The assets of Bahrain’s banks soared to an all-time record of US$128.4 billion at the end of July this year, according to statistics from the Bahrain Monetary Agency (BMA), the central bank of Bahrain and regulator of the country’s financial services industry.
This improved profitability is attributable to positive economic conditions created by higher expenditure on infrastructure development and greater private sector activity, all of which have increased domestic liquidity.
“The BMA continues to provide the necessary support infrastructure to enable banks operating from Bahrain to maximize the advantages accruing from these new growth opportunities, said H.E. Rasheed Mohammed Al Maraj, governor of the BMA.
“At the BMA, we are committed to ensuring that the financial services regulatory environment is effective and conforms to international best practice, on the one hand, and is, at the same time, market friendly and facilitates market innovation,” said Al Maraj.
“We are confident that our new initiatives will not only maintain but strengthen Bahrain’s attraction as the location of choice for financial services providers wishing to do business in the region.”
The assets of the banking system have grown 17% in the past year, with assets at July-end 2004 standing at US$109.3 billion.
In terms of profitability as well, the banks saw outstanding growth in 2004, more than doubling their year-on-year profitability to US$2.2 billion. The dramatic increase of 110% growth in profitability was enjoyed across the board by full commercial banks, offshore banking units (OBUs) and investment banks, both conventional and Islamic.
The contribution of the financial services industry, which largely comprises banking, to Bahrain’s gross domestic product rose to 24.2% in 2004, from 18.9% in 2003, while employment in the industry grew by 5.4% during 2004.
For more information on the Middle East, see Global Custodian’s specialreport on the region in the Pre-Sibos issue.