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Market Report, "Bahrain Commercial Banking Report Q3 2012", Published

Fast Market Research recommends "Bahrain Commercial Banking Report Q3 2012" from Business Monitor International, now available

 
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Boston, MA -- (SBWIRE) -- 10/22/2012 -- Banking Sector: Holding Up Despite Difficult Backdrop BMI View: We are forecasting a slow and steady expansion in Bahrain's retail banking sector in 2012, with the aggregate balance sheet for the industry projected to expand 8.0% this year, compared to 2.9% in 2011. The construction industry will likely provide significant opportunities for domestic lenders as the government seeks to address the country's housing shortage. Despite the volatile macroeconomic and political backdrop, Bahrain's retail banking sector held up relatively well in 2011, with profitability at some of the country's largest financial institutions growing robustly in the fourth quarter of last year. This came despite asset growth remaining in the low singledigits, with the sector's consolidated balance sheet expanding by a meagre 2.9% in 2011, compared to an average rate of growth of 33.2% between 2005-2010. With oil prices continuing to trade at historically high levels and tentative signs emerging that a macroeconomic recovery is beginning to gain traction, we hold a relatively sanguine outlook on the industry for 2012. Although we believe the days of double-digit expansion are unlikely to return anytime soon, we are nevertheless forecasting slow and steady growth in the sector's aggregate balance sheet of 8.0% this year. Recently released financial statements from a host of domestic lending institutions show the retail banking sector brushing off the political crisis to post record profits in some cases. Indeed, Ahli United Bahrain Commercial Banking Report Q2 2012 © Business Monitor International Ltd Page 34 Bank and National Bank of Bahrain saw net profits for 2011 increase 17% and 6% respectively. Arab Banking Corporation also announced in February that consolidated net profits came in at US$204mn, up 43% compared to 2010. Although BMI Bank posted another net loss in 2011, the BHD3.4mn (US$9.0mn) hole was nevertheless well below the BHD26.5mn loss chalked up in 2010, while the bank also returned to profitability in the fourth quarter of the year. External Climate Conducive To Recovery Broadly speaking, external macroeconomic and financial market conditions at the moment should prove conducive to an ongoing recovery in Bahrain's domestic banking sector. To be sure, although the global economy has hit a soft patch in recent months, we nevertheless expect the slowdown to prove transitory given the successful containment of the eurozone sovereign debt crisis and the gradual shift towards monetary loosening in emerging markets (see our online service, 2 April, 'Global Macro Update: Systemic Crisis Risks Contained'). In addition to the tentative calming in international financial markets, Bahrain's banking sector will also benefit from loose monetary policy out of the US Federal Reserve (we do not expect the Fed to begin tightening until 2014) and the aforementioned uptrend in global energy prices, both of which should help underpin in improvement in underlying liquidity ove

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