GCC banks’ net profit surge 10.5% to 14.4bn: Kamco Invest

Net profit of banks in the Gulf Cooperation Council region surged by 10.5 percent year-on-year in the first quarter of 2024 to $14.4 billion, an analysis showed.

In its latest report, Kamco Invest said that the bottom line performance of these banks also witnessed a rise of 11.8 percent in the first quarter compared to the previous three months.

The study added that an increase in lending continued in the region despite higher borrowing costs.

“The strong growth came despite a fall in revenues during the quarter and reflected a fall in total operating expenses coupled with a steep fall in quarterly impairments,” said the asset management company.

According to the analysis, banks in Saudi Arabia registered the most robust growth in the first quarter of 2023 at 3.3 percent, while gross credit data for UAE banks showed an increase of 1.1 percent during the first two months of the year.

“Data on listed banks showed gross loans reaching a record high of $2.02 trillion at the end of the first quarter of 2024, registering a quarter-on-quarter growth of 1.8 percent while aggregate net loans reached $1.92 trillion after a sequential growth of 2.3 percent,” the report added.

Kamco Invest revealed that customer deposits grew at a much stronger pace during the quarter as depositors eyed higher interest income.

The report noted that total customer deposits in the GCC region reached $2.45 trillion at the end of the first quarter after witnessing the most extensive quarter-on-quarter growth in for a year at 2.8 percent.

However, in the first quarter, the total revenue of listed banks in the GCC region fell for the first time in 12 quarters to $31.4 billion due to the impact of elevated interest rates.

According to the analysis, the first quarter registered a flattish gain in total interest income, reaching $50.5 billion, with the yield on credit averaging at 4.3 percent, in line with the trend over the last three quarters.

However, the continued rise in interest expenses, which reached $29.3 billion for the quarter, more than offset the growth in interest income

On the other hand, aggregate non-interest income declined for the first time in six quarters during the first quarter to reach $10.2 billion, from $10.7 billion in the last three months of 2023.

“Non-interest income also witnessed a decline during the quarter after a fall in other interest income more than offset a growth in management fees and commission income during the first quarter of 2024,” the report added.