Bahrain Banking & Financial Services Q1 2019
Despite its size, Bahrain has a well-developed and mature banking and finance sector. The market is supported bystringent regulations and an open business environment that is effective in attracting foreign investment and encouraging businessgrowth. Although the recent economic problems and the fall in oil prices have hindered the performance of most industries, thefinancial sector remains strong and is contributing to just under 20% of the country's GDP. Liquidity has improved in the bankingsector, and a new fintech deal is expected to help the sector grow, but a rise in funding costs is anticipated. The Islamic financesegment, in particular, has been improving and is leading the region, with 24 Islamic banks holding assets valued at more thanUSD25.7bn. The stock market, on the other hand, is experiencing extremely slow growth and is an area that should be addressed,although it is still on the rise, despite the index falling slightly. The banking sector might see consolidations in the wake ofcompetition from regional banks - within Bahrain itself and in regional markets that Bahrain strives to access. The shape of thebanking industry and the presence of many small players could be the impetus for consolidation events as a response to risingcompetition.
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