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Arab banks balance sheet to reach $2tr

DUBAI — The consolidated balance sheet of Arab banks will reach Dh7.34 trillion ($2 trillion) this year, or up 25 per cent from last year's Dh5.87 trillion ($1.6 trillion), 80 per cent of which is in the Gulf Cooperation Council member states.

The banks' overall net profit will reach Dh117.48 billion ($32 billion) by end-2007, according to Adnan Ahmed Yousif, chairman of the Union of Arab Banks and president and chief executive of Bahrain's Albaraka Banking Group.

Meanwhile, Yousif told reporters on the sidelines of the ongoing 3rd US-Middle East & North Africa Private Sector Dialogue (PSD) that no Gulf Cooperation Council member state will revalue its currency without the regional bloc's approval.

He also said that talks on currencies revaluation in the Gulf are best done when social and economic pressures to abandon the dollar-peg have died down.

"There should be a discussion on this issue but not under any pressure," he said noting that the region had enjoyed the strength of the greenback for years and "nobody said anything". Also yesterday, the governor of Jordan's central bank Umayya Toukan said that high inflationary pressures remain to be a "challenge" for monetary policies in the region.

But he also noted that high oil revenues are being used to diversify regional economies and savings being invested in new financial instruments. "Again, it will be a challenge for central banks to ensure the soundness of any financial innovation by banks and financial institutions," he said.

Yousif said Albaraka has embarked on a five-year expansion plan starting this year involving the opening of 55 more branches. He added that the group has opened an office in Jakarta and expanded in Egypt, Turkey and Algiers. It will also expand to India and China.

The group's net profit for the first nine months hit $162 million while its assets crossed the $10-billion-mark, or a 25 per cent increase on equity.

Yousif described as baseless fears that Arab banks would be badly affected by the subprime mortgage crisis in the US and high inflation rates in European countries.

He said the long-term borrowings in GCC banks are not big, unlike those in Europe. He added that most GCC banks have the needed capital for their various expansion programmes.