“Specific opportunities for banks that can manage a fast expansion” report states
A report from global management consultancy firm A.T. Kearney predicts favourable economic conditions for 2012, with “sustained growth” and “fast expansions” on the horizon, as banks return to pre-crisis levels of profitability.
Despite the positive outlook A.T. Kearney still warns that banks will need to enhance their capabilities and customer service levels, following several years of low investments in an environment with a low cost-to-income ratio.
“While conditions differ from country to country and from bank to bank, we expect overall sustained growth. The key challenge for GCC banks will be balancing growth aspirations with increasing cost pressure. But, there are country specific opportunities for banks that can manage a fast expansion,” said Cyril Garbois, partner and head of A.T. Kearney’s financial institutional practice in the Middle East.
A statement on the results of the study read: “Overall profitability of banks has now returned to pre-crisis levels in all markets, in spite of an overall slightly increased cost-to-income ratio for GCC banks.
“The macro-economic environment remains favourable, despite the ongoing European crisis; growth opportunities exist in a number of geographies and sustained overall growth in GCC banking is expected.”
Despite this, asset growth remained subdued at pre-crisis levels in 2011.
To leverage opportunities, A.T. Kearney experts suggest banks invest in retail banking infrastructure and capabilities, address untapped opportunities in wholesale banking and redefine priorities for external growth and international expansion.
“Efficiency improvement can yield significant savings, for example a structured approach to sales effectiveness can have a bottom line impact of 15 to 20 percent,” confirmed Dr von Pock.
Adding to the findings, His Excellency Sultan Bin Saeed Al Mansouri recently announced that the UAE’s economic growth for 2011 stood at 3.3 per cent – more than double the figure achieved in 2010.