Burgan Bank leads the banking sector in terms of revenue growth and diversification

With 32% growth in revenue, Burgan Bank wins the first place in the Top 25 ranking. Gulf Bank achieves 2nd place with 22% growth, closely followed by Al-Bank Al Saudi Al Fransi on 3rd position with 20% year-on-year growth in revenue. Saudi Hollandi Bank and Al Ahli United Bank (AUB) gained 4th and 5th position with 14% and 13% revenue growth rates respectively. In contrast, the revenue of Gulf International Bank, Al-Rajhi Banking and Investment Corporation (Al-Rajhi) and Emirates Bank Group declined during the year.

The report highlights the extent to which the GCC banks have reduced their reliance on Net Interest Income (NII) by developing other sources of revenue including, fees, commission, capital gain and trading related revenue. Burgan Bank tops the list by producing 47% of its revenue from sources other than NII. Ahli United Bank (AUB) and MashreqBank both generated 44% of their revenue from sources other than NII. The top performers (Burgan, AUB and MashreqBank) have beaten the Top 25 average of 29% ratio by a comfortable margin. Meanwhile, Al-Rajhi, Arab National Bank (ANB) and Qatar National Bank (QNB) posted the lowest ratio with 16%, 17% and 17% respectively.

The analysis indicates that banks from Saudi Arabia and Qatar have generally not developed their non-NII sources of revenue to the extent achieved by banks in Kuwait, Bahrain and the UAE. Saudi and Qatari banks posted a non-NII revenue ratio in the range of 16% to 25%, considerably below the Top 25 average ratio of 29% and a long way off from Burgan Bank, the top performer in this category with 47% ratio.

The revenue mix of international banks still remains significantly more diversified than their counterparts in the GCC region. Compared to the GCC average of 29% revenue from sources other than NII, the Top 10 international average is an impressive 54%.

The GCC average of 29% has a wide variation among the Top 25 players. The top GCC performers produced 40% to 45% from non-NII sources of revenue while some other GCC banks had a much lower ratio in the range of 15% to 20%. In comparison, the variation among international retail banks was relatively insignificant irrespective of their geographical location. Citigroup and Bank of America in the USA, ABN AMRO in Netherlands, HSBC and Barclays in the UK, all had a non-NII revenue ratio in a tight range of 42% to 48%.