Best Banks In The Middle East 2019: Sunny Outlook

Consolidation driven by weak credit demand will ease overcapacity and boost profits.

A wave of mergers in the overbanked Middle East has cleared away some of the region’s excess banking capacity and improved the outlook for industry profits. Recent M&A activity among Gulf Cooperation Council (GCC) banks is beneficial for the banking sector as it eases overcapacity and boosts earnings through synergies and increased pricing power, according to a report by Moody’s Investors Service.

Falling oil prices and production cutbacks in 2018 hit government budgets and slowed economic growth, the rating agency says. “Slow growth and subdued credit demand in the region are among the biggest drivers of consolidation,” says Ashraf Madani, a senior analyst at Moody’s. “This has intensified competition for depositors and borrowers.”

Consolidation will help curb funding costs and improve profitability over the long run, Moody’s says. Despite integration challenges in the early stages, merged banks will gain market share and economies of scale.

Meanwhile, the value of conventional and Islamic bonds issued by non-financial corporations increased 86% last year to $15.6 billion, according to Moody’s. The region’s overall M&A activity is also picking up significantly. Saudi Aramco recently agreed to buy a majority stake in chemical producer Saudi Basic Industries for $69.1 billion, the region’s largest deal ever. Uber Technologies agreed to buy Dubai-based Careem Networks for $3.1 billion in the biggest tech deal in the Middle East.

Amid this heightened activity, the focus of the region’s banks is on using technology to enhance the customer experience. Arab Bank, Global Finance’s choice as the Best Bank in the Middle East, as well as the country winner in Jordan and Yemen, has been a leader in introducing new banking technology in the region. The bank maintains a global network of treasury centers equipped with the latest systems to serve corporate customers. Based in Amman, Arab Bank is also unique in that it has a dominant presence in its home market, yet it receives 70% of its income from outside of Jordan.

Arab Bank Group’s earnings rose to $821 million in 2018 from $533 million a year earlier. CEO Nemeh Sabbagh says the solid results were driven by sustainable growth in the underlying business, spread improvements and well-controlled expenses. The asset quality of the group remains high, he adds, with credit provisions held against non-performing loans of more than 100%, excluding the value of collateral.

With a network of more than 600 branches on five continents, Arab Bank supports local companies as they operate globally. It also serves multinationals as they enter Middle Eastern markets. Arab Bank also provides loans to small- and medium-size enterprises (SMEs) in the 28 countries where it is present.

Samba Financial Group is Global Finance’s selection for Best Bank in Saudi Arabia due to its resilience to current economic challenges and its ability to deliver strong financial results, while reducing expenses. Samba posted record profits of $1.47 billion in 2018, an increase of 10% from a year earlier, while return on equity was 12.74%. Operating expenses declined by 4.2%.

Samba’s corporate banking group serves some 900 large corporate customers, multinational companies and public entities, in addition to about 1,500 midsize businesses. Samba Capital is a leader in initial public offerings and Islamic financing. Samba also provides first-rate cash management and trade finance services. The bank leverages its branch presence in the United Arab Emirates (UAE) to source and acquire transactions for blue-chip multinationals and large local corporates.

Rania Nashar, CEO of Samba Financial Group, says, “Samba’s continued winning of this prestigious award year on year is a source of pride for the group. It is recognition of Samba’s accumulated experience, professional practices, continuous qualitative performance and a constant passion for development, innovation and upgrading of its banking and financial services and products, thus enhancing its competitiveness, making it worthy of customer loyalty. The award added a new mark of excellence to Samba’s record.”

Global Finance selected Ahli United Bank (AUB) as the Best Bank in Bahrain, due to its prudent credit strategy, regional diversification and cross-border flows. AUB’s earnings increased 12.7% last year and the return on average equity (ROAE) was 18.1%. The bank’s non-performing loan (NPL) ratio declined to 2% from 2.4%, with an NPL coverage ratio of 222%.

AUB has both onshore and offshore operations in Bahrain. It also operates in Kuwait, the UAE, Egypt, Iraq, Oman, Libya and the UK. Late last year, AUB opened a Category 1 branch at the Dubai International Financial Center. In January 2019, Kuwait Finance House offered to buy Ahli United Bank in a share swap deal, a potential combination that would create a bank with assets of about $92 billion. AUB’s assets increased 6.8% last year to $35.5 billion.

National Bank of Kuwait (NBK) remains among the highest-rated banks in the Middle East and made Global Finance’s list of the 50 safest banks in the world once again in 2018. It posted another set of strong financial results with earnings of $1.22 billion, an increase of 15%.

“The year 2018 was a year for diversification of our business that extended to our products and services, growth in existing geographies, our approach to new business opportunities, and our commitment to a digital transformation,” says Isam Jasem Al-Sager, group CEO, NBK. He stressed the bank’s growing emphasis on technology and digitization, calling the completion of the bank’s digital roadmap to becoming an agent for change as a critical achievement.

“Our institutional strength is borne out by the continuing trust our customers and shareholders place in us, alongside our leading market position and our stable long-term credit ratings.” Al-Sager adds. “Given the depth of our service offering, knowledge and expertise, we also continue to play a vital role in supporting the Kuwaiti government development agenda and remain its biggest beneficiary.”

Qatar National Bank (QNB) the largest bank in Qatar, is Global Finance’s choice as Best Bank in the country, in part because of its global reach and strong corporate finance team, with in-depth experience in mergers and acquisitions, equity and debt capital markets, and project financing advisory. The bank, with $236.8 billion in assets, is 50% owned by the Qatar Investment Authority.

Besides its 61 branches in Qatar, QNB is present in 30 other countries, serving 23 million customers. QNB has a 95% stake in QNB Alahli, the second-largest private bank in Egypt, which has 219 branches. QNB is also expanding in Southeast Asia, with the recent opening of representative offices in Vietnam and Myanmar. It already owns a 91% stake in PT Bank QNB Indonesia. The bank’s overall return on average equity last year was 21%.

Mashreq is our choice for Best Bank in the UAE, where it is the largest privately owned bank, with a 50-year record of uninterrupted profitable operations. It launched the country’s first ATM and its first credit card and continues to lead innovation in banking in the UAE. MashreqMATRIX, its online corporate banking portal, offers a single window to track all payments in real time across multiple geographies. Mashreq’s vision for the next 50 years is: “To be the region’s most progressive bank, enabling innovative possibilities for its clients, colleagues and communities.”

Bank Hapoalim, Israel’s largest bank, with 225 full-service retail branches and 12 regional business centers, is Global Finance’s choice for Best Bank in the country. The bank’s credit portfolio increased by 6.3% in 2018, while income from regular financing activity grew by 8.9%. Credit to the corporate segment in Israel rose 9.8%. The group includes Isracard, Israel’s leading credit card company, as well as financial companies active in investment banking, trust services and portfolio management. Its retail deposit base in Israel increased 9.4% last year.

In neighboring Lebanon, BLOM Bank, the leading bank in terms of profits and efficiency, is Global Finance’s choice for Best Bank. “In a year characterized by political and economic instability, higher taxes, and declining net interest margins, BLOM Bank managed to achieve a larger balance sheet and higher profits,” says Saad Azhari, chairman and managing director. “In addition, the bank maintained excellent financial ratios,” Azhari says. “It is seldom that such an all-around performance is attained—especially under the difficult operating conditions—but BLOM Bank was able to do it, thanks to its prudent management, talented staff and sound business model.”

BLOM is the leading Lebanese bank in terms of lending to SMEs. It also boasts the leading financial app and was the first local bank to implement SWIFT global payments innovation (gpi) to improve speed, security and transparency in payment processing.

Our winner in Palestine is Bank of Palestine, which has the most widespread branch network in Palestine, with 74 branches, as well as a majority holding in Arab Islamic Bank, with its 20 branches. The Bank of Palestine’s subsidiary PalPay, a leading payment platform, is growing at a 22% annual rate. The bank signed an agreement earlier this year with the Palestinian Energy and Natural Resources Authority to implement a revolving fund for solar energy projects for citizens and small enterprises in the Gaza Strip.

Commercial International Bank (CIB), Egypt’s leading private-sector bank, is Global Finance’s choice as the Best Bank in Egypt because of its exceptionally strong financials and its diverse offering of products and services. CIB financed several major government projects last year, including a syndicated facility to finance Egypt’s petroleum sector. It also extended several short-term transactions to the telecom industry and helped finance the upgrade of Egypt’s national electricity grid.

“Winning this award for the 20th year is a great honor. It recognizes the discipline of CIB’s men and women who work diligently every day to maintain strong fundamentals, which has led, year after year, to record results and growth,” says Hisham Ezz Al-Arab, chairman and managing director of CIB. “This consistent performance has enabled us to pursue the necessary technological innovation to meet the needs of our growing customer base and remain the leader in the Egyptian banking sector.”

CIB’s earnings rose 27% last year and its return on average equity was 33.1%. The bank has one of the most experienced debt capital market divisions in the market, and its treasury group is a top provider of foreign exchange and cash management products. In addition, CIB serves more than 48,000 SMEs.

In Oman, Bank Muscat, the country’s largest bank with a network of more than 150 branches, is Global Finance’s selection for Best Bank. The bank has international branches in Saudi Arabia and Kuwait, as well as representative offices in Dubai and Singapore. In 2018, Bank Muscat signed a 10-year agreement with MetLife to offer insurance products in Oman. Bank Muscat is experienced in structuring large corporate deals. Its Meethaq Islamic Banking subsidiary launched the country’s first sukuk program, as well as a portal for SMEs.

Trade Bank of Iraq is Global Finance’s selection for Best Bank in Iraq. The government-owned bank accounts for about 80% of the trade finance volume in the country and has assets of about $20 billion. Founded in 2003 to facilitate Iraq’s international trade and reconstruction, the bank has become the leader in providing banking services in the country.

Trade Bank of Iraq has received approvals to open its first international branch in Riyadh, as trade between Iraq and Saudi Arabia is expanding. The bank already has a representative office in Abu Dhabi. Last October, it signed a €100 million ($112 million) loan agreement with Commerzbank to support SMEs in Iraq.


BahrainAhli United Bank
EgyptCommercial International Bank
IraqTrade Bank of Iraq
IsraelBank Hapoalim
JordanArab Bank
KuwaitNational Bank of Kuwait
LebanonBLOM Bank
OmanBank Muscat
PalestineBank of Palestine
QatarQatar National Bank
Saudi ArabiaSamba Financial Group
United Arab EmiratesMashreq
YemenArab Bank Yemen