The GCC banking sector saw steady performance in Q1-2024, with a healthy q-o-q growth of 11.8% and a Y-o-Y growth of 10.5% reaching $14.4 billion, as per the GCC Banking Sector Report – Q1-2024 released by kamco Invest. The report analyzed financials from 57 listed banks in the GCC, highlighting UAE-listed banks recording the highest q-o-q growth at 5.6% with total customer deposits reaching USD 803.2 billion, the highest in the GCC.
In terms of Net Interest Margin (NIMs), UAE ranked first in the GCC at 3.49% in Q1-2024, reflecting ample liquidity allowing banks to capitalize on the tightening interest rate cycle. Saudi Arabian banks followed with a NIM of 3.18%, Qatar at 3.06%, and Kuwait at 2.87%. UAE also led the region in return on equity (RoE) at 16.9% in Q1-2024, with Saudi Arabian and Qatari banks close behind at 12.8% and 12.7%. UAE-listed banks saw the biggest Y-o-Y growth in RoE at 280 bps driven by increased profits and modest growth in total shareholders’ equity.
The report noted that Islamic banks in the GCC also showed robust performance in Q1-2024, with total assets reaching $734 billion, a Y-o-Y growth of 6.1%. Islamic banks in Qatar reported the highest q-o-q growth in total assets at 3.9%, followed by Saudi Arabia at 2.2%, the UAE at 4.9%, and Kuwait at 0.4%. In terms of asset quality, Islamic banks in the UAE maintained the lowest non-performing financing ratio at 4.5% in Q1-2024, followed by Qatar at 6.6%, Kuwait at 7.4%, and Saudi Arabia at 8.1%.
The report highlighted that the GCC banking sector continued to demonstrate resilience and adaptability amidst ongoing economic challenges. Despite the pandemic impact and oil price fluctuations, banks maintained healthy growth rates in key performance indicators. Digital transformation and innovation played a crucial role in enhancing operational efficiency and customer experience, with banks focusing on digital offerings and partnerships to meet evolving customer needs and preferences.
Looking ahead, the report emphasized the importance of sustainable growth strategies and proactive risk management to navigate uncertainties and capitalize on emerging opportunities. Collaboration with fintech firms, investing in technology, and talent development were identified as key priorities for GCC banks to stay ahead in the rapidly evolving financial landscape. Overall, the GCC banking sector’s performance in Q1-2024 underscored its resilience, stability, and commitment to driving sustainable growth in the region’s economy.
