Kuwait Commercial Banking Report Q1 2012
Includes 3 FREE quarterly updates
Europe On The Brink
The biggest risk to the global commercial banking sector remains the European crisis, with the worst-case scenario of a euro bloc breakup looming large in the background, and the health of the global banking sector hanging in the balance. Our core global economic view is that the world is not about to enter a double-dip recession, but that weak ongoing growth leaves the global economy fragile, and thus susceptible to a major shock. A disorderly eurozone breakup would have devastating consequences for core eurozone banks, given their exposure to peripheral eurozone debt. Furthermore, with sovereign bond spreads soaring, commercial banks exposed to European debt are seeing their balance sheets erode, with the effect compounded by a weak economy hurting lending conditions. The market is discounting a negative outcome for bank asset value, with European and US bank shares trading well below book value. We stress that our core scenario for the eurozone is one of ‘muddle through’ rather than ‘meltdown’.
Furthermore, the exact path of events in the eurozone is difficult to predict, with potential outcomes including a full breakup of the monetary union, to austerity-induced recession, to European Central Bank support for the banking sector. However, it is worth looking at the potential contagion risks from a European financial crisis. Looking at the commercial banking universe covered by BMI, direct exposure to the weakest links in the eurozone is fairly limited, and is (unsurprisingly) most prevalent in European states. We are also acutely aware of the potential for contagion from a European financial crisis into emerging markets. However, looking at the data, emerging market exposure is mainly concentrated in Emerging Europe, as one would expect given the significant degree of banking sector integration across the continent over the past two decades. Furthermore, emerging markets tend to be exposed to the European banking sector on the liabilities side, far more than on the assets side (in other words, they are in danger of having European banks pulling lending from their economies). The following chart shows European banks’ lending as a percentage of the destination country’s GDP. Unsurprisingly, major financial centres figure prominently (eg Hong Kong, Singapore and the UK), as do emerging European economies.
Europe On The Brink
The biggest risk to the global commercial banking sector remains the European crisis, with the worst-case scenario of a euro bloc breakup looming large in the background, and the health of the global banking sector hanging in the balance. Our core global economic view is that the world is not about to enter a double-dip recession, but that weak ongoing growth leaves the global economy fragile, and thus susceptible to a major shock. A disorderly eurozone breakup would have devastating consequences for core eurozone banks, given their exposure to peripheral eurozone debt. Furthermore, with sovereign bond spreads soaring, commercial banks exposed to European debt are seeing their balance sheets erode, with the effect compounded by a weak economy hurting lending conditions. The market is discounting a negative outcome for bank asset value, with European and US bank shares trading well below book value. We stress that our core scenario for the eurozone is one of ‘muddle through’ rather than ‘meltdown’.
Furthermore, the exact path of events in the eurozone is difficult to predict, with potential outcomes including a full breakup of the monetary union, to austerity-induced recession, to European Central Bank support for the banking sector. However, it is worth looking at the potential contagion risks from a European financial crisis. Looking at the commercial banking universe covered by BMI, direct exposure to the weakest links in the eurozone is fairly limited, and is (unsurprisingly) most prevalent in European states. We are also acutely aware of the potential for contagion from a European financial crisis into emerging markets. However, looking at the data, emerging market exposure is mainly concentrated in Emerging Europe, as one would expect given the significant degree of banking sector integration across the continent over the past two decades. Furthermore, emerging markets tend to be exposed to the European banking sector on the liabilities side, far more than on the assets side (in other words, they are in danger of having European banks pulling lending from their economies). The following chart shows European banks’ lending as a percentage of the destination country’s GDP. Unsurprisingly, major financial centres figure prominently (eg Hong Kong, Singapore and the UK), as do emerging European economies.
Contents
Executive SummaryTable: Levels (KWDbn)
Table: Levels (US$bn)
Table: Levels At January 2011
Table: Annual Growth Rate Projections 2011-2015 (%)
Table: Ranking Out Of 59 Countries Reviewed In 2011
Table: Projected Levels (KWDbn)
Table: Projected Levels (US$bn)
SWOT Analysis
Kuwait Commercial Banking SWOT
Kuwait Political SWOT
Kuwait Economic SWOT
Kuwait Business Environment SWOT
Business Environment Outlook
Commercial Banking Business Environment Ratings
Table: Commercial Banking Business Environment Ratings
Commercial Banking Business Environment Rating Methodology
Table: Middle East And Africa Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
Middle East Banking Sector Outlook
Table: Banks’ Bond Portfolios
Table: Middle East And Africa Commercial Banking Business Environment Ratings
Table: Comparison Of Loan/Deposit, Loan/Asset And Loan/GDP Ratios
Table: Anticipated Developments In 2012
Table: Comparison Of Total Assets, Client Loans And Client Deposits (US$bn)
Table: Comparison Of Per Capita Deposits, 2011f (US$)
Table: Interbank Rates And Bond Yields
Islamic Finance Outlook
Kuwait Banking Sector Outlook
Economic Outlook
Table: Kuwait Economic Activity, 2011-2016
Competitive Landscape
Market Structure
Protagonists
Table: Protagonists In Kuwait’s Commercial Banking Sector
Definition Of The Commercial Banking Universe
List Of Banks
Table: Conventional Banks In Kuwait
Table: Islamic Banks In Kuwait
Company Profiles
National Bank of Kuwait
Table: Stock Market Indicators
Table: Balance Sheet (KWDmn, unless stated)
Table: Balance Sheet (US$mn, unless states)
Table: Key Ratios (%)
Commercial Bank of Kuwait
Table: Stock Market Indicators
Table: Balance Sheet (KWDmn, unless stated)
Table: Balance Sheet (US$mn, unless stated)
Table: Key Ratios (%)
Gulf Bank
Table: Stock Market Indicators
Table: Balance Sheet (KWDmn, unless stated)
Table: Balance Sheet (US$mn, unless stated)
Table: Key Ratios (%)
Al-Ahli Bank of Kuwait
Table: Stock Market Indicators
Table: Balance Sheet (KWDmn, unless stated)
Table: Balance Sheet (US$mn, unless stated)
Table: Key Ratios (%)
Ahli United Bank
Table: Stock Market Indicators
Table: Balance Sheet (KWDmn, unless stated)
Table: Balance Sheet (US$mn, unless stated)
Table: Key Ratios (%)
Burgan Bank
Table: Stock Market Indicators
Table: Balance Sheet (KWDmn, unless stated)
Table: Balance Sheet (US$mn, unless stated)
Table: Key Ratios (%)
Industrial Bank of Kuwait
Table: Key Statistics For Industrial Bank of Kuwait, 2006-2008 (KWDmn)
BMI Banking Sector Methodology
Commercial Bank Business Environment Ratings
Table: Commercial Banking Business Environment Indicators And Rationale
Table: Weighting Of Indicators Skip to top