Profits at Gulf countries’ banks fell an estimated 3% last year compared with 2015, the first yearly decline since 2008.
Banks in all six Gulf Cooperation Council countries saw a fall in profits in 2016, with UAE banks suffering most with a 4.5% reduction, according to the study by the Boston Consulting Group. Profits at Qatari banks fell 1.8% despite revenues rising by nearly a quarter.
Reinhold Leichtfuss, senior partner and managing director at the group’s Middle East office, said the results are “not a reason for major concern, since the level of profits went up steadily for the last few years and is still very healthy”.
The group blamed the decline in profits on a large increase in provisions, which are funds set aside to offset anticipated losses.
“The impact of the decline in oil prices has hit the banking industry,” said a statement summarising the research.
The results are based on an index of 46 banks in the region, which account for about 80% of the region’s banking sector.
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