GCC bank provisions soar 59% in Q4

Banks in Gulf oil producers are pushing ahead with a drive to build up loan loss provisions in the wake of the 2008 global fiscal distress and regional debt default problems, with those of key banks soaring by 59 per cent in the fourth quarter over the previous quarter, according to a Kuwaiti bank.

Provisions by the 22 banks covered in the report by Global Investment House (GIH) about the banking sector in the six-nation Gulf Cooperation Council (GCC) also jumped by around 51 per cent year-on-year.

Saudi Arabia was the only country whose banks recorded a decline in provisions YoY while Kuwait and the UAE accounted for the bulk of Q4 provisions.

Kuwait contributed around 60% of the incremental provisions taken by GCC banks, as compared to the previous quarter and a similar figure if compared on YoY basis, GIH said in its 20-page study.

Provisions leaped by nearly150% both on YoY and QoQ basis and all banks under coverage saw a sharp rise in provisions.

However Kuwait Finance House (KFH) fared the worst and saw its provisions rising 2.5 times over the previous quarter and 118%YoY. “These were the highest quarterly provisions taken by KFH since 4Q08.”

The next largest contribution to GCC banking provisions came from UAE, where provisions jumped by 47%YoY and 20%QoQ.