Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

Primary Credit Analyst: Timucin Engin, Dubai (971) 4-372-7150; timucin.engin@standardandpoors.com Secondary Contacts: Emmanuel F Volland, Paris (33) 1-4420-6696; emmanuel.volland@standardandpoors.com Nadim Amatouri, Dubai +971 (0)4 372 7157; nadim.amatouri@standardandpoors.com

Table Of Contents
Strong Government Support Is Key To The Rapid Growth Of GCC Islamic Banking Differences In Local Credit Conditions Lead To Divergent Islamic Asset Growth Rates Country-Specific Asset Quality Trends Deposits Are The Main Source Of Funding, And Overseas Borrowing Is Very Limited Islamic Banking Returns Are Converging With Their Conventional Peers Appendix Related Criteria And Research

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging
Islamic banks in the Gulf Cooperation Council (GCC) are likely to grow faster than their conventional counterparts and increase their share of GCC banking system assets for the foreseeable future, Standard & Poor's Ratings Services believes. But profitability rates for the two banking models are converging as Islamic banks are taking a more pronounced hit from lower interest rates and non-core banking revenues than their conventional peers because they traditionally operate with larger bases of non-interest bearing liabilities. According to our analysis of some conventional and Islamic banks in the Gulf region, the GCC Islamic banks in our sample of banks outgrew their conventional peers between 2009 and 2012. Their asset bases showed a compound average growth rate of 17.4% compared with conventional banks' 8.1%, while their net lending and customer deposits grew by an average of 18.2% and 19.9% compared with conventional banks' 8.1% and 10%. Overview GCC Islamic banks continued to capture market share and outgrow their conventional peers despite the 2008 crisis, and we expect them to continue to grow fast. Low interest rates and lower capital market-related gains than 2008 pre-crisis levels are impairing revenue growth for most Islamic banks in the region, leading to profitability convergence with their conventional peers. Strong government support is the key to the rapid growth of Islamic banking in the region. We expect Qatari Islamic banks to grow especially fast because of the country's large infrastructure needs and investments, including the 2022 soccer World Cup. We think Islamic banking will continue to increase its market share in the Gulf, and we expect the operating environment over the next two years to remain supportive for Islamic banks' credit quality.

The economies of the countries that make up the GCC--Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates--are showing robust recovery after the 2008 economic crisis, with Qatar looking particularly strong. The region has one of the world's largest Islamic banking markets and the sector has healthy performance metrics. Additional state support means we think Islamic banking in the region will continue to increase its market share, and we expect the operating environment over the next two years to remain supportive for Islamic banks' business and credit quality.

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

How We Reached Our Conclusions For our analysis, we selected only pure-play commercial Islamic banks in the Gulf region with a minimum balance sheet size of $5 billion. We excluded Islamic investment banks whose revenues are primarily driven by capital markets and principle investment-related activities. Four of the Islamic banks in our sample list were established in the past few years, and we incorporated their financials into our analysis from either 2009 or 2010. The geographical distribution among individual GCC countries is fairly balanced with Saudi Islamic banks representing 31.4% of our sample size, UAE Islamic banks 24.7%, Kuwaiti Islamic banks 21.6%, Qatari Islamic banks 16.4%, and Bahraini Islamic banks 6%. Although we have aggregated metrics for GCC Islamic banks, our sample is heavily concentrated on individual names--Al Rajhi and Kuwait Finance House together represent around 39%, while the largest five banks represent 61% of our 17-bank sample. As our average is heavily influenced by the large banks, we also make specific references to the sample average without these large entities. The sample asset size, based on 2012 year-end balance sheets, is around $317 billion. We note that this list is not exhaustive, as it does not include an estimated $30-$40 billion asset base of banks excluded from our analysis. It also does not consider potential Islamic assets held by conventional institutions in the GCC region. Nevertheless, we believe it is very representative of the core Islamic commercial banking market in the region, and its financial trends.

Table 1

Sample Islamic Banks

Bil. $ as of year-end 2012 Al Rajhi Bank Kuwait Finance House Dubai Islamic Bank Abu Dhabi Islamic Bank Qatar Islamic Bank (S.A.Q) Al Baraka Banking Group B.S.C. Masraf Al Rayan Bank Alinma Bank Aljazira Emirates Islamic Bank PJSC Ahli United Bank B.S.C. Al Hilal Bank PJSC Qatar International Islamic Bank Barwa Bank P.Q.S.C Country Saudi Arabia Kuwait UAE UAE Qatar Bahrain Qatar Saudi Arabia Saudi Arabia UAE Kuwait UAE Qatar Qatar Assets 71 52 26 23 20 19 17 14 14 10 9 9 8 7 Net loans 46 30 15 14 12 12 12 10 8 5 6 6 4 4 Customer deposits 59 33 18 17 12 15 12 9 11 7 6 7 5 4 Islamic banking ranking 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Overall ranking 5 8 17 20 25 26 29 32 33 35 36 37 38 39 % Weight in sample assets 22.5 16.5 8.2 7.4 6.4 6.0 5.3 4.5 4.3 3.2 3.0 2.8 2.5 2.2

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

Table 1

Sample Islamic Banks (cont.)

Boubyan Bank K.S.C. Sharjah Islamic Bank Noor Islamic Bank P.J.S.C Total Source: Banks' financial statements. Kuwait UAE UAE 7 5 5 317 5 3 3 194 5 3 4 228 15 16 17 40 41 42 2.1 1.6 1.5 100.0

Strong Government Support Is Key To The Rapid Growth Of GCC Islamic Banking
We believe that GCC Islamic banks have grown very fast because of significant direct and indirect support from governments, ruling families, and authorities, and we expect this support to continue (see "Islamic Banking Has Reached Critical Mass In The Gulf After Sustained Growth, And Expansion Is Set To Continue," published on Dec. 4, 2009 on RatingsDirect). For example, the granting of banking licenses is a discretionary power of the state authorities, and most of the new banks in the GCC region are Islamic. State authorities also control the system allowing conventional banks to change into Islamic ones--Bank of Kuwait & The Middle East in Kuwait, and Sharjah Islamic Bank and Dubai Bank in UAE have all done this. In addition, the authorities control the opening of dedicated business lines in Saudi Arabia, Qatar, and UAE, and the acquisition of Islamic banking subsidiaries, as happened when National Bank of Kuwait S.A.K. acquired a controlling stake in Boubyan Bank. State authorities have had strong and direct involvement in the development of the Islamic banking sector by holding direct and indirect stakes in Islamic banks including Kuwait Finance House, Dubai Islamic Bank, Dubai Bank, and Al Rajhi Bank, and more recently, Alinma Bank, First Energy Bank, Al Hilal Bank and Barwa Bank. State involvement has been particularly strong in Qatar, where the Central Bank banned conventional banks from having "Islamic windows." The Qatari authorities also structure a large part of their infrastructure funding to be sharia compliant to allow Islamic banks to participate in these projects (see "Qatar's Islamic Banks Are On A Fast Track To Growth" published on Sept. 16, 2013).

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

Chart 1

Differences In Local Credit Conditions Lead To Divergent Islamic Asset Growth Rates
We expect GCC Islamic banks' overall credit growth to remain strong over the medium term, with Saudi and Qatari Islamic banks accounting for a big chunk of the increase because of their planned infrastructure investments. We also think Abu Dhabi-based banks will show healthy growth, given their stronger balance sheets relative to their Dubai-based peers. GCC banking system assets have risen by a compound average growth rate of 6.9% a year since 2009 to reach $1.6 trillion at the end of 2012, as the positive effects of strong oil prices offset the fragile global operating environment. However, when we look at growth rates among individual countries using our sample of selected banks, we see quite a bit of divergence. The strongest compound average growth rate was in Qatar, where strong state support and a buoyant economy helped Islamic banks expand their loans by 32% compared with system-level domestic credit growth of 23.7%. The country's youngest Islamic bank, Barwa Bank, began operations after 2009. If we were to exclude Barwa Bank from our analysis, the lending growth for Islamic banks would still remain at 26% for the period.

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

Saudi Arabia was the second-fastest-growing Islamic banking market, with a average 22.3% growth rate in 2009-2012, as banks were able to capitalize on strong local economic conditions. Alinma Bank, the country's newest Islamic bank, began operations in 2008. The compound average growth rate for the Islamic banks in our sample for the UAE over the same period was around 14.5%, but this falls to 9.3% if we exclude Al Hilal Bank, which began operations in 2011. Most of the growth was generated by Abu Dhabi-based banks and the contribution from Dubai-based banks was minimal as they had to focus on cleaning up their balance sheets due to real estate and government-related entity (GRE) lending exposures In Kuwait, the compound average growth rate of 10.5% was largely driven by Kuwait Finance House, whose rise came mostly from overseas businesses, predominantly in Turkey. That's why Islamic banking growth was significantly above domestic credit growth. Bahrain has experienced political and economic upheaval over the past two years, and central bank data show total assets for Islamic retail and wholesale banks unchanged at $25.5 billion from 2009-2012. Total Bahraini banking system assets contracted by about 16% between 2009 and 2012.
Chart 2

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

In Oman, the regulator approved Islamic banking from Jan. 1, 2013. The country's first Islamic bank, Bank Nizwa, opened in January 2013. Oman's biggest lender, Bank Muscat, has begun to sell Islamic banking products through an Islamic window. Despite this recent push, we do not expect the Islamic banking segment in Oman to represent a meaningful portion of the regional Islamic banking market because Oman's banking system, at around $37 billion at the end of 2012, is small.

Country-Specific Asset Quality Trends

Asset quality trends for GCC banks are driven by country-specific factors rather than conventional or Islamic structure. We selected 26 conventional banks in the Gulf region for our conventional banking sample and the total asset base of the sample banks was $1 billion as of year-end 2012. (see the appendix for a detailed list of the conventional banks).
Table 2

Asset Quality Comparison Between Islamic And Conventional Banks

Conventional banks NPL ratio (%) NPL coverage (%) Credit losses % average assets Credit losses to revenues Islamic banks NPL ratio (%) NPL coverage (%) Credit losses % average assets Credit losses to revenues 2008 1.7 129.0 1.1 27.6 2008 4.4 70.7 1.1 19.1 2009 4.3 79.5 1.2 30.9 2009 5.2 73.6 1.3 27.8 2010 5.1 75.1 0.9 23.0 2010 5.7 69.9 1.0 24.2 2011 4.9 75.0 0.7 18.6 2011 5.6 73.8 1.1 25.6 2012 4.6 80.5 0.6 17.5 2012 4.9 77.9 0.9 21.8

NPL--Nonperforming loans. N.A.--Not available. Source: Banks' financial statements.

Although the conventional banks started 2008 with significantly lower nonperforming loan (NPL) stock than their Islamic banking peers, they experienced much faster asset quality deterioration than the Islamic banks during the first year of the crisis. Their average NPL ratio rose from 1.7% in 2008 to 4.3% in 2009 while Islamic banks' rose to 5.2% in 2009 from 4.4% in 2008. This higher rate for conventional banks is largely a result of UAE banks' increasing NPL levels in 2009--around 36% of new NPL formation in 2009 came from UAE-based banks. It also reflects the significant hike in Kuwait-based Gulf Bank's NPLs in 2009. Looking at our sample of banks, GCC conventional banks' NPLs peaked in 2010 at 5.1%, then gradually declined in the following two years to 4.6% level, whereas for the Islamic banks, the NPL ratio peaked in 2010 at 5.7% level, declining to 4.9% in 2012. Despite the conventional banks' faster NPL formation, they entered the crisis in 2008 with substantially higher loan loss reserve coverage of 129% versus 71% for their Islamic peers. Given this buffer, conventional banks' overall declines in credit losses after 2009 were significantly better than their Islamic peers. For example, conventional banks' credit losses to average assets peaked at 1.2% in 2009 and gradually declined to 0.6% in 2012, whereas the same ratio, which peaked at 1.3% for Islamic banks in 2009, only declined by 0.4% over the next three years. This had a large impact on performance divergence between commercial and Islamic banks after the crisis.

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

In our view, the crisis clearly showed that GCC banks' asset quality is influenced more by their country of domicile and local market lending conditions than their adherence to the conventional or Sharia-compliant banking model. Table 3 shows that NPL formation in UAE and Kuwait was very high in 2008 and 2009 because of falling prices on their large real estate exposures, difficulties faced by certain GREs in Dubai, and the challenges faced by local investment companies in Kuwait. We believe the countries' Islamic banks' asset quality trends closely followed these leads.
Table 3

Non-Performing Loans By Geography (%)

2008 Kuwait--Islamic banks Kuwait--all banks Qatar--Islamic banks Qatar--All banks KSA--Islamic banks KSA--All banks UAE--Islamic banks UAE--All banks 8.6 6.2 1.0 0.9 2.3 1.6 3.6 1.4 2009 8.2 10.6 0.9 1.3 3.8 3.4 5.4 3.7 2010 9.4 8.5 1.5 1.7 2.5 3.0 7.4 6.7 2011 7.0 6.6 1.2 1.4 1.8 2.4 11.4 8.2 2012 5.9 5.3 1.5 1.5 1.9 2.0 10.3 8.4

Source: Banks' financial statements.

We see large real estate lending concentrations in Kuwait, Qatar, and UAE for most banks, including Islamic banks. Some Islamic banks also have direct investments in real estate as an asset class, and this has created volatility in their earnings and overall performance since the 2008 crisis.

Deposits Are The Main Source Of Funding, And Overseas Borrowing Is Very Limited
Most GCC banks have traditionally funded themselves through customer deposits, and the overall role of non-depository funding is limited. This is more visible with Islamic banks, where debt capital markets issuance has historically been very limited.
Table 4

Asset Funding Composition Of Islamic Banks And Conventional Banks

Islamic Banks Asset Funding Composition (%) Core Deposits Non core deposits Other borrowing Other liabilities Total Equity Conventional Banks Asset Funding Composition (%) Core Deposits Non core deposits Other borrowing Other liabilities 2006 68.0 8.0 1.5 5.5 16.9 2006 66.2 12.7 6.1 3.2 2007 68.4 8.3 1.7 4.8 16.8 2007 62.1 16.8 6.6 3.4 2008 69.4 9.2 1.6 4.5 15.3 2008 64.8 13.9 6.3 3.9 2009 67.6 8.4 1.8 5.3 16.8 2009 65.4 12.0 6.8 3.3 2010 68.5 9.9 2.3 3.9 15.5 2010 66.7 10.1 6.3 3.6 2011 70.0 9.1 2.1 3.9 14.9 2011 66.7 10.6 5.8 3.5 2012 72.0 7.7 2.6 3.8 13.9 2012 68.5 8.9 5.9 3.4

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

Table 4

Asset Funding Composition Of Islamic Banks And Conventional Banks (cont.)

Total Equity Source: Banks' financial statements. 11.8 11.1 11.0 12.5 13.3 13.5 13.4

About 72% of Islamic banks' total assets were funded by customer deposits as of Dec. 31, 2012, and 14% were funded by shareholders' equity. Most GCC banks also have high levels of non-remunerated current accounts, and Islamic banks generally have stronger access. In addition, most Islamic banks in the region traditionally employ more capital than their conventional peers in funding their assets. Given the larger equity base and current account deposits, Islamic banks' interest bearing liabilities to total liabilities are generally lower than their conventional peers. The Gulf region's currencies, with the exception of Kuwait, as its currency is pegged to an undisclosed basket of currencies, are pegged to the U.S. dollar, so regional interest rates have tracked the decline in global interest rates over the last few years. Islamic banks are able to operate with strong net interest margins in a high interest rate environment because of their funding advantage. The impact of declining interest rates was therefore more obvious on their performances. Conventional banks were able to mitigate some of the pressure on their yields on earning assets as they were able to capitalize on the lower cost of funding opportunities in debt capital markets.

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

Chart 3

The corporate and infrastructure related nature of lending in the Gulf region means the average tenor of loans for most Islamic banks is substantially higher than a year. Furthermore, the average tenor for customer deposits is generally very short-term. This results in a contractual asset liability mismatch for Islamic banks similar to their conventional peers. Although these deposits have a very high roll-over rate, we believe that under the incoming Basel III regulations, the region's banks will be further incentivized to issue longer term paper. We therefore expect Islamic banks in the region to adopt a more active stance in debt capital markets.

Islamic Banking Returns Are Converging With Their Conventional Peers

Unless we see a cycle of higher interest rates that would help Islamic banks to expand their net interest margins, we expect to continue to see convergence between conventional and Islamic banking returns in the GCC region over the next few years. Islamic banks have continued to outgrow their conventional peers since the beginning of the crisis, but their margins have been eroding and their return on average assets converging with conventional banks. Between 2008 and 2012, Gulf Islamic banks' average return on average assets declined by around 100 basis points (bps), and operating

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

revenues to average assets declined by 130bps. The main driver behind the lower revenue generation was the significant contraction in net interest margins, but this was also accompanied by a significant contraction in revenues some Islamic banks had traditionally generated from non-core banking activities. These factors mean that Islamic banks' revenue generation is now falling to their conventional counterparts' levels.
Table 5

Analysis Of Islamic Banks' Return On Equity (%)

2008 Net interest income to average earning assets Average earning assets to average assets Net interest income to average assets (1) Fee income to average assets (2) Other non interest income average assets (3) Operating revenues over average assets ( = 1 + 2+ 3) Personnel expenses to average assets (4) Non personnel expenses to average assets (5) Operating cost over average assets (=4+ 5) Credit losses over average assets Other items over average assets Return on average assets Equity leverage (avg. equity to avg. total assets) Return on average equity Source: Banks' financial statements. 4.0 87.4 3.5 1.0 1.0 5.5 1.1 0.8 2.0 1.1 (0.2) 2.7 15.0 18.0 2009 4.0 87.6 3.5 0.8 0.5 4.8 1.1 0.9 2.0 1.3 (0.4) 1.9 15.1 12.6 2010 3.6 87.3 3.2 0.8 0.3 4.3 1.0 0.9 1.9 1.0 (0.3) 1.7 15.1 11.3 2011 3.5 86.5 3.0 0.8 0.5 4.3 1.0 0.9 1.9 1.1 (0.4) 1.7 14.2 11.9 2012 Change from 2008 to 2012 3.4 86.3 2.9 0.8 0.5 4.2 0.9 0.8 1.8 0.9 (0.2) 1.7 13.5 12.5 (0.6) (1.1) (0.5) (0.2) (0.6) (1.3) (0.2) 0.0 (0.2) (0.1) 0.0 (1.0) (1.5) (5.5)

Conventional banks have been able to reduce their provisioning requirements substantially since NPL formation began to stabilize, as they entered the crisis with substantially higher loan loss reserve coverage. Islamic banks have continued to operate with higher levels of credit losses, which has also contributed to the convergence of Islamic and conventional banks' profitability.
Table 6

Analysis Of Conventional Banks' Return On Equity (%)

2008 Net interest income to average earning assets Average earning assets to average assets Net interest income to average assets (1) Fee income to average assets (2) Other non interest income average assets (3) Operating revenues over average assets ( = 1 + 2+ 3) Personnel expenses to average assets (4) Non personnel expenses to average assets (5) Operating cost over average assets (=4+ 5) Credit losses over average assets Other items over average assets Return on average assets 2.9 88.7 2.6 0.9 0.4 3.9 0.8 0.5 1.3 1.1 0.1 1.4 2009 2.9 89.3 2.6 0.8 0.5 3.8 0.7 0.5 1.2 1.2 0.0 1.4 2010 2.9 88.3 2.6 0.8 0.4 3.7 0.7 0.5 1.2 0.9 0.1 1.6 2011 3.0 88.3 2.6 0.7 0.4 3.7 0.7 0.5 1.3 0.7 (0.0) 1.8 2012 Change from 2008 to 2012 2.8 88.5 2.5 0.7 0.5 3.7 0.7 0.5 1.2 0.6 0.1 1.7 (0.1) (0.2) (0.1) (0.2) 0.0 (0.2) (0.1) (0.0) (0.1) (0.4) (0.0) 0.3

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Gulf Islamic Banks Continue To Grow Faster Than Their Conventional Peers, But Profitability Rates Are Converging

Table 6

Analysis Of Conventional Banks' Return On Equity (%) (cont.)

Equity leverage (avg. equity to avg. total assets) Return on average equity Source: Banks' financial statements. 10.5 13.6 10.7 12.9 11.6 13.5 12.4 14.5 12.7 13.7 2.2 0.1

As with asset quality, profitability depends significantly on country of operations, so banks in Qatar and Saudi Arabia are operating with better metrics than their peers in the UAE and Kuwait. We believe the convergence of returns between the conventional and the Islamic banking models in the GCC region is here to stay. Islamic banks used to be able to rely on strong returns from non-banking activities such as capital markets and real estate owing to the inflationary asset valuation cycle in the region. After their recent credit losses we now expect them to have similar provisioning levels to their conventional peers.

Appendix
Table 7

List of Conventional Banks Used In Our Sample

Bil. $ as of year-end 2012 Qatar National Bank The National Commercial Bank Emirates NBD PJSC National Bank of Abu Dhabi National Bank of Kuwait S.A.K. Samba Financial Group Riyad Bank HSBC Bank Middle East Ltd. Abu Dhabi Commercial Bank First Gulf Bank Banque Saudi Fransi The Saudi British Bank Arab National Bank Ahli United Bank B.S.C. Arab Banking Corp. B.S.C. Union National Bank PJSC The Commercial Bank of Qatar Burgan Bank Mashreqbank BankMuscat S.A.O.G. Gulf International Bank B.S.C. Gulf Bank Country Qatar Saudi Arabia UAE UAE Kuwait Saudi Arabia Saudi Arabia UAE UAE UAE Saudi Arabia Saudi Arabia Saudi Arabia Bahrain Bahrain UAE Qatar Kuwait UAE Oman Bahrain Kuwait Assets 100.8 92.1 83.9 81.8 58.4 53.1 50.7 50.5 49.2 47.7 42.1 41.8 36.4 29.9 24.5 23.7 22.0 21.3 20.8 20.6 17.7 17.2 Net Loans 68.6 43.6 59.4 44.8 35.1 28.9 31.3 24.0 33.5 31.2 27.4 25.6 23.0 15.0 12.9 15.6 13.3 12.0 11.0 14.9 7.1 11.8 Customer Deposits 74.2 72.9 58.2 48.9 33.8 39.5 38.6 32.0 29.7 32.5 30.8 32.0 27.5 18.2 12.1 17.3 11.4 13.8 12.9 13.8 9.5 11.5 Overall Ranking 1.0 2.0 3.0 4.0 6.0 7.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 18.0 19.0 21.0 22.0 23.0 24.0 27.0 28.0 % Weight in Sample Assets 9.8 8.9 8.1 7.9 5.7 5.1 4.9 4.9 4.8 4.6 4.1 4.0 3.5 2.9 2.4 2.3 2.1 2.1 2.0 2.0 1.7 1.7

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Table 7

List of Conventional Banks Used In Our Sample (cont.)

The Saudi Investment Bank Doha Bank Q.S.C. Commercial Bank of Kuwait BMI Bank B.S.C. Total Source: Banks' financial statements. Saudi Arabia Qatar Kuwait Bahrain 15.7 15.2 13.0 2.0 1,032.0 9.1 9.3 7.6 1.3 617.4 10.8 9.4 8.0 1.5 701.1 30.0 31.0 34.0 43.0 1.5 1.5 1.3 0.2 100.0

Related Criteria And Research

Qatar's Islamic Banks Are On A Fast Track To Growth, Sept. 16, 2013 Banking Industry Country Risk Assessment: Qatar, July 11, 2013 A Growing Economy And Strong Capitalization Keep Gulf Banks On A Path To Recovery, March 20, 2013 Low Interest Rates Should Keep Gulf Banks' Debt Issuance Levels Strong In 2013, March 4, 2013 Exit European Banks, Enter Gulf Banks As Major Acquirers In The Region's Emerging Markets, Feb. 1, 2013 Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9, 2011 Banks: Rating Methodology And Assumptions, Nov. 9, 2011 Bank Capital Methodology And Assumptions, Dec. 6, 2010

Additional Contact: Financial Institutions Ratings Europe; FIG_Europe@standardandpoors.com

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