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In this report, KPMG professionals have analyzed the financial results of leading listed commercial banks from each GCC country — the Kingdom of Bahrain (Bahrain), the State of Kuwait (Kuwait), the Sultanate of Oman (Oman), the State of Qatar (Qatar), the Kingdom of Saudi Arabia (Saudi Arabia or KSA) and the United Arab Emirates (UAE). The financial results and selected key performance indicators (KPIs) of the 55 selected GCC banks for the year-ended 31 December 2020 are summarized and compared with the prior year (year-ended 31 December 2019). 

The 2020 report, titled ‘Banking redefined’, highlights some of the key financial trends identified in the banking sector across the region in the past year, including:

—continued asset growth

—declining profitability

—higher NPL ratios

—increased loan impairment

—stability in costs

—declining share prices

2020 was a unique year, severely impacted by Covid-19 which was reflected in the financial trends identified through our analysis. Despite these challenges and the resulting disruption, the GCC banking sector remained resilient by taking effective and timely measures, coupled with government support, to weather the storm. While financial challenges were faced by the entire sector, it was also a year in which banks were able to ‘redefine their business models’ and accelerate their digital transformation plans. Our report highlights how banks have moved to cashless payment models; placed greater focus on innovation and technological advancements to serve the customer base; effectively introduced agile working practices while adhering to the norms of social distancing; and embraced FinTech collaboration to improve the customer experience and manage the increasing cyber security threats posed by digitalization. 

As banks accelerate their digital transformation plans and increase their investment in solutions driven by innovative technologies, the regulatory agenda will need to continue to play a pivotal role in supporting the digital enablement of the ecosystem. The regulatory agenda in 2021 and beyond will continue to focus on tech-based solutions like - Open Banking, RegTech, Multi-channel payment solutions, Improved analytics on AML/ Financial Crime, E-KYC, Cybersecurity and Digital/ crypto Currencies.

Mahesh Balasubramanian