New Market Research Report: Bahrain Commercial Banking Report Q1 2011

Feb. 4, 2011 - PRLog -- We continue to see Bahrain as a regional underperformer in growth and financial market terms.  Although the launch of the Bahrain Financial Exchange (BFX) in October 2010 will be a boost to  confidence, if it goes ahead, the competition in the Gulf Cooperation Council (GCC) is hotting up. We  think Dubai, supported by very strong business and financial infrastructure and the oil wealth of Abu  Dhabi, will continue to be the financial centre of choice in the region for global players. Meanwhile,  anecdotal evidence suggests that economic activity on the ground in Bahrain is still weak.    The stock market had a good few days in late July but continues to look weak on a technical basis, with  plenty of resistance levels to get through before we would start to be bullish. Even with the  underperformance of the last few years, Bahraini stocks are still not the cheapest in the region, with a  price-to-earnings ratio of 10.9. The index also has the second lowest return-on-equity ratio in the GCC,  after Kuwait at 5.4, compared with 8.6 in the UAE and 12.0 in Saudi Arabia. Liquidity and volumes  remain very low. The Bahrain Stock Exchange turned over US$0.8mn in 64 trades on July 29 and clearly  it will need more momentum if it is going to stage a recovery.    Banks had a slightly better time in Q210. For the most part, profitability is picking up: Gulf Investment  Bank went back into profit, to the tune of US$29.5mn, while Arab Banking Corporation and Ahli  United Bank saw their profits rise by 54% and 62% respectively. However, this is from a low base and  most lenders increased provisioning in Q210 (see chart). At the time of writing, there was no new data  from the troubled Islamic investment bank Gulf Finance House, while Bahrain Islamic Bank was still  in trouble. The latter recorded a net loss of US$18.3mn in Q210, down from a small profit in Q110, and  undertook a US$143mn rights issue at a 37% discount in July.  Derive Time For BFX  So will drive the recovery for these banks? We have previously highlighted the scope for growth in lowcost  housing, but the construction sector is still not showing many signs of life. The launch of the BFX,  which was delayed in May but scheduled to begin in October 2010, could provide a shot in the arm. The  new exchange, to based at the Bahrain Financial Harbour, will be the 'first multi-asset class exchange' in  the Middle East and North Africa region. In July, it signed a licensing agreement with the FTSE Group  to list and trade market derivatives products based on the FTSE's regional and international indices. This  is good news in terms of Bahrain's competitiveness as a financial centre. Increasing the sophistication of  financial markets allows companies to better protect themselves against volatility and the derivatives  industry is still very much in its infancy in the Middle East.    However, we still think Dubai's superior infrastructure and liquidity will keep international financial  attention away from Bahrain, despite the former's debt crisis. With a stock market that trades at such low  volumes, Bahrain is almost trying to run before it can walk with its venture into derivatives, and Dubai is likely to follow suit over the coming years in any case as the increasing number of foreign firms in the  Dubai International Financial Centre leads to the advancement of international financial norms there. We  also think there could be further fallout from the overextended investment company sector in Bahrain and  its exposure to troubled real estate markets across the region. The fact that banks' provisioning increased  in Q210 does not bode well and we think there could be some more defaults before the recovery begins.

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Partial Table of Contents:

Executive Summary
- Table: Levels (BHDbn)
- Table: Levels (US$bn)
- Table: Levels At October 2010
- Table: Annual Growth Rate Projections 2010-2015 (%)
- Table: Ranking Out Of 59 Countries Reviewed In 2010
- Table: Projected Levels (BHDbn)
- Table: Projected Levels (US$bn)
SWOT Analysis
- Bahrain Commercial Banking SWOT
- Bahrain Political SWOT
- Bahrain Economic SWOT
- Bahrain Business Environment SWOT
Business Environment Outlook
- Commercial Banking Business Environment Ratings
- Table: Bahrain's Commercial Banking Business Environment Rating
- Commercial Banking Business Environment Rating Methodology
- Table: Middle East and Africa Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
Middle East Banking Sector Outlook
- Table: Banks' Bond Portfolios
- Table: Middle East and Africa Commercial Banking Business Environment Ratings
- Table: Comparison Of Loan/Deposit, Loan/Asset And Loan/GDP ratios
- Table: Anticipated Developments In 2011
- Table: Comparison Of Total Assets, Client Loans And Client Deposits, 2009-2010 (US$bn)
- Table: Comparison Of Per Capita Deposits, 2010 (US$)
- Table: Interbank Rates And Bond Yields, 2009-2010
Islamic Banking Sector Outlook
- Table: Largest Muslim Populations Worldwide
Bahrain Banking Sector Outlook
- Overexposure To Real Estate To Weigh On Recovery
- Table: Bahraini Conventional Retail Banks - Key Indicators, 2009-2010
Economic Outlook
- Table: Bahrain - Economic Activity, 2008-2015
Competitive Landscape
- Market Structure
- Protagonists
- Table: Protagonists In Bahrain's Commercial Banking Sector
- Definition Of The Commercial Banking Universe
- List Of Banks
- Table: Bank Licensees In Bahrain
Company Profiles
- Arab Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Gulf International Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Ahli United Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Arab Banking Corporation
- Table: Stock Market Indicators
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Full Table of Contents is available at:
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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.