GCC banks post 9.1 percent loan growth

Net earnings of GCC banks increased 4.7 per cent to $5.3 billion in fourth quarter 2015 with the UAE banks recording the most increase at 11.8 per cent, followed by Saudi banks at 3.7 per cent and Kuwait at 1.1 per cent.

Net profit of Qatari banks declined 2.1 per cent, Global Investment House said in its Banking Sector Quarterly report. The collective loans disbursed by GCC banks under Global Investment House's coverage increased by 9.1 per cent to $793 billion in the same quarter, with Qatar leading with 16.2 per cent year on year growth followed by the UAE at 8.1 per cent.

Qatar-based banks managed to maintain highest lending growth due to an increase in public sector spending backed by several developmental initiatives taken by the government prior to Fifa World Cup 2020. Among Qatar-based banks, Qatar Islamic Bank, Doha Bank and Qatar National Bank registered higher growth in lending of 46.1 per cent, 14.5 per cent and 14.8 per cent, respectively. Loans growth of UAE banks was at 8.1 per cent during the quarter. Despite, Dubai Expo 2020 on cards, lending growth of the country might get hurt due to fall in oil prices. Among the UAE banks, Emirates NBD (10 per cent) achieved highest lending growth, followed by Abu Dhabi Commercial Bank (9.3 per cent) and First Gulf Bank (7.2 per cent). Saudi banks posted 6.5 per cent and Kuwait 6.2 per cent loan growth. The net interest income of GCC banks increased five per cent; however, margins remained under pressure, Global said in its report. The NII of banks in Saudi Arabia grew the most at 8.1 per cent, followed by Kuwait (3.9 per cent), Qatar (3.1 per cent) and the UAE (2.8 per cent).

Non-interest income of GCC banks fell 6.2 per cent in the quarter led by 1.1 per cent year on year decline in fee income and lower investment gains. The UAE recorded a positive change in noninterest income with 7.5 per cent growth, while Qatar (-22.5 per cent), Kuwait (- 16.2 per cent) and Saudi Arabia (-0.9 per cent) reported decline in non-interest income. According to Global, total assets of GCC banks under its coverage expanded 7.4 per cent to $1.3 trillion in 2015 last quarter. Qatar-based banks witnessed the strongest growth in total assets (11.9 per cent), followed by banks in the UAE (9.8 per cent), Saudi Arabia (3.4 per cent) and Kuwait (2.4 per cent).

Among UAE based banks, Emirates NBD reported 74 per cent profit growth in 2015 fourth quarter due to higher operating income and lower provisions. ADCB figure was 16.4 per cent due to higher net and non-interest income and lower provisions. First Gulf Bank reported 10.8 per cent growth in net profit mainly due to higher non-interest income and lower taxation and minority interest. Rest of the banks in Global Investment House's coverage reported disappointing bottom-line with decline in profitability in fourth quarter 2015, which partially offset the profit growth of the UAE banking universe.