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Fri 8 Apr 2016 12:09 AM

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GCC banking revenue growth slows in 2015 in era of cheap oil

New report shows growth in operating costs exceed revenue growth while bad loan provisions rise slightly

GCC banking revenue growth slows in 2015 in era of cheap oil

Lower oil prices are beginning to impact the Gulf's banking sector, with revenue growth slowing in 2015 compared to the previous year, a new report has said.

The study by The Boston Consulting Group found that GCC banking revenues grew by 7.2 percent, down three percent from 2014.

It said the impact of the massive decline in oil prices has affected some banks more than others and profits rose by 6.3 percent last year, less than half the growth seen in 2014.

The BCG report added that 2015 saw patterns that have rarely been witnessed in the last six years - operating costs growing by only six percent, below revenue growth rates.

Provisions for bad loans also increased slightly - by 0.6 percent, a reverse of previous years, said Dr ReinholdLeichtfuss, a senior partner and managing director at BCG's Middle East office.

The main customer segments - retail and corporate banking - grew by 8.1 and 3.3 percent respectively while extraordinary income declined by 21.5 percent, the report added.

Based on the banks' 2015 annual results released in the first quarter of 2016, the report included 45 banks from across the GCC, capturing about 80 percent of the total regional banking sector.

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