GCC banks’ loan books hit record high

GCC banks have reported record high loan books on the back of robust lending activity during the third quarter this year, reveals a new report.

Analysing financials reported by 60 listed banks in the GCC for the quarter ended Q3-2021, Kuwait-based Kamco Invest said aggregate gross loans by listed GCC banks reached $1.71 trillion at the end of Q3, up 1.7pc quarter-on-quarter (QoQ) and 6.8pc year-on-year (YoY), once again led by a broad-based growth seen in all the markets.

The growth was supported by continued robust economic growth as vaccinations picked up and restrictions were lowered.

Mortgage loans, which accounted for the bulk of the personal credit facilities, showed strong QoQ growth during Q3-2021 across the GCC.

In Saudi Arabia, mortgage loans increased by 6.1pc, the strongest in the GCC followed by Kuwait and Bahrain at 4.1pc and 3.4pc, respectively.

Credit facilities extended to the construction sector also showed growth in all the GCC countries, barring Kuwait where they declined by 2.9pc.

Customer deposits growth was also broadly positive with banks listed in all seven exchanges recording a QoQ growth.

Aggregate customer deposits increased by 2pc to $2.03trn, a new record high for the GCC banking sector, as compared to $2trn as of end-Q2-2021.

A higher growth in customer deposits during the quarter vs. loan growth resulted in a slight decline in loan-to-deposit ratio for the GCC banking sector.

The aggregate loan-to-deposit ratio dropped 30bps QoQ to 80.1pc, still below pre-Covid-19 levels.

Loan loss provisions (LLP) reported by GCC banks reached the lowest in eight quarters after a steep double-digit drop in all the GCC markets during Q3-2021, barring UAE, as compared to Q2-2021.

Total LLP reached $3.2 billion, a $0.9bn decline as compared to $4.1bn in Q2-2021.

The QoQ decline in LLP was seen across the GCC, barring UAE.

Total bank revenue for GCC banks increased by 3.3pc QoQ to $22.6bn during Q3-2021 after seeing a slightly higher growth of 3.5pc during the previous quarter with revenues at $21.8bn.

The positive growth in Q3-2021 was led by an increase in both net interest income as well as non-interest income at the aggregate GCC level.

The QoQ growth was led by a broad-based increase in net interest income across the six exchanges in the GCC.

Banks in UAE, Bahrain and Oman reported the biggest percentage increase in net interest income during the quarter at 6.8pc, 4.9pc and 3.1pc.

GCC banking sector net profits showed a QoQ increase almost equivalent to the decline in LLP during Q3-2021.

Total banking sector net profits reached $9.4bn in Q3-2021 as compared to $8.3bn during Q2-2021.

Profits continued to remain below pre-covid levels of $10.2bn reported in Q3-2019.

Nevertheless, QoQ growth was seen across the GCC, barring Oman, with Saudi Arabia, Kuwait and Bahraini banks seeing double digit growth.

Near term outlook for the sector remains positive but uncertainties related to new variants of Covid-19 and the resulting restrictions may dent the overall growth story in the region.


Source: https://www.gdnonline.com/Details/1015412/GCC-banks%E2%80%99-loan-books-hit-record-high


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