Kingdom of Bahrain: Financial System Stability Assessment, including Reports on the Observance of Standards and Codes on the following topics, Banking Supervision, Insurance Supervision, Securities Regulation, and Anti-Money Laundering and Combating the Financing of Terrorism
IMF Staff Country Reports, March 6, 2006
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- Canonical URL
- Kingdom of Bahrain: Financial System Stability Assessment, including Reports on the Observance of Standards and Codes on the following topics, Banking Supervision, Insurance Supervision, Securities Regulation, and Anti-Money Laundering and Combating the Financing of Terrorism
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Bibliographic details
- Published: March 6, 2006
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451804607.002
Summary findings
- The assessment highlights banking supervision, insurance supervision, securities regulation, and anti‑money laundering and combating the financing of terrorism.
- The banking sector is well capitalized.
- Asset quality has been improving and provisioning is high.
- Profitability surged in 2004–05, although historically return on equity has been moderate for many institutions.
- Favorable liquidity conditions have caused regional equity and real estate markets to surge.
- Consumer lending has grown rapidly, although it slowed in 2005 following a tightening of loan to income limits.
Banking sector characteristics and risks
- Well capitalized banking sector.
- Improving asset quality.
- High provisioning levels.
- Profitability: surge in 2004–05; historically moderate return on equity for many institutions.
- Policy action noted: tightening of loan to income limits in 2005, which slowed consumer lending growth.
Market conditions and systemic considerations
- Favorable liquidity conditions linked to surges in regional equity and real estate markets.
- Rapid consumer lending growth identified as a notable development and potential risk prior to 2005 tightening.