(MENAFN- The Peninsula) The Peninsula
With banks looking to navigate through pandemic-driven difficulties toward economic recovery and stability, KPMG published the eighth edition of its GCC listed banks' results. Titled 'Cautious optimism', the report offers a thorough analysis of the financial results and key performance indicators (KPIs) of leading listed commercial banks in the region, in comparison with the previous year, to highlight the main financial trends in the GCC countries.
Head of Financial Services, KPMG in the Middle East, South Asia, and Caspian Region and Partner, KPMG in Qatar Omar Mahmood (pictured) said, ''Listed banks in the GCC region continued their post-COVID recovery with strong double-digit asset while maintaining a conservative approach to credit provisioning, tight cost control and healthy capital levels, amid a future outlook based on cautious optimism.''
Out of all the GCC nations, Qatar had the lowest cost-to-income ratio (22.8 percent) and the highest coverage ratio on stage 3 loans (91.6 percent), with Qatar National Bank being the largest bank by assets in the region at USD 327bn. The following salient findings emerged from the financial results' analysis for the year-ended 31 December 2022 for the GCC region as a whole:
Profitability saw another double-digit increase of 25.3 percent, driven particularly by a growth in loan books, increased interest margins, lower loan impairment and a continued focus on cost efficiencies. Asset growth remained robust as banks increased their asset base by 9.9 percent, which was driven by lending to high quality customers.
Net interest margins increased by 0.2 percent, as a result of the rising interest rate environment, which helped drive profit growth. The overall NPL ratio for the GCC banking sector decreased by 0.1 percent and now stands at 3.8 percent, reflecting the conservative approach to credit risk management. Net impairment charges on loans and advances decreased by an average of 11.2 percent, with the drop observed mainly in stage 2 and 3 portfolios, indicating an improvement in credit quality.
ROA (1.3 percent in 2022) increased by 0.2 percent compared to 2021, owing to the rise in profitability being higher than the asset growth. Cost-to-income ratios reduced compared to 2021 (40.9 percent to 39.9 percent), reflecting the continued focus on cost reductions and operating efficiency initiatives. The average coverage ratio for stage 2 and 3 loans increased by 0.4 percent and 1.7 percent respectively from the prior year, demonstrating how banks continue to be cautious in relation to their approach to provisioning.
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