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Doha, Qatar: The banks in Qatar registered a 10.8 percent rise to reach $3.5bn in net interest income in the third quarter (Q3) of this year according to Kamco Invest report.
The aggregate net interest income reported by banks listed in the GCC witnessed growth for the second consecutive quarter to reach a record during Q3-2023. Total net interest income reached $21.1bn during Q3-2023 from $20bn in Q2-2023, registering a growth of 5.6 percent. The increase in Q3-2023 came despite cost of funds reaching one of the highest levels on record at 3.7 percent as compared to 3.2 percent recorded in Q2-2023.
Qatari banks recorded the biggest q-o-q increase in net interest income during Q3-2023 at 10.8 percent to reach $3.5bn followed by Kuwaiti and UAE-listed banks with growth of 6.9 percent and 5.5 percent, respectively. Saudi banks were next with a growth of 3.8 percent to reach net interest income of $7bn, in line with the aggregate for UAE-listed banks, the report noted.
In terms of y-o-y growth, the growth in net interest income was strong at 13.2 percent reflecting an increasing impact of consecutive rate hikes implemented by banks in the GCC following rates hikes in the US. The q-o-q trend in the GCC remained largely positive with only Omani banks seeing a decline during the quarter while the rest of the GCC aggregates showed growth.
The report further stated the total bank revenue for GCC banks once again registered q-o-q growth during Q3-2023 by 5.3 percent to reach a new record high of $30.7bn as compared to $29.2bn during Q2-2023. A growth in aggregate net interest income as well as non-interest income supported the growth in total revenues.
The q-o-q increase was led by a broad-based improvement in revenues across the GCC during the quarter, barring Omani banks that reported a decline of 1.1% during the quarter. Qatari banks reported the biggest increase during the quarter at 9.2 percent followed by Kuwaiti and UAE-listed banks with growth of 7.9 percent and 5.1 percent, respectively. Saudi-listed banks also reported a healthy q-o-q growth of 3.5 percent during Q3-2023.
Qatari banks reported the lowest ratio of 35.9 percent despite reporting the biggest q-o-q jump of 200 bps during Q3-2023.
Saudi and UAE-listed banks followed with the ratio at 37.9 percent (+110 bps q-o-q increase) and 40.7 percent, respectively. Total operating expenses was one of the highest on record for the GCC banking sector at $12.7bn during Q3-2023, recording a q-o-q increase of 14 percent while y-o-y growth stood at 28.4 percent, the report noted.
The aggregate loan-to-deposit ratio for the GCC banking sector continued to remain below the 80 percent mark for the sixth consecutive quarter at the end of Q3-2023 to reach 79.1 percent, a marginal improvement from 79 percent recorded at the end of Q2-2023.
The flattish performance reflected an almost equivalent growth in lending and customer deposits during the quarter.
At the country level, the performance was mixed with three out of six countries witnessing higher loan-to-deposit ratio.
Saudi-listed banks showed the biggest improvement in the ratio with an increase of 100 bps to reach 86.9 percent at the end of Q3-2023, the third highest in the GCC. Qatari banks also showed a growth of 80 bps with the ratio reaching 89 percent, the highest in the GCC overtaking Omani banks that was leading in Q2-2023 but reported the biggest q-o-q decline during Q3-2023. Banks in Bahrain showed marginal improvement during the quarter.
The report stated that the aggregate net interest margin (NIM) reported by GCC-listed banks increased for the fourth consecutive quarter during Q3-2023, although the increase was marginal to reach 3.2 percent. The increase reflected elevated net interest income during the trailing twelve-month period adding additional rate hikes since the start of 2023.
A smaller increase in earning assets also contributed to the growth in NIMs.
The q-o-q growth in NIM was seen across the GCC banking sectors barring Oman which reported a marginal decline during Q3-2023. UAE-listed banks once again showed the biggest improvement in NIMs during the quarter with an increase of 11 bps to reach 3.53 percent followed by marginal single bps increase in the rest of the GCC countries .With the improvement, UAE once again ranked first in the GCC in terms of NIMs followed by Saudi Arabian banks at 3.23% and 3.04% in the case of Qatari banks during Q3-2023, it added.
