Banks in the Gulf countries performed better in the second quarter of 2011 amid improving regional economic conditions, recovering credit and lower loan loss provisions by most banks, Kuwait-based Global Investment House (GIH) reported. UAE and Qatar emerged as the best performers, it added. The aggregate net profits of banks in the Gulf surged by around 28 percent in the second quarter of 2011. GIH said better banking performance in the six-nation Gulf "GCC banks under our coverage saw another good quarter with profits rising 28 percent Y-o-Y and four percent QoQ," GIH said. "Banks in the UAE and Qatar stood out in terms of highest profit growth achieved during the quarter while Oman was the only country that witnessed a decline." Provisions by GCC banks covered by the survey declined by nearly 15 percent Y-o-Y and the bulk of the drop was in Saudi Arabia, where banks' provisions slumped by around 53 percent. Banks in the UAE and Qatar saw a decline of around 9-10 percent Y-o-Y. "On an aggregate level, GCC banks witnessed a healthy growth in the net interest income (+7 percent YoY) and exhibited a strong rise in non-interest income (+23 percent YoY)," the study said. "A major contributor to the jump in profits was the significant drop in provisions ... while profits were up four percent QoQ, the credit goes to a robust jump in NII (+5 percent QoQ) since non-interest income retreated (-3 percent QoQ) and provisions rose seven percent QoQ." The report said that although the banking sector in the GCC, excluding Saudi Arabia, saw a rise in their net interest income, Qatar, Kuwait and UAE banks saw the highest jump in their net interest income in the second quarter, up 13 percent YoY, 13 percent YoY and 12 percent YoY, respectively.
