Graphical evidence of the Gulf banking sector's problems
As we alluded to before, working for a local bank in the Middle East doesn't seem like a very stable career option currently.
On the retail side, deposits have slumped, while commercial banks appear unwilling extend credit due to deteriorating economic conditions and increased defaults on existing loans.
Just how badly banks in the Middle East, North Africa and Pakistan (MENAP) have been hit was illustrated by a report from the International Monetary Fund (IMF) yesterday.
After a period of rapid growth in 2008, credit extended to the region's private sector has slumped by an average of 30 percentage points by the end of 2009. "Losses on non-performing loans have yet to be realised," says Masood Ahmed, IMF's Middle East and Central Asia department director.
And, as the chart below shows, this coincides with a slide in deposits:
Banks' provisions for loan losses were particularly pronounced in the UAE last year - rising from $6.8bn at the end of 2008 to $12.8bn at the end of March 2010 - and the IMF expects this trend to continue for the remainder of this year.
It's not all bad news. The IMF says that the authorities' swift action to around central bank liquidity support and capital injections to the banking sector has helped mitigate the financial crisis, and it expects economic growth to reach 4.2% across the region in 2010.
"However, this positive perspective is clouded by some stress in the banking system and lethargic credit activity across the region," says Ahmed.
All-in-all this doesn't look great from a jobs point of view. Local banks in the Gulf have continued to post poor results in the first quarter of this year, and the majority resisted redundancies in 2009. If this does indeed continue throughout 2010, many will be forced to cut their cloth.
