UAE Leads In Q2 Gross Loan Growth As GCC Banks' Net Profit Surges To $14.8B

(MENAFN- Khaleej Times) Net income reported by listed banks in the GCC reached a new record high during Q2 2024 after four out of the six country aggregates showed growth as compared to Q1-2024, GCC banking Sector report said.

Aggregate net profits reached $14.8 billion during the quarter as compared to $14.4 billion during the previous quarter, resulting in a quarter-on-quarter growth of 2.6 per cent. The year-on-year growth was also healthy at 9.2 per cent when compared to Q2 2023, according to the report by Kamco Invest.

“The biggest support to bottom-line performance for the sector came from a steep decline in quarterly impairments booked by banks in the region. Total loan loss provisions (impairments) reached the lowest level in at least 33 quarters at $1.9 billion reflecting double-digit quarter-on-quarter declines in most countries in the GCC. 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,” said Junaid Ansari, head of investment strategy and research, Kamco Invest.

The report noted that 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 quarter-on-quarter growth of 0.4 per cent.

Data from central banks in the GCC showed higher quarter-on-quarter lending for all the GCC country aggregates.

Aggregate lending by listed banks in the GCC continued to show quarter-on-quarter growth during Q2 2024 backed by growth in almost all GCC markets. Aggregate gross loans reached a new record high of $2.1 trillion after registering a four-quarter high quarter-on-quarter growth of 2.1 per cent while the year-on-year growth came in at 7.9 per cent. Banks in the UAE reported the biggest quarter-on-quarter gross loan growth during Q2 2024 at 3.4 per cent mainly led by strong retail lending. Gross loans growth for Saudi-listed banks came in next at 3.1 per cent to reach $711.1 billion during Q2 2024 reflecting healthy growThis was followed by Oman, Kuwait and Qatar with quarterly loan growth of around 1.0 per cent.

On the other hand, customer deposits for GCC-listed banks declined by a marginal 0.5 per cent 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.

Data from GCC central banks once again highlighted the resilience of regional economies with continued growth in credit facilities.

Outstanding credit facilities in the region continued to show growth during Q2 2024 led by a broad-based growth across the seven country aggregates. The gains as compared to last year were solid with all countries witnessing healthy growth in lending. Saudi Arabia witnessed a double-digit year-on-year growth in outstanding credit facilities at 11.4 per cent while banks in Qatar showed a year-on-year growth of 5.5 per cent. The lending growth in the region reflected a strong project pipeline with aggregate contract awards of $51.7 billion in the GCC during Q2 2024.

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