GCC banks are gradually expected to recover from the impact of the crisis on the back of stimulus plans initiated by the official authorities and the central banks, said a report.

"The future expectations in the banking sector is conditional to the other sectors' performances, mainly the real estate and investment sectors, which in turn place a pressure on the banks' asset quality namely in case of a further default on credit facilities extended to the highly leveraged real estate and investment companies," according to the report by Kipco Asset Management.

"Consequently provisions and non-performing loans, which registered $10.9 billion and $26.38 billion in 2009, are estimated to record $8.71 billion and $28.52 billion for this year.

"The coming years' estimates are expected to see lower net provisioning as banks may start to recover part of the total provisions booked during the last two years," it said.

"Real GDP in the GCC region is estimated to have grown by a mere 0.7 per cent in 2009, but will bounce to 5.2 per cent in 2010, compared to the growth of 6.4 per cent recorded in 2008, mainly due to steep decline in oil prices, as well as oil production cuts.

"Consequent to these trends and their effect on the market performance, our assessment indicates a slower growth and squeezed profitability for the aggregate GCC banks which are estimated to record a total profit before provisions and impairments of $26.1 billion and $26.3 billion in 2010 and 2011 respectively," the report added. – TradeArabia News Service