Net income reported by listed banks in the GCC reached a new record high during Q2-2024 with aggregate net profits hitting $14.8 billion as compared to $14.4 billion during the previous quarter, resulting in a q-o-q growth of 2.6%.

The y-o-y growth was also healthy at 9.2% when compared to Q2-2023. The biggest support to bottom-line performance for the sector came from a steep decline in quarterly impairments booked by banks in the region, according to Kamco Invest, a Kuwait-based non-banking powerhouse.

Total loan loss provisions (impairments) reached the lowest level in at least 33 quarters at $1.9 billion reflecting double-digit q-o-q declines in most countries in the GCC.

Improving economic health

The decline in impairments indicates improving health of the economy as well as overall credit quality. It also shows improving loan portfolios over the past several years as shown by a steadily declining non-performing loan rate.

Moreover, since central bank interest rates in the GCC remained unchanged during the quarter, net interest income reached a new peak during the quarter at $21.5 billion, a slight improvement when compared to $21.3 billion during Q1-2024.

Non-interest income reported a small decline to reach a three-quarter low level of $10.1 billion during Q2-2024. As a result, aggregate bank revenue reached $31.6 billion during Q1-2024, registering a marginal q-o-q growth of 0.4%.

Lending growth

Meanwhile, lending growth continued in the region despite higher borrowing costs. Data from central banks in the GCC showed higher q-o-q lending for all the GCC country aggregates. The data on listed banks showed gross loans for UAE banks registering the strongest quarterly growth during Q2-2024 at 3.4% followed by Saudi Arabian banks with a slightly smaller growth of 3.1%.

Data from central banks also highlighted a similar picture with Saudi Arabia witnessing credit growth of 3.1% followed by Oman, Kuwait and Qatar with quarterly growth of around 1.0%.

Customer deposits

On the other hand, customer deposits for GCC-listed banks declined by a marginal 0.5% during the quarter mainly led by fall in customer deposits reported by SNB as well as a decline in deposits in Bahrain after the delisting of Al Baraka Banking Group.

These declines were partially offset by higher customer deposits reported by banks in Kuwait, Oman and Qatar.

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