The GCC Banking Sector report revealed that net income reported by listed banks in the GCC reached a record high during Q2 2024. Four out of the six country aggregates showed growth compared to Q1-2024, resulting in an aggregate net profit of $14.8 billion, a 2.6% increase from the previous quarter. Year-on-year growth was also healthy at 9.2% compared to Q2 2023. This growth was supported by a decline in quarterly impairments booked by banks in the region, reflecting improving economic health and credit quality.
The report highlighted that since central bank interest rates remained unchanged during the quarter, net interest income reached a new peak at $21.5 billion, while non-interest income saw a small decline. Aggregate bank revenue reached $31.6 billion, registering a marginal quarter-on-quarter growth of 0.4%. Central bank data also showed higher lending for all the GCC country aggregates, with aggregate gross loans reaching a new high of $2.1 trillion, backed by growth in almost all GCC markets.
Banks in the UAE reported the biggest quarter-on-quarter gross loan growth during Q2 2024 at 3.4%, driven by strong retail lending. Meanwhile, customer deposits for GCC-listed banks declined by a marginal 0.5% during the quarter, mainly due to a fall in deposits reported by SNB and a decline in deposits in Bahrain. Despite this, data from GCC central banks 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 broad-based growth across the seven country aggregates. Saudi Arabia witnessed a double-digit year-on-year growth in outstanding credit facilities, while banks in Qatar showed a year-on-year growth of 5.5%. This lending growth reflected a strong project pipeline in the region, with aggregate contract awards of $51.7 billion in the GCC during Q2 2024.
Overall, the GCC Banking Sector report indicated a positive outlook for the banking sector in the region, with record high net income and strong lending growth. The decline in impairments and improving credit quality are positive indicators of the improving health of the economy. Despite a slight decline in customer deposits, the resilience of regional economies and continued growth in credit facilities point towards a stable and growing banking sector in the GCC.
