Kuwait Finance House is the strongest bank in Kuwait, 6^th strongest bank in the Middle East and the 2^nd strongest Islamic bank for 2019

• Kuwait Finance House tops the ranking of Strongest Banks By Balance Sheet in Kuwait and ranks sixth in the Middle East and is the second strongest Islamic bank for 2019
• Most banking systems in the Middle East and Africa demonstrated continued resilience
• Saudi Arabia tops Islamic bank ranking, while Malaysia dominates share of assets

London, United Kingdom, 24 September 2019 – Kuwait Finance House tops the ranking of Strongest Banks By Balance Sheet in Kuwait, ranks sixth in the Middle East and is the second strongest Islamic Bank in this year’s The Asian Banker Strongest Banks by Balance Sheet, which is the most comprehensive annual evaluation that captures the quality and sustainability of the balance sheets of the banks in the Asia Pacific, Middle East and Africa regions.

The ranking is based on a very detailed and transparent scorecard that evaluates banks on six areas of balance sheet financial performance: the ability to scale, balance sheet growth, risk profile, profitability, asset quality and liquidity. 

Kuwait Finance House, along with other strongest banks in the region, was recognised at The Asian Banker 500 (AB500) Strongest Banks By Balance Sheet ceremony held in conjunction with the annual SWIFT-organised SIBOS convention in London, United Kingdom. 

Kuwait Finance House tops the ranking of Strongest Banks By Balance Sheet in Kuwait and ranks sixth in the Middle East and is the second strongest Islamic bank for 2019

With the strength score at 3.99 out of five, Kuwait Finance House is the strongest bank in Kuwait, sixth strongest bank in the Middle East and the second strongest Islamic bank for 2019. Strong liquidity, robust capitalisation and improvements in asset quality and profitability indicators were the main factors that enabled the bank to maintain its leading position in the country.

Banks in Saudi Arabia and UAE remain the strongest in the Middle East, while South African and Egyptian banks are the leaders in Africa. Qatar National Bank, First Abu Dhabi Bank and Standard Bank Group remained as the top three largest banks by assets in the Middle East and Africa. Total assets of Qatar National Bank surpassed that of First Abu Dhabi Bank and Standard Bank Group by 17% and 60%, respectively. 

These findings were revealed by the Middle East and Africa 200 (MEA 200) 2019, the evaluation of the 200 largest banks in the Middle East and Africa for the financial year 2018. This year, the evaluation covered banks from 16 countries, namely Bahrain, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE), Algeria, Egypt, Ghana, Kenya, Mauritius, Morocco, Nigeria and South Africa, and ranked them according to both asset size and overall strength.

Most banking systems in the Middle East and Africa demonstrated continued resilience

The overall profitability of banks in the Middle East improved marginally in 2018. Banks’ operational efficiencies improved, reflected by the fall in the weighted average cost to income ratio of the 100 largest banks in the region from 38% in the previous year to 36.9%. Qatari banks enjoyed the lowest average cost to income ratio, while the ratio for banks in Jordan and Kuwait improved the most. The weighted average return on assets (ROA) went up to 1.65% in 2018 from 1.59% in 2017, and the average return on equity (ROE) was higher at 12.6% from 12%. The average ROA of Saudi banks on the list improved further to 2.3%, the highest in the region.

Meanwhile, Middle Eastern banks remained well-capitalised, with capital adequacy ratio (CAR) averaging 18.3% and Tier 1 capital ratio averaging 16.8% in 2018. Despite the slight decline, the average CAR of Saudi banks remained the highest in the region, at 20.3% in 2018. Banks in Qatar, Lebanon and Oman have seen an increase in their average CAR. Despite the challenging operating environment, the overall asset quality of banks in the region stayed relatively sound. Nevertheless, the overall balance sheet growth was weak in 2018, with banks registering the average loan growth and deposit growth of 2.7% and 4.5%, respectively.

Banks in Saudi Arabia and UAE remain the strongest in the region. Saudi banks have continued to deliver robust financial performance, taking the top five spots in the top 10 strongest banks list in the region. On the contrary, the average strength scores for banks in Bahrain and Lebanon are lower than other Middle Eastern countries under evaluation. In addition to subdued balance sheet growth, banks in Bahrain and Lebanon posted much weaker profitability and asset quality than their regional peers amid the challenging operating environment. 

In Africa, banks in South Africa and Egypt achieved the highest weighted average strength score at 3.43 and 3.16 out of five, respectively. The balance sheet growth in the South African banking sector accelerated in 2018. South African banks maintained adequate capitalisation and liquidity and sound asset quality. However, their average cost to income ratio stood at a high level of 58.1%, only lower than that of Nigeria. Egyptian banks maintained solid liquidity buffers, and their average loan to deposit ratio reached only 42.5%. Their balance sheet growth decelerated in 2018, while overall capital levels increased slightly. The average cost to income ratio of Egyptian banks on the list increased from 27.5% in the prior year to 34.3%, but still the lowest among banks in the region.

Saudi Arabia tops Islamic bank ranking, while Malaysia dominates share of assets

Malaysia, Saudi Arabia, UAE, Qatar and Kuwait are the largest markets in terms of the Islamic bank assets, with their aggregate assets representing 79% of the combined assets of the 100 largest Islamic banks. The Islamic banks in Malaysia, including both domestic and foreign Islamic banks, held six out of the top 20 ranks and 16 of the total 100. Notably, the combined assets of all Malaysian Islamic banks accounted for 23% of the 100 largest Islamic banks’ assets.  

The top 10 strongest Islamic banks include three Saudi banks, two Malaysian banks, two Qatari banks, and one bank each from Kuwait, Pakistan and the UAE. On average, Saudi Arabia achieved the highest strength score at 3.9 out of five, followed by Kuwait (3.7), Qatar (3.5) and UAE (3.3). 

The profitability and asset quality of Saudi Islamic banks are strong, and they maintained a robust capital position and ample liquidity. Their average return on assets (ROA) reached 2.5%, compared to 1.5% recorded by all the 100 banks. The average strength score of Malaysian Islamic banks on the list is 3.1 out of five, lower than the average recorded by all the 100 banks, at 3.2. Their average ROA was only 0.9%.

Looking ahead, Islamic banking industry will continue to expand steadily. In the Middle East, most banking systems in the region are expected to remain resilient, despite challenges. Some changes in the rankings are expected in the near future, as the recent mergers and acquisitions drive in the region is expected to create larger and stronger banks. 

The Strongest Banks Rankings

About the programme

The Asian Banker Strongest Banks By Balance Sheet is an annual assessment of the financial and business performance of the banking industry in the Asia Pacific, Middle East and Africa regions. The assessment ranks the top performing banks in each country by strength, an evaluation that is based on a belief that a strong bank demonstrates long-term profitability from its core businesses.

The scope of coverage for The Asian Banker Strongest Banks By Balance Sheet comprises of both the mature markets and the most promising emerging markets in the region. The focus of the assessment is on banks and financial holding companies with a significant proportion of activity in commercial banking. The assessment does not include central banks, policy banks or finance companies.

The winners are determined using a scorecard approach based on six crucial performance indicators rated on a scale of 0-5: scale, balance sheet growth, risk profile, profitability, asset quality and liquidity.

For further information, you may get in touch with:

Mr. Alfred Labiccasi

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alabiccasi@theasianbanker.com