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GCC Banking Sector Quarterly Summary

August 2016

August 29, 2016 | 14:05 | Dubai

Global Investment House in their report Global Research Sector – Banking August 2016 presented a quarterly summary for the sector. Highlights from the same include

  • GCC banks’ profit rises 0.6%YoY and 4.5%QoQ: Net earnings of GCC banks expanded 0.6%YoY to USD5.8bn in 2Q16, wherein earnings for all countries, except UAE, rose on YoY basis. Net profit of banks in Qatar rose the most (3.5%YoY), followed by Kuwait (2.1%YoY) and the KSA (1.8%YoY), while UAE banks registered a fall of 3.3%YoY.
  • Net interest margin improves 12bps after eight consecutive quarters of compression, due to acquisition by QNB: The collective loans disbursed by GCC banks increased 9.8%YoY to USD 845bn in 2Q16. Interestingly, net interest margin for this quarter expanded 12bps on YoY basis after eight consecutive quarters of compression. GCC banks’ net interest income grew a strong 11.9%YoY and 11.1%QoQ. The NII of banks in Qatar increased the most (45.7%YoY), followed by the KSA (9.3%YoY) and Kuwait (2.4%YoY), while that the banks in the UAE declined 1.8%YoY.
  • Non-interest income rises on uptick in fee income growth: Non-interest income of GCC banks rose 2.1%YoY during the quarter due to 9%YoY growth in fee income. Qatar (26.8%YoY) and the UAE (6%YoY) recorded positive change in non-interest income, while the KSA (-8.5%YoY), and Kuwait (-6.1%YoY) reported a decline in non-interest income. The fee income of GCC coverage rose 9%YoY.
  • Growth in asset base led by the acquisition by QNB and organic loan book expansion of other banks: The total assets of GCC banks expanded 8.4%YoY to USD1.3tn in 2Q16. Qatar-based banks witnessed the strongest growth in total assets (24%YoY), followed by banks in the UAE (7.6%YoY) and the KSA (2.2%YoY), and while Kuwait-based banks’ asset base remained unchanged.

Exhibit 1

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