Gulf banks are estimated to have made provisions worth $9.4 billion for last year against impairment of assets and credit loss, a massive 40 per cent rise from the previous year, a report said.

The provisions, which Gulf banks started to increase rapidly in the wake of the global economic crisis, are however expected to decline slightly in 2010, Kuwait Financial Centre said in an economic report.

The 61 banks in the six-nation GCC made provisions worth $6.4 billion in the first three quarters of last year during which provisions continued to rise quarter-on-quarter.

Provisions last year were a five-fold surge over the modest $1.8 billion set aside in 2007, and which grew to as much as $6.68 billion in 2008, the report said.

'This was due to heightened provisions taken by many of the GCC's largest banks in order to withstand the possibility of defaults in their loans books,' it said.-TradeArabia News Service