The net profit of listed banks operating in the Gulf Cooperation Council region rebounded in the first quarter of 2026, posting a solid recovery after a decline in the previous three months, an analysis showed TurkicWorld reports via arabnews.
According to the latest report by Kamco Invest, aggregate net profits for listed banks in the region stood at $16.8 billion, registering a quarter-on-quarter growth of 4.6 percent and a year-on-year expansion of 5 percent.
This uptick comes as the region’s banks demonstrated resilience despite a complex global interest rate environment shaped by ongoing Middle East conflicts, elevated energy prices, and divergent monetary policies worldwide.
The strong net profit growth among banks in the region also aligns with an analysis made by S&P Global in March, which said that the GCC banking sector faces limited short-term credit risk from the Iran war, supported by strong financial buffers and sovereign backing.
“The increase in bottom line was led by a broad-based growth across countries aggregates with only Oman registering a decline, while the rest of the countries showed a quarter-on-quarter increase,” Kamco Invest said.
In the fourth quarter of 2025, net profits of listed banks in the GCC region declined by 5.9 percent from the record high achieved in the previous three-month period, reaching a four-quarter low of $15.6 billion, driven by a rise in operating expenses.
In terms of topline performance, aggregate banking sector revenues in the first quarter reached a new record high at $35.3 billion, although the growth was the smallest in four quarters at 0.9 percent.
Credit momentum
According to Kamco Invest, total outstanding credit facilities across the GCC reached approximately $2.17 trillion by the end of March, up 9.2 percent year on year.
Saudi Arabia dominated with over 41 percent of regional credit, followed by the UAE at 27 percent and Qatar at 18 percent.
Lending growth was broad-based, led by key sectors aligned with diversification agendas such as Vision 2030 in Saudi Arabia and Vision 2040 in Oman.
“This sustained credit growth reflects the region’s continued economic diversification efforts, robust infrastructure spending, and supportive monetary policies despite global economic uncertainties,” said Kamco Invest.
It added: “Saudi Arabia’s banking credit reached SR3.36 trillion ($894.8 billion) at end-March 2026, growing 8.2 percent year on year and 1.8 percent year to date. The Kingdom’s Vision 2030 megaprojects continue to drive sectoral lending patterns.”
In the Kingdom, the transportation and communications sector drove strong credit growth, expanding 25.2 percent year on year to SR75.5 billion. This performance was supported by substantial investments in logistics hubs, ports, and telecommunications infrastructure.
Saudi Arabia’s credit in electricity, water, gas, and the health sector grew 22.8 percent year on year to SR222.9 billion, backed by large-scale investments in power generation, desalination plants, and healthcare facilities.
The building and construction sector saw an annual increase of 9.2 percent to SR143.5 billion, providing vital support to major real estate and tourism megaprojects such as Neom and the Red Sea Project.
The UAE’s banking credit reached 2.14 trillion dirhams ($582.4 billion) at the end of March, demonstrating the strongest year-on-year growth in the GCC at 14.4 percent, with year-to-date expansion of 4.4 percent.
Aggregate gross loans by listed banks hit a record $2.53 trillion, growing 2.2 percent quarter on quarter, the slowest sequential pace in eight quarters, but a healthy 12.3 percent rise year on year.
Deposits
Customer deposits also reached a new high of $2.87 trillion, expanding 3.4 percent compared to the previous three months, the strongest pace in three quarters, and 8.7 percent year on year.
Oman and the UAE led deposit growth. The sector’s loan-to-deposit ratio stood at 85 percent, slightly down from the prior quarter’s record but still elevated, reflecting improved asset utilization.
“At the country level, Oman-listed banks registered the strongest growth in deposits during the quarter that reached $90.4 billion at the end of the first quarter of 2026, with a growth of 4.9 percent. UAE-listed banks were next, with customer deposits breaching the $1 trillion mark to reach $1.04 trillion after a quarter-on-quarter growth of 4.7 percent,” said Kamco Invest.
The sector’s loan-to-deposit ratio stood at 85 percent, slightly down from the prior quarter’s record but still elevated, reflecting improved asset utilization.
“The ratio increased year on year by more than 300 bps during the quarter and has remained consistently above the 80 percent mark over the last eight quarters and reflects improving asset utilization as well as better margins to offset pressure from declining interest rates,” said Kamco Invest.
Net interest income
According to the report, net interest income showed only marginal quarter-on-quarter growth of 0.1 percent to $24.4 billion, while non-interest income provided a stronger lift of 2.6 percent, helping total revenues rise 0.9 percent to $35.3 billion.
The quarter-on-quarter gain in net income came after interest rates remained steady with no cuts announced by central banks, while lending continued to witness growth in almost all country aggregates.
At the country level, the trend remained mixed, with three country aggregates showing declines in net interest income and the remaining three showing growth.
“Omani banks once again ranked first in terms of growth in net interest income at 3.3 percent to reach $600 million. Kuwaiti and Saudi-listed banks were next with growth of 1.6 percent and 1.0 percent, respectively, to reach $8.5 billion and $2.7 billion during the first quarter,” said Kamco Invest.
It added: “Bahraini banks showed the biggest decline in net interest income that reached $700 million, falling by 5.2 percent. Qatari and UAE-listed banks also showed marginal declines of 1.1 percent and 0.5 percent, respectively.”
