GCC banks' lending activity is forecast to sustain the upward trend in 2012 after witnessing a continued growth this year from a 5-7 percent rise in most countries in the region in 2010, despite a cloud of uncertainty caused by unrest in the broader MENA region, the Saudi American Bank group (Samba) said in its latest monthly bulletin. "That said, we expect that the revival in corporate and consumer credit growth will strengthen in 2012 as GCC economies continue to benefit from high oil revenues and sustained public spending," the report said. "Banks should become more comfortable taking on risk, although economy wide confidence will still be vulnerable to global developments … project financing will be an area of growth as progress is made with implementing state development plans. However, regional banks will not be able to cover all the long-term financing needs, and there are concerns that international banks could hold back due to their own home country concerns, including the debt crisis in the eurozone and regulatory changes." Such developments should prompt regional countries to intensify efforts to develop national and regional bond markets to provide alternative sources of long-term finance in the GCC. Moreover, GCC banks' access to international capital markets has improved, the cost of funding has declined, and most banks have maintained their high levels of profitability, the report added. "However, it would be unrealistic (and probably undesirable) to expect credit growth to return to the 40 percent per annum booming levels seen prior to the global crisis, and in fact lending has remained muted despite the improvement in bank balance sheets and strong government fiscal stimulus." The report further said that the GCC banks are now gradually easing curbs on domestic credit. "The GCC banking sector is generally sound and well managed, and compares favorably when viewed against US and European banks," it said. "Banks in the GCC have been resilient in the face of recent global financial shocks and benefit from strong government support. Most hold capital in excess of statutory limits and are now highly liquid, bolstered by a healthy revival in deposit growth since the middle of 2010." Samba is playing an active role not only in developing the banking industry in the Kingdom and the Middle East but also in further boosting the economy. And in recognition of its achievements, the bank's chairman Eisa Al- Eisa, has again received an accolade - this time from CEO Middle East Magazine - conferring on him the "Lifetime Achievement Award for Business Sectors in the Middle East 2011."
