Despite losses in profit growth for some banks, overall the Bahraini banking sector did well in 2007. According to a recent report by the Central Bank of Bahrain (CBB), “Against the background of recently completed structural changes, domestic banking institutions (conventional and Islamic) show sound financial health, as rapidly expanding balance sheets are underpinned by high capital adequacy, low non-performing assets, plenty of liquidity, continued growth of earnings and stable ratings from accredited rating agencies.” Despite this praise, prudent observers will keep their eyes on some of Bahrain’s bank portfolios that contain high concentrations of certain sectors. Further unchecked growth in the construction and real-estate sectors will leave some banks uncomfortably exposed. Current difficulties in the industry include the recent structural changes implemented by the central bank, related to the CBB’s single license policy. Furthermore, it is worth noting that three wholesale banks have become retail banks, which has expanded
