UAE banks record highest return on equity in the GCC

UAE-listed banks once again topped the GCC with the highest return on equity (RoE) at the end of the third quarter of 2024 at 16.8 per cent, recent data showed.

According to Kamco Invest’s latest report on the GCC banking sector, listed banks in the GCC witnessed a broad-based growth in lending during the third quarter of 2024 with healthy quarter-on-quarter growth seen across countries in the region. The growth reflected resilient economic growth in the region that came despite relatively lower oil prices.

Growth was primarily driven by non-oil growth in the UAE, Qatar, Bahrain and Saudi Arabia. “In addition, the project market and the pipeline of prospective projects remain strong for the GCC countries, reflecting commitment to long term growth visions as the countries strive to steer the economy away from the reliance on crude oil,” Junaid Ansari, Kamco Invest’s head of investment strategy and research, said.

Aggregate gross loans for GCC-listed banks increased by 3.1 per cent to reach a new record high of $2.12 trillion at the end of the third quarter of 2024 as compared to $2.06 trillion at the end of the previous quarter. The year-on-year growth reached double-digits at 10.1 per cent, once again led by healthy growth in each market.

On RoE, the UAE was followed by Saudi Arabian and Qatari banks with RoEs of 12.8 per cent each, flat as compared to the previous quarter. The biggest year-on-year growth in RoE was also seen for Oman-listed banks at 80 bps which was mainly led by elevated profits as well as a relatively smaller growth in total shareholders’ equity.

Gross credit for the UAE banking sector increased by 0.1 per cent during July 2024 to reach Dh2.1 trillion. The increase was mainly led by a 0.3 per cent growth in domestic credit that more than offset the decline in foreign credit by 1.5 per cent. Within domestic credit, the month saw 1.2 per cent growth in credit to the government sector and 0.7 per cent increase in credit to the private sector that more than offset a 1.9 per cent decline in credit to government-related entities (GREs) and 1.2 per cent decline in credit to non-banking financial companies (NBFCs).

Banks in UAE also reported a healthy growth in customer deposits during the quarter that reached $828.0 billion, the highest in the GCC, registering a growth of 3.1 per cent as compared to Q2 2024.

Omani and UAE-listed banks were next with lending growth of 3.6 per cent and 3.4 per cent, respectively.