Lenders in Qatar registered the biggest quarter-on-quarter increase in net interest income (NII) and topline growth and the lowest operating cost within the Gulf banking industry during the third quarter (Q3) of 2023, according to Kamco Invest, a regional economic think-tank.
"Qatari banks recorded the biggest quarter-on-quarter increase in net interest income during Q3-2023 at 10.8%, followed by Kuwaiti and the UAE-listed banks with growth of 6.9% and 5.5%, respectively. Saudi banks were next with a growth of 3.8%," Kamco said in its latest report.
The quarterly trend in the GCC (Gulf Co-operation Council) remained largely positive with only Omani banks seeing a decline during the quarter while the rest of the GCC aggregates showed growth, the report said.
The aggregate net interest income reported by banks listed in the GCC witnessed growth for the second consecutive quarter to reach a record during Q3-2023, it said, adding the increase came despite cost of funds reaching one of the highest levels on record at 3.7% compared to 3.2% in the second quarter (Q2) of 2023.
On topline, Kamco Invest said total bank revenue for the GCC banks once again registered quarter-on-quarter growth during Q3-2023 by 5.3% to a new record high of $30.7bn. A growth in aggregate net interest income as well as non-interest income supported the growth in total revenues.
The quarterly increase was led by a broad-based improvement in revenues across the GCC lenders during the quarter, barring Omani banks.
"Qatari banks reported the biggest increase during the quarter at 9.2% followed by Kuwaiti and the UAE-listed banks with growth of 7.9% and 5.1%, respectively. Saudi-listed banks also reported a healthy quarter-on-quarter growth of 3.5% during Q3-2023," the report said.
Referring to operating costs, the Kamco report said Qatari banks reported the lowest ratio of 35.9% despite reporting the biggest quarter-on-quarter jump of 200bps (basis points) during Q3-2023.
Saudi and the UAE-listed banks followed with the ratio at 37.9% (+110bps quarter-on-quarter increase) and 40.7%, respectively.
After remaining subdued for the previous seven quarters at the sub-40% mark, the cost-to-income ratio for the GCC banks increased by 80bps during Q3-2023 to 40.1% compared to 39.2% in Q2-2023. The increase was broad-based as seen from growth in the ratio for five out of six country aggregates during the quarter.
The aggregate return on equity (RoE) for the GCC banking sector continued to show improvement during Q3-2023, reaching one of the highest levels over the last few years at 13.3% against 13% at the end of Q2-2023, reaching almost pre-pandemic levels, Kamco Invest said.
At the country level, the UAE-listed banks once again topped in the region with the highest RoE at the end of Q3-2023 at 16.5%; closely followed by Saudi Arabian and Qatari banks with RoE of 12.9% and 12.3%, respectively.
The aggregate gross loans of the GCC banks reached a new record high of $1.95tn, up 1.5% quarter-on-quarter and 6.8% year-on-year, mainly led by strong growth in banks in Saudi Arabia and the UAE, and marginal growth in Qatar, according to Kamco Invest.
Saudi-listed banks once again reported the strongest quarter-on-quarter growth in lending at 2.8% at the end of Q3-2023. The UAE-listed banks followed with a growth of 2.4% in gross loans, followed by Qatari-listed banks with a growth of 0.3%.
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