Qatar’s banking sector sees strong growth in Q1

June 25, 2022

Qatar’s banking sector continued to record improving results during first quarter (Q1) of this year backed by solid economic recovery and demand post pandemic. Banks in Qatar showed strongest quarter on quarter (q-o-q) growth of 52 percent to reach to profit of 1.8bn during the quarter, according to Kamco Invest report.

GCC banking sector net profits showed one of the strongest q-o-q growth during Q1, 2022 with a growth of 25.1 percent to reach one of the highest quarterly levels at $10.9bn as compared to $8.7bn during Q4, 2021. The year-on-year (y-o-y) growth was also strong at 30.7 percent.

“Qatari banks showed strongest q-o-q percentage growth of 52 percent or $0.6bn to reach to profit of 1.8bn during the quarter. UAE and Omani Banks were next with a growth of 27.1 percent and 25.5 percent, respectively. Profits reported by Saudi Arabian banks reached one of the highest quarterly levels of $3.9bn as compared to $3.3bn in Q4, 2021 and $3.2bn in Q1, 2021,” the report noted.

The aggregate return on equity (ROE) for the GCC banking sector continued to show improvement during Q1, 2022 reaching an 8-quarter high level of 10.8 percent as compared to 10.4 percent at the end of Q4, 2021. “Qatari banks continued to boast the highest average ROE of 12 percent at the end of Q1, 2022, flat when compared to Q4, 2021. UAE banks were next with a double-digit ROE of 11.5 percent, a 120 bps improvement as compared to the previous quarter. Saudi Arabian banks also recorded double digit average ROE of 10.9 percent, a 20 bps decline from 11.1 percent reported in Q4, 2021. The rest of the markets reported ROE in single digits with Kuwaiti Bank’s ROE at 8.9 percent followed by Bahraini and Omani banks at 8.5 percent and 6.9 percent, respectively.”

Qatari banks boasted the highest cover against stage 3 bad loans in the GCC during the quarter at 98.5 percent, higher than Q4-2021 cover of 91.9 percent. Bahraini banks were next at 72.2 percent followed by Omani and UAE-listed banks at 63.5 percent and 63.2 percent, respectively.

The recent economic data has showed 9.9 percent year on year (y-o-y) GDP growth rate for Saudi Arabia in first quarter 2022, highest since 2011, with expectations of sustained activity by the end of the year.
Consensus estimates show GCC real GDP growth of 6 percent this year, one of the highest over several years.
The overall activity was also reflected in the PMI surveys for the region. Data showed that manufacturing activity remained well above the growth mark with PMI figures of over 50 for Qatar, Saudi Arabia, UAE, Dubai during Q1, 2022.

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