Qatar’s Masraf Al Rayan: the best performing bank in the GCC

Masraf Al Rayan was the best performing bank in the GCC during 2010 according to a comprehensive survey conducted by Darien Middle East. Second place was taken by Qatar International Islamic Bank, with Saudi Arabia’s Al Rajhi in third.

Fifteen of the top 20 banks were from Qatar or the UAE, while the lower ranks were notable for the prevalence of Bahraini banks.

Taken as a whole, commercial banks in the region produced a sound performance in 2010. Seventy percent declared higher net profits than the year before, and only four of those surveyed declared a net loss, compared to 13 declaring net losses in 2009 and four in 2008.

Darien Middle East’s Survey is based on a detailed analysis of the financial statements of commercial banks in the six Gulf states. To be eligible for inclusion, banks must be either primarily funded by customers’ deposits and/or be primarily engaged in extending credit.

Seven of the nine Qatari banks surveyed earned a place in the top 20. Among the Emirati banks it was often the small and medium sized banks which performed best. Sharjah-based Investbank took forth place, followed by National Bank of Ras Al Khaimeh in fifth.

Al Rajhi was the best performing Saudi bank, in third, followed by Banque Saudi Fransi in 13th. National Bank of Kuwait was the highest placed Kuwaiti bank, at 20th, closely followed by AlAhli Bank. Oman Arab Bank was the highest placed Omani bank at number 11.

Bahraini banks occupy the lowest five positions on the list, and another four are ranked with the bottom 20.

The rankings are based on the following ratios:

– Equity to assets: ability to withstand unexpected losses and writedowns without becoming insolvent

– Operating profit to loans + investments: ability to withstand provisions and writedowns without declaring a net loss

– Return on average assets: ability to generate a return on assets held

– Return on average equity: ability to generate internal capital

– Cost to income: a measure of financial efficiency

– Equity + customers’ deposits to assets: a measure of funding strength.

The biggest ten banks ranked by equity accounted for 45% of all equity shown by the 70 banks surveyed. Ranked by loans and deposits, the biggest ten accounted for almost 50% of the total. The biggest 20 banks accounted for about 70% of the total for equity, loans and deposits.

Note that such figures do not represent market shares for the GCC. The Darien Survey is based on consolidated financial reports by individual banks, and those consolidated reports include, for example, loans extended by branches or subsidiaries outside the bank’s country of origin.

The full Survey is currently with the graphic designer and will hopefully be going to the printer later this week. I’ll be posting the full version, which includes many more ratios than the six cited above, and all 70 banks, on this website.

Meanwhile, here’s a list of the top 20 banks:

1. Masraf Al Rayan, Qatar
2. Qatar International Islamic Bank, Qatar
3. Al Rajhi, Saudi Arabia
4. Investbank, UAE
5. National Bank of Ras Al Khaimeh, UAE
6. First Gulf Bank, UAE
7. United Arab Bank, UAE
8. Commercial Bank of Dubai, UAE
9. Arab Bank for Investment and Foreign Trade, UAE
10. National Bank of Umm al-Qaiwain, UAE
11. Oman Arab Bank, Oman
12. Qatar Islamic Bank, Qatar
13. Banque Saudi Fransi, Saudi Arabia
14. Qatar National Bank, Qatar
15. Bank of Sharjah, UAE
16. Samba Financial Group
17. Commercial Bank of Qatar
18. Ahli Bank, Qatar
19. Doha Bank, Qatar
20. National Bank of Kuwait, Kuwait.