Al Aali added: “Overall, it has been a good year for listed banks in Bahrain despite the economic and political challenges facing the region. The positive report findings reflect the resilience of Bahrain’s banking sector. Impairment charges, non-performing ratios and funding costs have all increased, while liquidity continues to be a key focus area. Banks are therefore reshaping strategies, targeting higher quality domestic assets and looking at diversified funding sources.”

“There has been an increasing focus on financial technology in that past few years. We expect this focus will continue to grow as banks in Bahrain look to improve their customer experience and competitiveness through innovation and technology. This also sets to improve efficiency, given the funding cost pressures being faced, as well as the increasing regulatory requirements, such as Basel III and IFRS 9. We expect to see continued focus on controlling cost to ensure profitable growth remains and cost-to-income ratios are maintained at low levels.

“Also the introduction of value-added tax (VAT), as expected in Bahrain by the end of this year, means that banks need to make infrastructure investments to ensure their readiness to comply with the indirect tax regulatory compliance requirements. VAT also presents cash management and working capital funding opportunities for banks to fund businesses whose procurements are subject to incremental VAT costs and cash flows.”  Al Aali added.

The report findings highlight that the GCC banking sector remains relatively resilient amidst regional and global political and economic challenges, although they have not seen the double-digit growth rates seen in previous years.

Overall, net profits have increased year-on-year by 6.7 per cent, in comparison to last year’s decline, as a result of larger GCC economies. The region’s banking sector continues to focus on cost reductions and operating efficiency initiatives, largely driven by innovation and technology, as evidenced by declining cost-to-income ratios. – TradeArabia News Service