Dubai, UAE – The Middle East and North Africa (MENA) banking sector has witnessed a remarkable 30% year-on-year increase in net profits and a substantial 12.2% growth in net assets, the EY MENA H1 2023 Banking Report revealed on Monday.
Returns on equity increased by 6.18%, and the net interest margin expanded by 0.2%.
This positive momentum extended to the region’s banks, which recorded an 18.8% rise in operating income. Total deposits increased by 6.08%, and the loan-to-deposit ratio (LDR) saw a 5.43% increase. Non-performing loans (NPLs) are expected to remain stable in 2023, with banks maintaining a selective approach to lending and a strong focus on regulatory compliance.
The banking sector’s transformation in the GCC is playing a crucial role in the region’s economic growth. Factors contributing to this growth include robust oil and gas prices, government investments, and advancements in technology. Additionally, a rising demand for sustainable finance is being driven by GCC countries’ commitment to net-zero roadmaps and clean energy transitions.
Digital transformation is a central theme in the MENA banking sector, with AI, digital banking, mobile payments, open banking, and sustainable finance gaining prominence. Banks are investing in technology to meet evolving customer needs, enhance risk management, and improve efficiency. The adoption of digital solutions, cloud migration, and automation are helping banks connect customer-facing operations with back-end processes.
The UAE’s banking sector is experiencing substantial growth, with net profits and total assets increasing by 31% in 2022. This growth is attributed to investments in technology initiatives, attracting digitally savvy customers.
The outlook for the GCC banks remains positive, with expectations of improved economic conditions and a focus on innovation and financial resilience. The region’s banks are adapting to evolving regulatory environments to balance growth and innovation.