The GCC region’s largest banks booked higher loan growth than a year ago in the second quarter of 2025, supported by lower rates, said S&P Global in its latest analysis.
Loan growth is expected to remain strong for the remainder of the year in Qatar, Saudi Arabia and the UAE as the countries are expected to reduce their interest rates in step with the U.S. Federal Reserve, which is expected to cut rates in the second half.
Al Rajhi Bank posts sharpest loan growth
Saudi Arabia’s Al Rajhi Banking & Investment Corp. recorded the sharpest loan growth among the five biggest banks in the GCC region, increasing to 19.31 percent from 7.37 percent a year earlier. Domestic peer Saudi National Bank’s loan growth rose year on year to 12.21 percent from 10.25 percent.
In the UAE, First Abu Dhabi Bank PJSC, the country’s largest lender, saw loan growth increase to 10.71 percent from 6.34 percent and raised its full-year guidance to low double-digit growth from its previous guidance of single-digit growth. Meanwhile, Dubai-based Emirates NBD Bank PJSC revised its own loan growth guidance to low double digits after reporting second-quarter loan growth of 14.28 percent.
In Qatar, QNB registered loan growth of 9.38 percent and also upgraded its loan growth guidance to 7–9 percent from 5–7 percent. Almost half of the growth came from Turkey, Durraiz Khan, senior vice president for group financial consolidation, said in a July 14 earnings call.
Türkiye rate cuts to drive NIM recovery
As lending increased, net interest income (NII) rose at most of the large GCC banks in the second quarter. QNB’s NII climbed to $2.34 billion from the year-ago $2.12 billion, despite margin pressures due to the impact of high interest rates in its Turkish business, QNB’s Khan said, adding that the bank expects its net interest margin (NIM) to recover if Türkiye cuts its rates in the second half of the year as projected. Deposits in Türkiye reprice faster than loans.
Emirates NBD, which also operates in Türkiye through its DenizBank AS unit, incurred a 22-basis-point decline in its second-quarter NIM to 3.36 percent. The Dubai-based bank expects its full-year NIM to be in the 3.3–3.5 percent range with the anticipated recovery of DenizBank’s margins. Emirates NBD’s NII for the quarter rose roughly 6 percent year over year to $2.28 billion.
Lower Türkiye inflation to reduce net monetary losses
GCC banks with exposures to Türkiye can expect net monetary losses to lessen if the country’s inflation continues to cool, Fitch Ratings said in a June report.
Al Rajhi Bank also reported the highest NII growth among the sampled banks, rising 25 percent year-on-year to $1.95 billion. This, along with higher net financing and investment income and banking services fees, propelled its net profit for the quarter to $1.64 billion, an increase of 31 percent year-on-year.
First Abu Dhabi Bank said it achieved a record quarterly profit after booking $1.50 billion in the second quarter, up 29 percent from $1.16 billion a year ago, while Saudi National Bank and Qatar National Bank also reported higher net income for the period, rising about 18 percent and 4 percent, respectively.
Emirates NBD was the only bank in the sample that recorded a profit decline year-on-year of 10 percent, driven by an impairment charge of $31 million in the quarter compared to a reversal of $374 million a year ago.
