Banking - Bahrain

Bahrain

In 2024, the projected Net Interest Income in the Banking market of Bahrain is expected to reach US$2.30bn units.
Traditional Banks are anticipated to dominate the market with a projected market volume of US$1.66bn units in the same year.
Looking ahead, the Net Interest Income is forecasted to demonstrate an annual growth rate (CAGR 2024-2029) of 3.03%, resulting in a market volume of US$2.67bn units by 2029.
When compared globally, it is notable that China is expected to generate the highest Net Interest Income with US$4,332.0bn units in 2024.
Bahrain's banking sector continues to thrive, with a strong focus on Islamic finance and a growing presence of fintech startups.

Key regions: United States, China, Japan, Brazil, United Kingdom

Definition:

The Banking market refers to the financial services sector providing financial products and services to individuals and businesses. Retail banking focuses on offering financial services to individual consumers, such as personal loans, savings and checking accounts, credit cards, and mortgages. Commercial banking, on the other hand, provides financial services to small and large businesses, including loans, lines of credit, and other financial products designed specifically for businesses.

Structure:

The market consists of two segments:
- The Traditional Banking market refers to the financial services sector that provides a range of financial products and services to individuals and businesses through store-based branches and other traditional channels.
- The Digital Banking market refers to the emerging market for digital-only banks that offer financial services through online and mobile platforms.

The market data comprises Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the Retail & Commercial banking market, creating opportunities for new entrants, and forcing existing players to adapt.
Key players in this market are companies such as the Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

The Banking market in Bahrain is experiencing a shift in customer preferences, influenced by global trends and local special circumstances.

Customer preferences: Customers in Bahrain are increasingly seeking digital banking solutions, driven by the convenience and efficiency they offer. The demand for online banking services, mobile banking apps, and digital payment options is on the rise as customers look for ways to manage their finances easily and securely. This shift towards digital channels is in line with the global trend towards digitization in the banking sector, where customers are seeking more personalized and tech-driven services.

Trends in the market: One of the key trends in the Bahraini banking market is the growing focus on Islamic banking products and services. With Bahrain being a prominent Islamic finance hub in the region, banks are expanding their offerings of Sharia-compliant products to cater to the increasing demand for Islamic banking solutions. This trend is not only specific to Bahrain but is also reflective of the broader growth of Islamic finance globally, driven by the preference of Muslim consumers for financial products that comply with Islamic principles.

Local special circumstances: Bahrain's status as a regional financial center and its supportive regulatory environment are influencing the development of its banking market. The country's strategic location, well-established financial infrastructure, and regulatory framework are attracting both local and international banks to set up operations in Bahrain. This influx of financial institutions is contributing to the competitiveness and innovation within the banking sector, as banks strive to differentiate themselves and capture market share in the dynamic Bahraini market.

Underlying macroeconomic factors: The macroeconomic stability and diversification efforts in Bahrain are playing a significant role in shaping the banking market. The government's initiatives to diversify the economy away from oil dependence are creating new opportunities for the banking sector, particularly in areas such as fintech, trade finance, and wealth management. Additionally, Bahrain's stable regulatory environment and strong regulatory oversight are instilling confidence in both customers and investors, further supporting the growth and development of the banking market in the country.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.