Low interest rates are squeezing Bahraini banks' profit margins compared with other Bahrain-based financial institutions or Gulf banks due to high operational costs, bankers said.

Competition in the local market has led to unprecedented interest rates in terms of deposits or loans. Personal loan interest rates dropped to 4.9 per cent compared to 7 per cent last year, while return on deposits rose to 4 per cent in some banks compared to 1.5 per cent in the past, they said at a Press conference hosted by our sister publication Akhbar Al Khaleej.

Bank of Bahrain and Kuwait (BBK) chief executive officer Abdulkareem Bucheeri, BMI chief executive officer Jamal Hazeem and Bahrain Association of Banks chief executive Robert Ainey attended, in the presence of Akhbar Al Khaleej editor-in-chief Anwar Abdulrahman.

Bucheeri said interest rates on bank loans dropped, with clients refraining from taking loans due to recent political unrest and economic situation, although about 96.5 per cent of them are committed to repaying their loans, which is one of the highest rates globally.

Hazeem stressed banks have been harmed by Bahrain's credit rating downgrade as a result of political events, since credit ratings of major banks drop as ratings of the country where they operate in are cut, adding the difference between interest rates on deposits and loans currently stand at only 1 per cent, the highest ever in Bahrain's banking sector. – TradeArabia News Service