Net income for listed banks in the GCC reached a record high in Q2 2024, with total net profits hitting $14.8 billion, up from $14.4 billion in the previous quarter. This marks a quarter-over-quarter growth of 2.6 percent, a new report suggests.
Year-over-year, the growth was robust at 9.2 percent compared to Q2 2023. A significant factor contributing to the sector’s strong performance was a notable reduction in quarterly impairments recorded by banks in the region, as reported by Kamco Invest, a prominent non-banking institution based in Kuwait.
Total loan loss provisions (impairments) fell to their lowest level in at least 33 quarters, amounting to $1.9 billion, reflecting double-digit quarter-over-quarter declines in most GCC countries.
Improved economic health, credit quality
The reduction in impairments suggests a healthier economy and enhanced overall credit quality. This trend indicates that loan portfolios have improved over recent years, as evidenced by a consistently declining non-performing loan rate.
Additionally, with central bank interest rates in the GCC remaining stable during the quarter, net interest income reached a new high of $21.5 billion, a slight increase from $21.3 billion in Q1 2024.
Non-interest income saw a minor decrease, settling at a three-quarter low of $10.1 billion in Q2 2024. Total bank revenue for Q1 2024 amounted to $31.6 billion, reflecting a modest quarter-over-quarter growth of 0.4 percent.
Continued lending growth amid rising costs
Despite rising borrowing costs, lending growth persisted in the region. Data from central banks indicated an increase in lending across all GCC countries. Specifically, gross loans for UAE banks achieved the highest quarterly growth at 3.4 percent in Q2 2024, followed closely by Saudi Arabian banks at 3.1 percent.
Similar trends were observed in Saudi Arabia, which experienced credit growth of 3.1 percent, with Oman, Kuwait, and Qatar reporting approximately 1.0 percent growth for the quarter.
Decline in customer deposits
Moreover, customer deposits for GCC-listed banks experienced a small decline of 0.5 percent during the quarter, primarily due to a decrease in deposits from SNB and a reduction in Bahrain after the removal of Al Baraka Banking Group from the listings.
These declines were partially balanced by increased customer deposits in Kuwait, Oman, and Qatar.
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