Gulf banks show their profit mettle in 2022

Gulf banks show their profit mettle in 2022

Past mid-January, Gulf banks started announcing their 2022 financials, and confirming expectations of spectacular-to-strong results due to a number of contributing factors. The decision to gradually raise interest rates to 4.5 per cent in the past year provided for higher topline numbers, despite in some case these rates limiting borrowing demand. However, it also generated more revenue from the credit volumes offered to diverse businesses and as personal loans. Secondly, higher oil prices and the resulting revenue gains led to a significant growth in local liquidity from increased spending and government deposits from oil surpluses. Some of these were deposited at local banks, while others were invested in various assets such as bonds, stocks, projects, and overseas. A third factor was Gulf banks attracted sizeable capital from abroad, especially from regions undergoing tensions, thus providing for a significant cash inflow. A fourth dimension was the progress in overcoming COVID-19, along with the resumption of economic activities in aviation, retail, tourism, and services, which helped fuel demand for credit and loan expansion. These resulted in an improvement in the size and strength of the banking sector’s performance. The UAE's mega-bank FAB saw a 7 per cent increase in profits (to Dh13.4