Banks in the UAE hold the largest share of the Arab banking sector’s assets at 24.3 per cent, the Arab Monetary Fund (AMF) revealed in a report.
The AMF’s Financial Stability Report for Arab countries said the UAE banking sector’s asset growth reached 11 per cent, driven by a surge in credit and investments, while the Saudi banking sector’s asset growth reached 9.3 per cent on the back of a rise in real estate loans by 11.5 per cent and credit growth in other economic sectors.
At the end of 2023, the total assets of the banking sector in the Arab countries recorded a significant growth, rising to $4.574 trillion, up from $4.355 trillion in 2022, marking a 5.0 per cent growth, said the AMF report.
The UAE was followed closely by Saudi banks accounting for 23.1 per cent of the Arab banking sector’s assets. Additionally, the banking sector in the GCC is projected to represent 73.1 per cent of the total assets by the end of 2023.
The report added that the growth in the assets of the Arab banking sector reflects the confidence of customers and the market in the banking sector, as the sector was able to achieve this growth despite the current regional and global instability.
The report attributed the growth in assets to the increase in banking sector assets in the UAE, Saudi Arabia and Qatar, which account for 58.9 per cent of total assets in the Arab banking sector.
In its Financial Stability Report for 2023, the Central Bank of the UAE (CBUAE) noted that the UAE benefitted from favourable domestic conditions in 2023, which shielded the financial system from adverse global economic trends.
Khaled Mohamed Balama, Governor of the CBUAE, said the apex bank’s on-going efforts to enhance financial infrastructure and implement robust regulatory measures are pivotal in supporting sustainable economic growth and maintaining the UAE’s position as a leading financial hub. We remain committed to proactive risk management and innovation to ensure the continued stability and competitiveness of our financial sector,” said the governor.
Net income reported by listed banks in the GCC reached a new record high during Q2-2024 after four out of the six country aggregates showed growth as compared to Q1-2024, GCC Banking Sector report said.
Aggregate net profits reached $14.8 billion during the quarter as compared to $14.4 billion during the previous quarter, resulting in a q-o-q growth of 2.6 per cent. The y-o-y growth was also healthy at 9.2 per cent when compared to Q2-2023, according to the report by Kamco Invest.
“The biggest support to bottom-line performance for the sector came from a steep decline in quarterly impairments booked by banks in the region. Total loan loss provisions (impairments) reached the lowest level in at least 33 quarters at $1.9 billion reflecting double-digit q-o-q declines in most countries in the GCC. The decline in impairments indicates improving health of the economy as well as overall credit quality. It also shows improving loan portfolios over the past several years as shown by a steadily declining non-performing loan rate,” said Junaid Ansari, head of Investment Strategy & Research, Kamco Invest.
The report noted that since central bank interest rates in the GCC remained unchanged during the quarter, net interest income reached a new peak during the quarter at $21.5 billion, a slight improvement when compared to $21.3 billion during Q1-2024. Non-interest income reported a small decline to reach a three-quarter low level of $10.1 billion during Q2-2024. As a result, aggregate bank revenue reached $31.6 billion during Q1-2024, registering a marginal q-o-q growth of 0.4 per cent.
Data from central banks in the GCC showed higher q-o-q lending for all the GCC country aggregates. The data on listed banks showed gross loans for UAE banks registering the strongest quarterly growth during Q2-2024 at 3.4 per cent followed by Saudi Arabian banks with a slightly smaller growth of 3.1 per cent.
Aggregate lending by listed banks in the GCC continued to show q-o-q growth during Q2-2024 backed by growth in almost all GCC markets. Aggregate gross loans reached a new record high of $2.1 trillion after registering a four-quarter high q-o-q growth of 2.1 per cent while the y-o-y growth came in at 7.9 per cent. Banks in UAE reported the biggest q-o-q gross loan growth during Q2- 2024 at 3.4 per cent mainly led by strong retail lending. Gross loans growth for Saudi-listed banks came in next at 3.1 per cent to reach $711.1 billion during Q2-2024 reflecting healthy growth in lending in almost all sectors.
Source: www.khaleejtimes.com
