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Bahrain banks have cause for cheer

8 November 2023

Bahrain’s crowded banking sector has seen a sustained improvement in performance over the past year, amid generally stable economic conditions in which higher oil prices and procyclical public spending play a key role.

Loan books are in good shape. According to the Central Bank of Bahrain (CBB), the non-performing loan (NPL) ratio of conventional wholesale banks stood at just 2.1 per cent in the second quarter of 2023, compared to 2.5 per cent in the same period in 2022 – and well down on the 5 per cent seen at the height of the Covid-19 crisis.

Profitability has returned to banks, and higher interest rates – one source of those profits – have not yet had a material impact on loan quality.

Bank metrics have held up quite well, says Amin Sakhri, director – financial institutions, at Fitch Ratings. “There is a broadly stable NPL ratio and deterioration has been contained. We could have expected to see higher rates causing deterioration of asset quality in 2023 but the impact has been limited. We were seeing some deterioration, but it is very well contained.”

In addition, says Sakhri, liquidity in the system remains strong and is supported by higher oil prices. Capital buffers also remain sound and are supported by healthy internal capital generation from profitability overall.

Strong profit growth

The largest banks have seen profits swell this year. Bank of Bahrain & Kuwait showed a 20.9 per cent increase in first-half 2023 profits to BD37m ($98m), on the back of higher net interest income. National Bank of Bahrain showed a smaller 4 per cent increase in net income to BD40.8m ($108m) for the six months to the end of June, driven by higher income from loans and investment securities.

Even so, the overall profitabily of Bahraini banks is low compared to that of competitor countries. The system-weighted average return on assets at 1.2 per cent in 2022 was the lowest in the GCC region, according to the Washington-based IMF, which may reflect intense competition in a market that comprises 75 conventional and Islamic banks.

The shifting global interest rate environment inevitably has a bearing on performances.

According to S&P Global Ratings, a higher-for-longer interest environment means liquidity will be scarcer and more expensive, potentially affecting Bahrain, which has a growing external debt position. The agency points out that Bahrain's retail banks have large and expanding net external liabilities, which at the end of the first quarter of 2023 reached 26 per cent of total domestic lending. Against that, S&P Global Ratings notes that 60 per cent of the foreign liabilities are interbank, and 60 per cent are sourced from the GCC, giving reassurance that external funding will remain stable.

Loan-to-deposit ratios consistently below 80 per cent are another indicator that local deposits and external liabilities are recycled into government and local central bank exposures, said S&P.

Banks that are more corporate-focused benefit more on the asset side because the loans are on floating rates and re-price more quickly upon rate hikes, says Sakhri. “High rates have been supportive, but a bit less so than in markets like Saudi Arabia or the UAE, as these have higher proportions of lower-cost funding.”

Well capitalised

The strong capital positions of Bahraini lenders are a source of strength when it comes to supporting domestic project activity.

“Generally, Bahraini banks are well capitalised. The average Common Equity Tier 1 (CET1) ratio is solid, even in a GCC context, and the loan-to-deposit ratio, as reported by the CBB, is fairly low,” says Sakhri.

This means banks have the ability to absorb a large part of these projects. “We are not really concerned in terms of where banks are going to deploy capital, but it is important to bear in mind that households are under pressure, primarily due to the increase in the cost of living,” Sakhri adds.

Another area where Bahrain has been a regional leader is in financial technology (fintech) and digital banking. According to the World Bank Global Fintech Database, Bahrain was already a leader compared to the region and upper middle-income countries in 2017, with about 80 per cent of the population having made use of digital payments.

Since then, Bahrain has taken significant regulatory steps to create a favourable environment for fintech, including the introduction of a fintech unit at the CBB, a regulatory sandbox and new regulations for the digitalisation of banking and payment services.

As the IMF noted in a September 2023 assessment, digital payment service solutions, such as mobile payment applications, contactless payment cards and e-wallets, have been adopted by the public.   

Meanwhile, the door is still open for consolidation in a crowded banking system. The majority of these lenders are small, but just three of the country’s banks have a 50 per cent share of total assets.

The merger of Ahli United Bank and with Kuwait Finance House in 2022 was a cross-border deal, but the traditional drivers for domestic consolidation – which in the Gulf tend to be state equity owners looking to rationalise their shareholdings – are largely absent in Bahrain.

“Bahraini banks are generally profitable and their financial profiles are healthy, so there is no immediate need for mergers,” says Sakhri.

That will leave the country with perhaps more banks than it strictly needs, a legacy of its former position as the Gulf’s main financial centre.

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James Gavin

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  • Regional rail construction surges ahead

    21 November 2025

     

    > This package also includes: Middle East becomes a hub as rail networks mature

    The GCC is at the centre of global rail construction activity after a decade of stop-start activity. Progress is being made on several large-scale rail schemes, providing renewed opportunities for international contractors to re-enter the market.

    From the Qiddiya high-speed rail in Saudi Arabia to the planned expansion of Dubai’s metro network and the long-awaited revival of the GCC railway, a new wave of projects is shaping the region’s economic future.

    Well-timed resurgence

    According to data from regional projects tracker MEED Projects, the region boasts a pipeline of over $140bn-worth of railway schemes. Several factors are driving the renewed focus on major infrastructure.

    Firstly, the region’s post-pandemic recovery has been underpinned by robust fiscal performance. Higher oil prices since 2022 have strengthened government balance sheets, enabling public investment in capital projects. Unlike in previous cycles, however, the current wave of spending is guided by a clearer vision rooted in diversification and long-term national development strategies.

    Saudi Arabia’s Vision 2030, the UAE’s Centennial Plan 2071 and Oman’s Vision 2040 all emphasise connectivity, mobility and urban liveability as essential components of sustainable growth. Governments are therefore prioritising infrastructure that forms the backbone for tourism, logistics and housing development.

    Secondly, project delivery capabilities have matured across the GCC. Local developers, contractors and authorities have gained experience delivering large and complex schemes such as the Dubai and Riyadh metros and Doha’s Fifa World Cup infrastructure. This has built confidence and the capacity to handle more ambitious undertakings.

    Thirdly, global construction markets are shifting. With slowing growth in some developed economies, the GCC offers a stable, well-capitalised and politically supportive environment for investment. 

    In addition, international contractors, consultants and suppliers are facing shrinking margins elsewhere and are therefore refocusing on the Gulf region’s more promising project pipelines.

    Strong prospects

    Saudi Arabia has a pipeline of about $60bn-worth of rail projects. The long-discussed Saudi Land Bridge, connecting the Red Sea to the Gulf through Riyadh, is being prepared for procurement. Once complete, it will be a 1,300-kilometre (km) corridor from Jeddah to Dammam, transforming freight logistics and positioning Saudi Arabia as a regional trade hub.

    The kingdom’s planned Qiddiya high-speed rail, meanwhile, will link King Salman International airport with Qiddiya entertainment city. It is part of Riyadh’s broader mobility masterplan and reflects the government’s intention to integrate developments with efficient public transport.

    Riyadh also continues to expand its metro system, with Line 7 currently under tendering. This addition will extend the network’s reach to growing urban districts, further embedding mass transit into the daily life of the city.


    Dubai is moving forward with the proposed Metro Gold Line

    In the UAE, the momentum is just as strong. The ongoing Etihad Rail project is entering a new phase with the anticipated rollout of passenger services, connecting Abu Dhabi, Dubai and eventually the northern emirates. Freight operations are already under way, providing a backbone for industrial connectivity and cross-border trade. Plans for an Abu Dhabi–Dubai high-speed link are also progressing as bid evaluation continues for the main construction works.

    Dubai is also going ahead with the proposed Metro Gold Line, which is designed to serve new growth corridors and improve connectivity to emerging districts. 

    Meanwhile, regional integration is back on the agenda with the GCC Railway, a long-delayed project that is finally gaining traction. Once realised, the network will connect Kuwait to Oman via Saudi Arabia, Bahrain, Qatar and the UAE, and governments are now actively coordinating to align standards, timelines and funding mechanisms.

    The GCC offers a stable, well-capitalised and politically supportive environment for investment

    Evolving delivery models

    While public funding remains central to these initiatives, the GCC’s infrastructure landscape is also seeing a gradual shift towards new delivery and financing models.

    Public-private partnerships (PPPs) are gaining traction, especially in Saudi Arabia. The proposed Qiddiya high-speed rail project is planned as a PPP, while several components of Hafeet Rail are being delivered through joint ventures providing financing arrangements.

    This evolution comes with challenges, however. These frameworks must balance investor confidence with
    public value, creating a need for clear risk allocation and transparent governance.

    The scale and ambition of the ongoing projects have not gone unnoticed internationally. Leading construction, engineering, and technology firms are either expanding or returning to the region after years of reduced activity. 

    Global rail specialists are competing for lucrative contracts in the region, while international consultancies are increasingly embedded in master planning and programme management roles.

    The resurgence in project activity within the regional rail sector means firms will have many prospects to explore. 

    “The regional market has not been this exciting in a long, long time,” a senior executive from a major international rail firm told MEED. 

    “The market is shaping up for a golden era in rail and we will make sure that we give it our full attention.”

    Another executive added: “This is primarily because of the resources available to governments now compared to in previous years, but more importantly [it is due to] the intent and will to make the projects happen.”

    The GCC’s clear project pipeline and decisive execution are also a draw. Several rail projects in the region, such as Dubai Metro and Etihad Rail, have progressed from concept to implementation in relatively short timeframes.

    Moreover, sustainability and innovation are becoming central to the GCC’s value proposition. Digital engineering, modular construction and low-carbon materials are being adopted more widely. 

    Developers are under pressure to meet environmental standards and align with global best practices. Commitment to these concerns, particularly through the UAE and Saudi Arabia’s net-zero goals, further enhances the region’s attractiveness to global investors.

    Bringing together transport, tourism, logistics and sustainability is creating a practical approach to modern urban development

    Challenges ahead

    Despite the optimism, challenges remain. Cost pressures, supply chain disruptions and competition for skilled labour could slow progress or inflate project budgets. 

    The rapid pace of project launches also risks overstretching local capacity. Maintaining quality, timelines and financial discipline will require strong governance and careful coordination between various government agencies.

    Long-term success depends on integrating infrastructure investment with broader social and economic goals. Transport systems must connect to affordable housing, job clusters and educational hubs, otherwise benefits remain limited. 

    That said, the GCC has shown remarkable adaptability. The lessons learned from previous cycles, especially the importance of phasing, master planning and stakeholder alignment, are helping to shape current strategies. Authorities are more selective, prioritising projects that yield clear economic multipliers and align with national visions.

    The current wave of infrastructure expansion looks set to position the GCC region as a global rail construction hotspot. The projects will also define the physical and economic landscape of the region for decades to come.

    By connecting cities, ports, and industries, these projects are reshaping the region’s economy. Bringing together transport, tourism, logistics and sustainability is creating a practical approach to modern urban development.

    If the previous era of regional construction was defined by skyscrapers and luxury resorts, the coming decade will be defined by connectivity and integration. The GCC’s major projects today are not about scale alone, but also about building more connected economies that can sustain growth.

    The renewed momentum also presents an opportunity for regional governments to amplify their national ambitions by building more diversified economies, reducing carbon emissions and enhancing liveability.

    Main image: Haramain high-speed train in Jeddah, Saudi Arabia

    Middle East becomes a hub as rail networks mature: MEED interviews Martin Vaujour, Alstom’s Africa, Middle East and Central Asia region president

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  • Middle East becomes a hub as rail networks mature

    21 November 2025

     

    The resurgence in investment in metro and intercity lines means the region is no longer an emerging market for the global rail industry. It is now an established hub with an expanding network of projects and, increasingly, the need for ongoing servicing, upgrades and new technologies.

    “We are reaching a point where it is not just about building new lines. Customers are now understanding that it is not enough to just buy new trains – they also need long-term partnerships to service and maintain them efficiently,” says Martin Vaujour, Alstom’s Africa, Middle East and Central Asia region president.

    Alstom, which has supplied rolling stock and systems for major schemes in the region such as the Riyadh Metro, is now seeing growing demand for both new-build contracts and service agreements. “There are still lots of new investments,” he says, “but also growing activity in signalling projects, service projects and spare parts – areas that used to be small but are now taking off. That is a [source] of satisfaction for me, because those businesses are less risky, have better margins and create long-term relationships with customers.”

    The change is an important development as the region becomes a mature market with diverse opportunities for the rail industry. “There was a time when countries would just buy materials with export credit,” says Vaujour. “Now, they are supporting local capacity to service and maintain trains. The mindset is evolving, and that is a very positive sign.”

    Saudi expansion

    Buoyed by the opening of Riyadh Metro at the end of 2024, Saudi Arabia remains an important market. “They are happy with the success [of Riyadh Metro],” says Vaujour. “There is extension work on the existing lines, new rolling stock being discussed and a potential Line 7 project. The network is expanding, and that is a great success story.”

    The next wave of growth in Saudi Arabia includes the planned Qiddiya Express high-speed line, which has recently attracted expressions of interest. 

    “That project has been on our radar for some time,” says Vaujour. “It is under the umbrella of the Royal Commission for Riyadh City, which is very well organised and structured. That gives the project strength and credibility.”

    The scheme is being developed as a public-private partnership, a model that Vaujour says fits Saudi Arabia’s stable economic environment. “Public-private partnerships (PPPs) take longer to put together because they are more complex to structure, but in countries like Saudi Arabia – stable and with the capacity to raise debt – why not?” he says. 

    “We are fine with PPPs. We have experience from France, the UK and Spain.”

    While Alstom does not invest directly, it plays a key role in structuring deals. “We are facilitators and advisers,” says Vaujour. 

    “Our job is to accompany the customer, to adjust and iterate with them, and to help find the best solution. PPP is one of the tools in the box – not the simplest one, but one that works.”

    The challenge in the market today is not a lack of opportunity, but deciding where to focus. 

    “Our main problem is not the market; it is how to be selective,” he says. “We have more than enough opportunities to ensure a nice trajectory of growth. The difficulty is to pick our battles and fight for the right ones.”

    The challenge in the market today is not a lack of opportunity, but deciding where to focus

    Shifting focus

    In Africa and Central Asia, Alstom has long-term locomotive and commuter train partnerships that offer years of visibility. In the Gulf, by contrast, the model remains dominated by engineering, procurement and construction-style projects. 

    “It is more big projects, where civil contractors team up with us to deliver metros or airport people movers,” says Vaujour.

    As regional urban transport networks become established, attention is turning to intercity and high-speed rail. “In the Gulf, the Abu Dhabi-Dubai high-speed project is probably the most advanced, while Qiddiya Express and upgrades to the Haramain line in Saudi Arabia could also accelerate momentum.”

    Interest in high-speed connections between Riyadh, Doha and Kuwait is also growing, although such schemes will depend on electrification. “High-speed rail comes with electrification,” Vaujour notes. “And that means significant investment.”

    In addition to new infrastructure, the rail sector is being reshaped by technology. Alstom is investing in clean traction systems, such as hydrogen and battery-powered trains, as well as in autonomous operations.

    “Hydrogen and battery traction are progressing, but they are still in an early stage,” says Vaujour. “Diesel will continue to dominate freight for some time, because there is no clean technology yet that can deliver that level of power. But for passenger services, we are starting to see progress.”

    Driverless trains are another major growth area. “Customers everywhere are interested, partly because it is increasingly hard to find drivers, and also because software drives more efficiently than humans. It is more energy-efficient and reduces wear and tear,” says Vaujour.

    As the Middle East’s networks expand, upgrading existing infrastructure is becoming as important as building new lines. Signalling systems are central to this evolution. “You cannot just create new lines every year – it is too expensive,” says Vaujour. “Signalling allows you to double train frequency. It is what makes networks more efficient.”

    The evolution reflects a wider transformation of the region’s rail sector. “The Middle East has become an established rail hub,” says Vaujour. “It is no longer just about building – it is about operating, maintaining and evolving.” 

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  • Dubai launches auto trade hub

    21 November 2025

    Register for MEED’s 14-day trial access 

    Dubai has announced plans to develop one of the world’s largest and most advanced automotive trading hubs.

    Dubai Municipality has signed a partnership agreement with DP World’s Economic Zones division to establish and manage the market. Under the agreement, DP World will provide integrated logistics and zone management services, including e-commerce and trade finance solutions.

    The Dubai Auto Market will span a 22‑million‑square‑foot complex that will be developed by DP World.

    It is planned to host more than 1,500 showrooms, clustered workshop zones, warehouses and multi-storey parking facilities, alongside a convention centre, hotel, auction house, retail outlets, and food and beverage areas. The facility is designed to handle over 800,000 vehicles a year, including new and used electric, hybrid and conventional models.

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  • Riyadh sets December deadline for Prince Mishaal Road

    20 November 2025

     

    The Royal Commission for Riyadh City (RCRC) has allowed contractors until 3 December to submit bids for a contract to develop Prince Mishaal Bin Abdulaziz Road Axis-Taif Road in Riyadh.

    The previous deadline was 19 November.

    The scope of work covers general road improvement works, including street upgrades, drainage works, relocation of existing utilities, dry and wet utilities, and other associated infrastructure.

    RCRC is investing in improving the road network in and around the kingdom's capital.

    Earlier in November, MEED reported that RCRC had begun post-tender clarifications with bidders for a contract covering upgrade works on Najm Al-Din Al-Ayoubi Road in Riyadh.

    The scope of work covers general road improvement works, including upgrades to three bridges at Al-Zahabi Road, Abdulrahman Adakhel Road and Atia Al-Saady Road.

    In February, RCRC announced plans to develop eight road projects in Riyadh at an estimated cost of more than SR8bn ($2bn).

    The projects form part of the second group in the Riyadh Ring Roads and Main Axes development programme.

    The schemes include:

    • The northern part of the Prince Turki Bin Abdulaziz Al-Awwal Road development project, with a length of more than 6 kilometres (km). The scope includes the development of two main intersections, the construction of three bridges and a tunnel.
    • The middle section of the Al-Thumama Road Axis development project. The scheme will cover about 10km and includes the development of five main intersections and the construction of 11 bridges and five tunnels.
    • The Imam Abdullah Bin Saud Road development project, which will stretch about 9km and includes the development of four main intersections, the construction of three bridges and two tunnels.
    • The Dirab Road development project, which will cover 9km and includes the development of two main intersections and the construction of nine bridges.
    • The Imam Muslim Road development project, which stretches 12km and includes the development of four main intersections and the construction of four bridges. The project will serve as the future extension of the Prince Turki Bin Abdulaziz Al-Awwal Road Axis to the south.
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    • The first package of engineering modifications for crowded sites in Riyadh, encompassing improvements to alleviate traffic congestion during peak times.

    In August last year, RCRC confirmed it had awarded four contracts worth SR13bn ($3.46bn) as part of the first phase of the programme to develop the city’s road network.

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    Other major projects by RCRC include Riyadh Metro, Riyadh Art, Sports Boulevard, King Salman International Park and the Green Riyadh project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15123861/main.jpg
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  • Riyadh advances with rail link prequalifications

    20 November 2025

     

    Saudi Arabia Railways (SAR) is expected to begin the second stage of the prequalification process for a contract covering the construction of a new railway line, known as the Riyadh Rail Link, which will run from the north to the south of Riyadh.

    MEED understands that the consortiums need to propose self-funded financing arrangements for the project as part of the new round of prequalifications.

    Contractors submitted their initial prequalification documents earlier this month.

    The scope of work includes constructing a 35-kilometre-long double-track railway line connecting SAR’s North-South Railway to the Eastern Railway network.

    The contract also covers the procurement, construction and installation of associated infrastructure such as viaducts, civil works, utility installations, signalling systems and other related works.

    The project is expected to form a key component of the Saudi Landbridge railway.

    The Saudi Landbridge is an estimated $7bn project comprising more than 1,500km of new track. Its core component is a 900km new railway between Riyadh and Jeddah, which will provide direct freight access to the capital from King Abdullah Port on the Red Sea.

    Other key sections include upgrades to the existing Riyadh-Dammam line and a link between King Abdullah Port and Yanbu.

    The start of tendering activity for the Riyadh Rail Link project makes the construction of the Saudi Landbridge more likely. 

    The project is one of the kingdom’s most anticipated infrastructure programmes. Plans to develop it were first announced in 2004, but the project was put on hold in 2010 before being revived a year later.

    Key stumbling blocks were rights-of-way issues, route alignment and its high cost.

    In December 2023, MEED reported that a team of US-based Hill International, Italy’s Italferr and Spain’s Sener had been awarded the contract to provide project management services for the programme.

    If it proceeds, the Landbridge will be one of the largest railway projects ever undertaken in the Middle East – and among the biggest globally.

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    Yasir Iqbal