GCC banks profitability rose in 2021 as revenues surged, provisions fell

GCC banks profitability rose in 2021 as revenues surged, provisions fell

PHOTO

Profitability for the GCC banking sector rose 40% to 35 billion during 2021 to reach one of the highest yearly levels, albeit below pre-pandemic profits of 37 billion reported in 2019.

According to a report on the sector by Kamco Invest, the year-on-year (y-o-y) increase in 2021 was broadly across the GCC with profits for Kuwaiti banks almost doubling to $2.9 billion.

Saudi Arabia and UAE-listed banks also reported healthy profit growth of over above 40% and 52.6% respectively during the year.

Higher profits also pushed the aggregate return on equity for the sector to a seven-quarter high level of 10.4% at the end of 2021 as compared to 9.6% in Q3-2021 and 8.1% at the end of 2020.

The profit growth was led by an increase in total bank revenue as well as a decline in loan loss provisions. Total bank revenue increased by 6.9% to reach $90 billion during 2021, one of the highest on record mainly led by a growth of 17.6% in non-interest income and supported by a relatively smaller growth of 2.3% in net interest income.

Revenue growth was broad-based across the GCC with Qatari banks reporting the biggest growth of 9.9% followed by UAE and Kuwaiti bank revenue growth