Listed banks in the GCC witnessed a broad-based growth in lending during Q3-2024 with healthy q-o-q growth seen across countries in the region. The growth reflected resilient economic growth in the region that came despite relatively lower oil prices, according to Kamco Invest, a regional non-banking financial powerhouse based in Kuwait.

 

The IMF also highlighted the trend and forecasted GCC nominal GDP growth of 3.5% in 2024 mainly driven by healthy growth in the UAE, Qatar, Bahrain and Saudi Arabia, particularly in the non-oil sector. 

 

In addition, the project market and the pipeline of prospective projects remain strong for the GCC countries, reflecting commitment to long term growth visions as the countries strive to steer the economy away from the reliance on crude oil.  

 

Aggregate gross loans for GCC-listed banks increased by 3.1% to reach a new record high of $2.12 trillion at the end of Q3-2024 as compared to $2.06 trillion at the end of the previous quarter. The y-o-y growth reached double-digits at 10.1%, once again led by healthy growth in each market, stated Kamco Invest in its report. 

 

Data from central banks (excluding UAE) also showed growth in credit facilities outstanding for GCC banks, barring Bahrain that recorded a marginal decline, stated the report. 

 

Data from SAMA showed the strongest growth in Saudi Arabia with outstanding credit facilities seeing the biggest q-o-q growth in nine quarters at 3.7% during Q3-2024 followed by Qatar and Bahrain with growth of 1.9% and 1.2%, respectively, it added.  

 

Meanwhile, aggregate quarterly net income growth for banks in the region reached a three-quarter low level of 0.4% to hit $14.9 billion during Q3-2024. The marginal growth came after three out of the six country aggregates showed growth that was almost fully offset by decline reported by the remaining three countries. 

 

Moreover, the minimal growth came despite a healthy growth in total bank revenue that grew by 4.1% with net interest income growth of 2.8% and non-interest income growth of 6.9%, said Kamco Invest in its report. 

 

Factors that weighed on the bottom-line performance was a q-o-q increase in operating expenses as well as higher loan impairments booked during the quarter that almost fully offset topline growth during Q3-2024, it stated. 

 

Aggregate impairments reached three-quarter high level of $2.5 billion during Q3-2024 led by higher impairment booked by banks in UAE, Saudi Arabia, Oman and Bahrain partially offset by declines reported by banks in Qatar and Kuwait. 

 

According to Kamco Invest, at the country level, UAE-listed banks once again topped in the region with the highest return on equity (RoE) at the end of Q3-2024 at 16.8%, a slight 10bps drop from the previous quarter, followed by Saudi Arabian and Qatari banks with RoEs of 12.8% each, flat as compared to the previous quarter. 

 

The biggest y-o-y growth in RoE was also seen for Oman-listed banks at 80 bps which was mainly led by elevated profits as well as a relatively smaller growth in total shareholders’ equity. 

 

ROEs for Kuwaiti banks stayed elevated at a double-digit level of 10.4% while Bahraini and Omani banks reported RoEs at 9.4% and 9.1%, respectively, it added.-TradeArabia News Service