A Comparative Financial Performance of the GCC ’s Largest Banks During the Pandemic

Abstract

This paper investigates the financial performance of the largest Gulf Cooperation Council (GCC) banks by total assets before and during the recent COVID‑19 pandemic. The purpose of the study was to identify the impact of the COVID‑19 pandemic on banks’ financial performance. Financial ratios analysis during the period 2017–2020 is employed to measure the financial performance of the largest GCC banks mainly based in Saudi Arabia, Qatar, United Arab Emirates, Kuwait, Oman, and Bahrain. The ratios cover key performance areas such as profitability, efficiency, liquidity, asset quality, asset risk, and expense management. Two significant developments in 2020 are the COVID‑19 pandemic and severe drop in oil prices, both of which led to a sharp drop in the region’s GDP growth rate from an average of –0.09% in year 2019 to –5.9% in 2020, which in turn is expected to negatively impact bank performance. Using paired samples t-test the research study found statistically significant results that the financial performance of all banks suffered on almost all the key parameters in 2020 compared to the earlier period which can explained by the decline in economic activity due to COVID‑19. The focus of this study and its conclusions are novel to the extent that there are no country specific studies related to impact of COVID 19 on the biggest banks in a country. Further as far as the authors know there are no studies on the topic of impact of COVID‑19 on big banks operating in the Gulf cooperation council countries. The conclusions of the study would of importance to the regulators who would not like the big banks to fail.

Keywords

• gcc
• pandemic
• financial performance
• covid‑19
• banks