During the second quarter of 2024, listed banks in the GCC reported a new record high in net income, with aggregate net profits reaching $14.8 billion, showing a 2.6 percent quarter-on-quarter (q-o-q) growth. The year-on-year (y-o-y) growth was also strong at 9.2 percent compared to the same period in 2023. This growth was supported by a significant decrease in impairments booked by banks, reflecting an improving economy and credit quality. Net interest income reached a new peak at $21.5 billion, while non-interest income slightly declined to $10.1 billion.
Lending growth continued in the region, despite higher borrowing costs, with data showing increases in gross loans for UAE and Saudi Arabian banks during Q2-2024. The overall customer deposits for GCC-listed banks, however, declined marginally by 0.5 percent, with some countries experiencing decreases in customer deposits. The resilience of the regional economies was highlighted by continued growth in credit facilities, with all seven country aggregates showing healthy lending growth. Saudi Arabia reported double-digit y-o-y growth in outstanding credit facilities, reflecting a strong project pipeline in the region.
Manufacturing activity data from Bloomberg’s Markit Whole Economy Surveys showed strong PMI figures for Dubai, Saudi Arabia, Qatar, and the UAE at the end of Q2-2024. The PMI for Saudi Arabia stood at 55.0 points in June-2024, UAE at 54.6 points, Dubai at 54.3 points, and Qatar at 55.9 points, the highest in the GCC. Kuwait also showed growth in its PMI during June-2024, indicating positive trends in manufacturing activity across the region. The overall economic indicators point towards a robust and resilient economy in the GCC.
The report also highlighted a decline in impairments booked by banks in the GCC, reaching the lowest level in at least 33 quarters at $1.9 billion. This decline suggests an improvement in the health of the economy and overall credit quality, as well as better loan portfolios over the past few years. Despite central bank interest rates remaining unchanged during the quarter, net interest income reached a new peak. The marginal growth in aggregate bank revenue during Q2-2024 indicates a steady performance by the banking sector despite economic challenges.
Data from GCC central banks revealed a broad-based growth in outstanding credit facilities across the region, signaling continued economic resilience and expansion. The strong project pipeline in the GCC supported the growth in lending, with aggregate contract awards reaching $51.7 billion during Q2-2024. Manufacturing activity remained strong, with PMI figures above the growth mark of 50 for several countries in the region. The positive economic indicators reflect the stability and growth potential of the GCC economies, despite global uncertainties.
