UAE banks lead GCC in Q2 banking sector profit growth – Gulf News

9 out of 16 listed banks in the UAE reported an increase in net profits in Q2
Dubai: UAE banks reported the biggest increase in profits during the second quarter of 2021, registering a growth of 11.8 per cent quarter on quarter, according to a recent analysis of data from across the GCC by Kuwait-based Kamco Invest.
The second quarter data for the UAE banks showed 9 out of 16 listed banks in the UAE reported an increase in net profits.
FAB reported the biggest absolute growth in profits that reached $783.7 million in Q2-2021 as compared to $674 million in Q1-2021. ADCB and Dubai Islamic Bank followed in terms of absolute profit growth registering increases of 25.1 per cent and 19.3 per cent quarter on quarter, respectively. On the other hand, Bank of Sharjah continued to report loss during the quarter that reached $93.9 million in Q2-2021.
Kuwaiti banks reported the second-biggest quarter on quarter increase in net profits at 7.8 per cent to reach $0.7 billion in Q2-2021 after 6 out of 10 banks reported growth in profits. CBK and Burgan Bank reported the biggest quarter on quarter growth in net profits during Q2-2021.
For the GCC banking sector as a whole, net profits remained stable during Q2-2021 after witnessing a strong recovery during Q1-2021 to reach pre-COVID levels.
Profits reached $8.3 billion during the quarter, up 82.8 per cent year on year and 0.3 per cent sequentially. The year on year growth in profits was seen across the region after record low profits reported last year.
In terms of quarter on quarter growth, Bahrain and Saudi Arabia reported declines in profits while the aggregates for the rest of the countries reported growth. The decline in Saudi Arabia mainly reflected the merger of NCB and Samba which resulted in consolidated financials starting from Q2-2021 with a gap in financials for Samba for Q1-2021.
Total banking sector assets in the GCC continued to show growth reaching a new record high of $2.64 trillion, registering a growth of 4.7 per cent quarter on quarter and 6.7 per cent year on year during Q2- 2021.
Listed banks in the GCC continued to post robust growth in lending activity during Q2- 2021 resulting in record high loan books. Aggregate gross loans at the end of the quarter reached $1.68 trillion, up 4.6 per cent sequentially and 7.1 per cent year on year. Faster economic activity was evident in the PMI figures for UAE and Saudi Arabia that remained elevated during May 2021 and June 2021, well above the growth mark of 50.
Customer deposits also showed growth in almost all the markets during the quarter. Aggregate customer deposits increased by 4.6 per cent to reach $2 trillion, a new record high for the GCC banking sector, as compared to $1.9 trillion at the end of Q1-2021.
Saudi Arabian banks reported the biggest sequential growth in customer deposits. The aggregate loan-to-deposit ratio for the sector improved slightly quarter on quarter by 20 bps to 80.4 per cent, the highest in the last five quarters, but still below pre-COVID-19 levels.
Loan loss provisions (LLP) showed mixed trends during Q2-2021 but the aggregate for the GCC banks increased by 12.3 per cent quarter on quarter to $4.1 billion as compared to $3.6 billion during Q1-2021. The increase was mainly led by Saudi Arabia with LLPs almost doubled to $1.2 billion during Q2-2021 from $0.6 billion in Q1-2021. The increase witnessed in Saudi Arabia was mainly led by an increase in provisions reported by Saudi National Bank (SNB) post its merger with Samba Financial Group.
Qatar and Bahrain also reported marginal absolute increase in provisions during the quarter, whereas UAE, Kuwaiti and Omani banks reported a quarter on quarter decline in provisions booked during Q2-2021.

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