According to an analysis of the GCC banking sector by Global Investment House, profits of banks in the UAE grew 15.8 percent YoY while the banks in Qatar recorded a growth of 11.6 percent. Net profits of banks in Kuwait and the KSA, however, fell 23 percent and 3.9 percent respectively, which dragged overall performance.
Among banks in the UAE, Union National Bank reported a 115.3 percent growth in net profit due to increased non-interest income and lower provisions. Abu Dhabi Commercial Bank recorded a robust 30.4 percent growth in its bottom-line on YoY basis during 4Q13 mainly due to a huge increase in non-interest income (32.6 percent) and a significant fall (50.8 percent) in provision expenses. First Gulf Bank posted a 19.2 percent growth in bottom-line backed by whopping non-interest income growth.
Among Qatar-based banks, Qatar Islamic Bank reported a 225.6 percent YoY growth in its bottom-line primarily driven by improvement in non-financing income as well as decline in provisions. Qatar National Bank recorded a 12.4 percent YoY growth in bottom line in 4Q13 on higher NII and non-interest income.
According to Global, loan book growth among GCC banks continues to remain strong; loans books increased 11.1 percent YoY to $669.5 billion in 4Q13. Banks in Qatar registered the highest YoY growth of 21.3 percent, followed by those in the UAE (9.3 percent), the KSA (9.1 percent), and Kuwait (6.5 percent). Given the strong growth in loan books, net interest income (NII) of GCC banks rose 10.9 percent YoY.
NII growth was led by Qatar-based banks (22.6 percent YoY), followed by banks in the UAE (10.9 percent YoY) and the KSA (7.8 percent). Despite compression in cost of funds, combined net interest margin (NIM) declined 10bps YoY on a 23bps YoY fall in interest yield.
The loan books of UAE-based banks grew 9.1 percent despite recovery in the real estate sector and overall economic growth. The moderate growth can be ascribed to high credit penetration levels and the absence of quality lending opportunities. However, infrastructure spending would grow significantly in the next few years in the run-up to the Dubai Expo 2020.