The aggregate gross loans in the Gulf region reached a new record of $1.93 trillion, and the banking sector in the Gulf countries is witnessing the initial interest rate hike applied by the central banks in the Gulf Cooperation Council (GCC) countries consistent with the US Federal Reserve interest rate hike.
Kuwait-based KAMCO Investment Company said the net interest income for listed banks in the GCC reached a record quarterly level at $18.6 billion during the third quarter (Q3) of 2022 compared to $17.2 billion during Q2.
According to the report, non-interest income dropped to a four-quarter low of $7.4 billion during Q3-2022 compared to $7.8 billion during Q2-2022, reflecting a slide in global and regional financial markets during the quarter.
Aggregate lending in the GCC remained strong during the quarter. Central bank data showed Kuwaiti banks seeing double-digit growth in outstanding credit facilities during the quarter.
The report shows that Saudi Arabia, Bahrain, and Omani banks registered low single-digit growths.
The Credit survey from UAE central banks also showed strong lending during the quarter. On the other hand, the Qatari banking sector was an exception showing a marginal decline in lending during the quarter.
Data on listed banks also showed growth, with aggregate GCC gross loans reaching a new record of $1.93 trillion, increasing by 1.2 percent or $23.5 billion during the quarter.
Outstanding net loans witnessed a slightly smaller growth of 1.1 percent during the quarter due to higher provisions booked.
Aggregate quarter-over-quarter growth in customer deposits was at a six-quarter low of 1.0 percent to reach $2.19 trillion at the end of Q3-2022.
The change in customer deposits remained mixed in the GCC during Q3-2022, with UAE and Saudi-listed banks showing growth while aggregates for the rest of the countries showed declines.
The net impact of larger lending growth and a slightly smaller customer deposit growth was a marginal growth of ten bps in the aggregate GCC loan-to-deposit ratio at the end of Q3-2022.
The report noted that despite the growth, the ratio remained below the 80 percent level and at one of the lowest quarterly levels at 79 percent.
The report stated that the Gulf banking sector balance sheet continued to grow during the quarter, despite the slowdown in the growth rate to its lowest level in six quarters.
Total assets reached a new record level of $2.9 trillion after increasing by 1.2 percent during the third quarter of 2022 compared to Q2.
Conventional banks in the region witnessed greater total asset growth of 1.4 percent during the third quarter, while asset growth in listed Islamic banks was slightly lower by 0.4 percent compared to Q2.