Gulf Arab banks are poised to report weaker fourth-quarter profits this month on growing provisions for bad loans and write-downs on investment losses as the region suffers the fallout of a global financial crisis. Qatar National Bank (QNB), the Gulf state's biggest bank, shocked markets this week with a 0.8 per cent decline in quarterly profit - missing a 28 percent earnings growth forecast of analysts in a Reuters survey last month. QNB shares have slid almost 14 per cent since it said on Tuesday it booked 198 million riyals ($54.39 million) of provisions for credit losses on loans in the quarter, sending bank stocks across the Gulf lower as investors brace for more negative news. Bank Muscat, Oman's biggest bank, has warned it could book 26.9 million rials ($69.87 million) in impairment charges in 2008. Its stock fell over five percent on Thursday. “We may see much bigger provisioning in the fourth quarter than I had anticipated,” said Raj Madha, regional banking analyst at EFG-Hermes. By the second quarter, a pick up in Gulf non-performing loans (NPLs) was a “certainty”, he said. “We will see a drastic drop in asset management revenues, we will see trading income evaporate, a drop in profits from the property sector and a massive drop in loan growth.” The fortunes of banks in the world's top oil-exporting region, including Saudi Arabia, have shifted as sharply and quickly as its economic growth outlook in the last six months. Banks are now restricting lending as they face tight credit markets and, especially in Dubai, a real estate price correction that has prompted companies to lay off thousands of employees, raising the prospect of defaults on mortgage and consumer loans. “UAE banks will be taking a cautious approach,” said Bikash Rout, senior financial analyst at Global Investment House. Gulf governments have been struggling to keep their banks liquid and boost confidence.
