Doha, Qatar – The GCC banking sector has emerged as a beacon of resilience and growth, suggest the latest findings from both KPMG in Qatar and Fitch Ratings.
The comprehensive analysis offered by KPMG’s ninth edition report on GCC listed banks, titled ‘Adaptation and growth’, in conjunction with the optimistic upgrades by Fitch Ratings, paints a promising picture of financial stability and strategic foresight within the region’s banking industry.
Fitch Ratings’ announcement of upgraded ratings for seven Qatari banks, meanwhile, marks a significant indicator of the robust health and improved outlook of Qatar’s banking sector.
Notably, Qatar National Bank (QNB), the titan among GCC banks in terms of assets, received an uplift in its long-term credit rating from A to A+.
Additionally, six other Qatari banks saw their ratings escalate from A- to A, a direct consequence of Fitch’s upgrade of the State of Qatar’s sovereign rating to AA with a stable outlook on March 20.
This adjustment is rooted in Fitch Ratings’ confidence in the ability of Qatar’s authorities to support the banking sector, reinforcing the notion of an increasingly stable and secure financial environment in Qatar.
Sector-Wide Growth and Adaptation
KPMG in Qatar’s report serves as a deep dive into the operational realities and strategic positioning of commercial banks across the GCC. The report, leveraging insights from Financial Services heads across KPMG’s member firms in the six GCC countries, aims to shed light on the banking market dynamics and the financial performance of leading banks.
It underscores a period of significant adaptation and investment that has paved the way for remarkable growth, reflecting the intrinsic strength of GCC economies and the fruitful outcomes of digital transformation and efficient management practices.
Key Findings and Trends
The banking sector across the GCC has demonstrated formidable growth and profitability, with Qatar leading in several key performance indicators. Qatar National Bank continues to dominate as the largest bank in terms of assets, valued at $338 billion.
The region has also seen a notable increase in profitability, with a significant double-digit rise of 23.1 percent, driven largely by growth in loan books, improved interest margins, and ongoing cost-efficiency measures.
Asset growth has been robust, showing an 8.1 percent increase, fueled by lending to high-quality customers. Net interest margins saw a marginal rise due to the climbing interest rate environment, contributing to profit growth. The overall Non-Performing Loan (NPL) ratio across the GCC banking sector showed a decrease, indicating a more conservative approach to credit risk management.
Looking Ahead
Despite the challenges posed by global economic conditions, GCC banks have displayed an unwavering ability to adapt and navigate through uncertainty.
The sector’s solid foundation and readiness to embrace future growth opportunities are evident in its strategic management, investment in digital innovation, and commitment to improving operational efficiencies.
The concerted efforts of banking institutions, coupled with supportive governmental policies and a favorable economic climate, suggest a continued trajectory of growth and prosperity for the GCC banking sector.
With a blend of strategic adaptation, robust financial performance, and the backing of stable sovereign support, the GCC banking industry stands well-equipped to face the challenges and opportunities that lie ahead, ensuring its position as a cornerstone of the region’s economic landscape.