Gulf banks seek to focus on SMEs, youth and women

DUABI: Banks in the six-nation Gulf Cooperation Council (GCC) aim to boost lending to small and medium enterprises (SMEs) and focus on youth and women to increase returns, an Accenture survey found.

Lenders in the GCC, which includes Saudi Arabia and the United Arab Emirates, plan to cut their cost-to-income ratio to 35 per cent from an average 36 per cent to help increase return on equity to 20 per cent by 2015 from 16 per cent, 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."

Young population
Gulf banks are recovering from the global credit crisis, which slowed lending, hurt investment banking and led to an increase in loan defaults. 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 per cent of overall lending in the GCC, compared to 27 per cent in countries of the Organisation 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 $800 billion by 2014 from $500 billion 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.

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