RIYADH: Strong regional fundamentals and a robust project pipeline drove Gulf Cooperation Council-listed banks’ net profit to a record $16.2 billion in the second quarter of 2025, up 9.2 percent year on year.
This marks the second consecutive quarterly increase, with profits rising 3.7 percent quarter on quarter, supported by broad-based revenue growth and a lower cost-to-income ratio, which offset higher impairments, according to Kuwait-based Kamco Invest’s GCC Banking Sector Report – Q2 2025.
This comes as GCC inflation remained stable in the second quarter despite heightened geopolitical risks.
The report aligns with forecasts that regional economies will grow 4.4 percent in 2025, up from 4 percent, as rising oil output and resilient non-oil activity offset global trade headwinds, according to a recent report by the Institute of Chartered Accountants in England and Wales with Oxford Economics.
“At the country level, the q-o-q growth remained largely positive with five out of six country aggregates showing a sequential growth in net income while the aggregate for the Bahraini banking sector showed a decline,” said the Kamco report.
“Kuwaiti-listed banks showed the biggest absolute growth in net profits with an increase of $204.6 million, or 15.6 percent, mainly led by reversal of provisions reported by three out of nine listed banks on the exchange,” it added.
“UAE and Saudi banks were next with net profit growth of $191.8 million (+3.2 percent) and $152.3 million (+2.6 percent), respectively,” Kamco said.
Year-on-year, all markets posted growth, with Saudi and Bahraini banks achieving double-digit increases, while Oman and Kuwait also reported solid gains.
It showed that the banking sector’s total revenues hit a new all-time high of $35.6 billion for the quarter, driven by a solid 3.6 percent quarter-on-quarter increase.
“The growth was led by a broad-based increase in revenues reported by banks across country aggregates that more than offset an 8.2 percent decline reported by Bahraini banks,” the report said.
“UAE-listed banks led the way during the quarter with a revenue growth of 5.3 percent or $674.0 million during Q2-2025 as compared to Q1-2025,” it also said.
Lending rose 3.4 percent quarter on quarter, the second-largest gain in 16 quarters, bringing total gross loans to $2.23 trillion, supported by strong non-oil sector activity, particularly manufacturing, which grew well above regional benchmarks.
Central bank data confirmed the strength of GCC economies, showing sustained credit expansion in all countries except Bahrain, even amid declining project awards.
Customer deposits reached a new high of $2.74 trillion, up 3.5 percent quarter on quarter and 13.3 percent year on year, with growth broad-based across all GCC countries.
Loan-to-deposit ratio
The overall loan-to-deposit ratio for GCC banks remained above the 80 percent threshold at the end of the period, settling at 81.5 percent, slightly down from 81.6 percent in the first quarter.
This is the fifth consecutive quarter the ratio has stayed above 80 percent, reflecting stronger asset utilization and improved margins, which help offset the impact of declining interest rates.
