According to the GCC banking sector report of Kuwait Financial Powerhouse, Kamco Invest, Qatar banks achieved the highest average return on equity (ROE) among lenders in GCC countries in the fourth quarter (Q4) of 2021.
Kamco Invest reported that, the banking sector in Doha had a 12 percent ROE at the end of Q4 2021, higher than the GCC average of 10 percent.
While Saudi Arabian lenders witnessed an ROE of 11.1 percent, the UAE lenders achieved a 10.3 percent ROE. The other ROE numbers in the region were, Bahrain at 8.4 percent, Kuwait at 8.2 percent and Oman at 6.9 percent.
The banking sector recorded high revenue growth across the GCC. Qatari banks topped the list with 9.9 percent growth, followed by the UAE with 9 percent and Kuwait with 7.1 percent.
Following an increase in total bank revenues and a decline in loan loss provisions (LLPs), net profit in the GCC banking sector grew by 40 percent year on year to $35 billion in 2021.
On a quarterly basis, LLP rose 17.6 percent quarter on quarter but fell 39.2 percent to $3.8 billion in 2021 fourth quarter. While Saudi and Bahraini banks achieved nominal growth, a major chunk of the quarterly growth was mainly due to the 85.6 percent bookings increase achieved by Qatari banks.
During Q4 2021, Kuwait and the UAE-listed banks partially offset the overall growth by reporting a $0.1 billion and $0.2 billion quarter-on-quarter drop in provisions booked respectively.
By the end of 2021, NIMs (net interest margins) remained stable at a multi-quarter low of 2.8 percent, reflecting the year-over-year low-interest rates and general year-on-year impact on GCC.
In addition, small growth in net interest income compared to earnings of assets maintained the threshold of net interest margin growth over the Q4 2021 period.
In the fourth quarter of 2021, NIMs recorded a quarter-on-quarter fall in four of the six GCC countries. Kuwait reported the biggest decline of 0.06 percent to report a net interest margin fall of 2.62 percent with Saudi Arabia reporting a decline of 5 basis points.
However, Saudi Arabian bank NIMs remained at 3.2 percent in Q4 2021, the only market where NIM reported more than 3 percent in the GCC.
