Aggregate net profit for listed banks in the GCC reached a new record high during Q1, mainly led by a steep q-o-q increase in non-interest income that more than offset a sequential decline in interest income in Qatar and Kuwait, a report said.

In addition, lower provisions booked by banks in the region also supported bottom-line performance during the quarter, according to Kamco, a financial powerhouse in Kuwait.

As a result, aggregate net profits saw the biggest q-o-q growth since the pandemic at 17.0% to reach $13.4 billion during Q1-2023 from $11.5 billion recorded in Q4-2022. The sequential increase in net profit was broad-based and was seen across the GCC.

Total quarterly net interest income declined for the first time in five quarters during Q1-2023 mainly led by a decline reported by banks in Qatar and Kuwait. On the other hand, banks in UAE reported a growth of 1.2% whereas for Saudi-listed banks the growth was flattish. Non-interest income, meanwhile, increased by a strong 17.2% during the quarter with growth seen across the GCC, barring in Bahrain. Kuwait, Saudi and Qatari banks reported strong double-digit growth in non-interest income during the quarter.

The trend in provisions was mixed during the quarter, although aggregate provisions declined by 6.2% q-o-q to reach $3.1 billion in Q1-2023 as compared to $3.3 billion in Q4-2022. The decline mainly came as a result of a steep drop in provisions booked by banks in the UAE, Qatar and Oman that more than offset higher provisions booked by banks in Kuwait, Saudi Arabia and Bahrain.

Aggregate lending in the GCC continued to see growth during the quarter although the trend remained mixed at the country level with growth in three out of six countries in the GCC offsetting declines in the remaining countries. Moreover, the q-o-q growth in gross loans fell to a five-quarter low level of 1.2% to reach $1.9 trillion at the end of Q1-2023.

The growth in net loans was slightly better at 1.7% to reach $1.8 trillion. On the other hand, growth in customer deposit was at a three-quarter high of 2.9% to reach $2.3 trillion at the end of Q1-2023. The trend once again remained mixed across the GCC countries. The net impact of a stronger growth in customer deposits vs. lending resulted in a decline in loan-to-deposit ratio for the GCC banking sector that reached 78.5%, one of the lowest levels in several quarters. – TradeArabia News Service