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Qatar banks shine, record 8% profit growth in GCC: KPMG report

IFM-Omar Mahmood
According to the KPMG report, Qatar National Bank has maintained its position as the largest bank in the GCC, with assets worth USD 338 billion

KPMG in Qatar recently unveiled the ninth edition of its Gulf Cooperation Council (GCC) listed banks’ results report, offering a comprehensive analysis of financial outcomes and key performance indicators for leading commercial banks across the GCC compared to the previous year. Titled ‘Adaption and Growth’, this comprehensive report provides insights into major financial trends in the regional banking sector. Through the collaboration of Financial Services heads across its member firms in the six GCC countries, KPMG aims to provide valuable perspectives on banking markets and the financial performance of leading banks. This information can be useful in driving banking strategies and shaping the industry across the region.

During an interaction with International Finance, Omar Mahmood, Head of Financial Services for KPMG in the Middle East and South Asia, and Caspian Region and Partner at KPMG in Qatar, shared his view about the significant trends in the GCC banking sector.

Omar Mahmood said, “2023 emerged as a year of growth post a period of adaptation and investment in the region, reflecting not only the strength of GCC economies but also the results of effective management, digital transformation and improved return on investments over the past few years.”

According to the report this year, Qatar National Bank has maintained its position as the largest bank in the GCC, with assets worth USD 338 billion. Qatar is also leading in terms of having the lowest cost-to-income ratio at 24.6% and the highest coverage ratio for stage 3 loans at 84.2%.

The region has seen a significant double-digit increase of 23.1% in profitability this year, which is mainly due to the growth in loan books, improved interest margins, reduced loan impairments, and ongoing cost-saving measures. Banks have expanded their asset base by 8.1%, driven by lending to high-quality customers, which has resulted in a robust growth in assets.

Net interest margins saw a 0.2% increase due to the rise in interest rates, contributing to profit growth. The non-performing loan (NPL) ratio for banks in the GCC dropped by 0.2% to 3.5%, indicating a conservative approach to managing credit risk.

The return on assets (ROA) in 2022 rose by 0.7% compared to the previous year, reflecting higher profitability in relation to asset growth. Cost-to-income ratios decreased from 40.4% to 39.7%, showing the banks’ commitment to reducing costs and improving operating efficiency. The average coverage ratio for stage 3 loans increased by 0.4% from the previous year, which highlights the banks’ careful approach to provisioning.

Despite facing challenges, banks in the GCC have demonstrated resilience and adaptability in navigating global economic conditions, laying a solid foundation for future growth.

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