A record amount of money was made by Gulf banks in the second quarter of the year thanks to the high interest rate regimes. Lenders listed in the GCC (Gulf Cooperation Council) reported net interest income of USD 21.5 billion for the quarter, up 0.91% from the prior quarter and 7.6% from a year ago, according to Kuwait-based asset management giant Kamco Invest.
“Since central bank interest rates in the GCC remained unchanged during the quarter, net interest income reached a new peak,” the report said, adding that the quarter also recorded one of the highest quarterly total interest incomes, which hit USD 52.2 billion, as reported by Zawya.
Kuwaiti banks drove the expansion, with their net interest income reaching USD 2.05 billion, an increase of 6.3%, over the quarter.
Following banks in Oman and the UAE, which reported growths of 2.3% and 1.5%, respectively, listed banks in Saudi Arabia came in second place with a growth of 2.5% to USD 7.3 billion.
However, net interest income for Qatari banks fell precipitously, to USD 3.3 billion, a 4.3% decrease from the first quarter of 2024.
The S&P Global Ratings had previously predicted that the delay in interest rate cuts would help GCC banks’ earnings to stay strong in 2024.
The rating agency added that strong economies, limited leverage, and high levels of precautionary reserves will ensure that banks’ asset quality endures despite the longer-term increases in interest rates.
A sharp decrease in quarterly impairments was the primary driver of the GCC banks’ combined net profit for the quarter, which came in at USD 14.08 billion, up 9.2% from the prior year.
Meanwhile, the Central Bank of Kuwait has given Kuwait’s Burgan Bank the go-ahead to proceed with its plan to acquire Bahrain’s United Gulf Bank (UGB) in whole, according to a market disclosure.
Burgan Bank said that studies and final approvals from pertinent authorities in Kuwait and Bahrain are required for the acquisition. Investment firm Kuwait Projects Co (KIPCO) owns both UGB and Burgan Bank.