Lenders look to push new business to increase returns, spur recovery from crisis
Banks in the six-nation Gulf Cooperation Council aim to
boost lending to small and medium- sized companies and focus on youth and women
to increase returns, an Accenture survey found.
Lenders in the GCC, which includes Saudi Arabia and the UAE,
plan to cut their cost-to-income ratio to 35 percent from an average 36 percent
to help increase return on equity to 20 percent by 2015 from 16 percent, the
survey of 47 senior executives at banks in the region found.
“The SMEs have traditionally been a small part of the
business as the government sector” dominates the economy, Amr El Saadani,
managing director for Accenture’s financial services practice, said by phone on
Monday. “Governments are now diversifying their economies and most banks have
indicated they are interested in pushing this business.”
Gulf Arab banks are recovering from the global credit
crisis, which slowed lending, hurt investment banking and led to an increase in
Rising government expenditure, partly spurred by a need to
stem political discontent, and higher oil prices are helping revive economic
growth and lending.
Loans to small- and medium-sized companies make up 2 percent
of overall lending in the GCC, compared with 27 percent in countries of the
Organization of Economic Cooperation and Development, El Saadani said.
More than half of the GCC population is less than 30 years
old, while assets held by women is expected to surge to $800bn by 2014 from
$500bn in 2009, he said.
“Young people are extremely tech-savvy,” El Saadani said.
“Women increasingly are also highly educated, increasingly employed and are
becoming extremely demanding customers.”
Addressing the small- and medium-enterprise segment as well
as retail customers needs skilled banking staff, demand for which is
outstripping supply in the region at a time when banks globally are cutting its
workforce, El Saadani said.