A recent report revealed that the rise in interest rates contributed to an improvement in net interest income for listed banks in the Gulf Cooperation Council region during the second quarter of 2023; It reached $13.7 billion, with an annual growth of 3.5% on a quarterly basis.
The report issued by the Research and Investment Strategies Unit of KAMCO Investment Company today, Wednesday, indicated that the total net revenues of listed banks in the Gulf Cooperation Council countries partially improved in the second quarter of 2023, after witnessing its first decline in five quarters in the first quarter of 2023.
Total net interest income reached $20 billion in the second quarter of the year, compared to $19.8 billion in the first quarter of 2023, but it remained below the historic record level of $20.1 billion recorded in the fourth quarter of 2022.
The growth came in the second quarter of 2023 despite the financing cost reaching one of the highest levels recorded at 3.1%, compared to 2.5% recorded in the first quarter of 2023.
It is noteworthy that the report was based on the financial statements that were announced by 58 banks listed on the stock exchanges of the Gulf Cooperation Council countries for the period of the second quarter of 2023.
This report includes the compilation of individual banking data at the level of each individual country. It includes the main highlights based on the analysis of the latest financial statements on a quarterly basis for the Gulf banking sector.
In terms of year-on-year growth, net interest income growth was healthy at 16.2%; This reflects the increasing impact of the central banks in the GCC countries raising interest rates at a successive pace, in the wake of the interest rate hike in the United States.
The trend on a quarterly basis in the GCC remained mixed; Net interest income rates declined in Oman and Qatar during the quarter, while the rest of the countries recorded growth.
Kuwaiti banks recorded the largest increase on a quarterly basis in net interest income during the second quarter of 2023 by 3.3% to reach $2.2 billion, followed by UAE and Bahraini banks with growth of 1.7% and 1%, respectively.
Saudi banks recorded a marginal growth of 0.2%, bringing net interest income to $6.8 billion, which is slightly higher than the total of $6.6 billion listed banks in the UAE.
In Kuwait, 9 out of 10 banks announced an increase in net interest income, while Burgan Bank announced a decline in that percentage during the quarter, on the back of lower net interest income from international operations.
In Saudi Arabia, 3 out of 10 banks announced a decrease in net interest income, with the National Bank of Saudi Arabia recording the highest rate of decline compared to the first quarter of 2023.
The total revenues of Gulf banks once again recorded growth on a quarterly basis in the second quarter of 2023, by 1.3%, to reach a new record of $29.2 billion, compared to $28.8 billion in the first quarter of 2023.
The growth in total net interest income as well as non-interest income supported the growth in total revenue. The quarter-on-quarter growth was driven by an improvement in revenues in general across the GCC during the quarter, with the exception of Kuwaiti banks, which recorded a decrease of 0.9% during the quarter.
UAE banks recorded the largest increase during the quarter by 3.1%, followed by Qatari banks with a growth of 1.3%, and Saudi-listed banks recorded a marginal growth of 0.2% in the second quarter of 2023.
Total non-interest income grew for the third quarter in a row, but it witnessed a much lower growth during the second quarter of 2023 compared to the growth rate recorded in the previous quarter. Total non-interest income reached $9.2 billion during the second quarter of 2023, with a quarterly growth of 2.9% and an annual growth of 18.4%.
All GCC countries showed growth except for Kuwaiti banks, which recorded a decline of 9.5%.
