The Banking Executive Magaizne - March 2025 Issue

GCC Banks DRIVE MOMENTUM AND TRANSFORMATION WITH STRONG GROWTH GCC Banks drive momentum and transformation with strong growth KPMG in Qatar has released the tenth edition of its GCC Listed Banks’ Results Report, providing an in-depth analysis of the financial performance and key indicators of leading com- mercial banks across the region. Ti- tled Momentum and Transformation, this year’s report highlights the sec- tor’s resilience, strategic adaptability, and sustained expansion despite global economic shifts. Bringing together insights from Fi- nancial Services leaders across KPMG’s member firms in the six GCC countries, the report offers valu- able perspectives on the evolving banking landscape, emerging indus- try trends, and financial outlook. By analyzing key performance indica- tors from the past year, the report aims to support banking leaders in shaping strategies and driving long- term growth. Omar Mahmood (pictured), Head of Financial Services for KPMG in the Middle East, South Asia, Caucasus and Central Asia, and Partner at KPMG in Qatar, commented, “The GCC banking sector remains a pillar of economic stability and growth, demonstrating resilience in the face of macroeconomic uncertainties. The sector’s ability to maintain strong capital positions, enhance asset qual- ity, and embrace digital transforma- tion underscores its commitment to sustainable progress. Looking ahead, we expect a continued focus on managing non-performing loans, cost control, and the integration of AI and ESG principles into banking strategies, ensuring long-term com- petitiveness and stability.” The report highlights strong asset growth across GCC banks, supported by robust capital adequacy ratios. Profitability saw a notable increase, driven by higher interest margins and disciplined cost control, while net in- terest margins (NIMs) remained sta- ble despite economic fluctuations. Non-performing loan (NPL) ratios de- clined, reflecting prudent credit risk management, and cost-to-income ra- tios remained among the lowest globally, emphasizing continued op- erational efficiency. Investor confi- dence has also been reinforced, with bank share prices showing stability in a volatile market. In Qatar’s banking sector, this year’s report reaffirms Qatar National Bank’s position as the largest bank in the GCC by assets, reaching $356bn. Qatar also continues to lead the re- gion with the lowest cost-to-income ratio at 25.6 percent and the highest coverage ratio for stage 3 loans at 85.1 percent, reflecting strong finan- cial resilience. Across the GCC, profitability in- creased by 10.5 percent, driven by loan book growth, stable interest margins, lower loan impairments, and ongoing cost-efficiency meas- ures. Total assets increased by 9.2 percent, supported by lending to high-quality customers. While net in- terest margins saw a slight dip of 0.1 percent, the overall NPL ratio im- proved, decreasing by 0.3 percent to 3.3 percent, signaling a continued conservative approach to credit risk management. Return on Assets (ROA) (1.5 percent in 2023) slightly increased by 0.04 percent compared to the previous year reflecting stable profitability rel- ative to asset growth. Looking ahead, KPMG predicts that the GCC banking sector will con- tinue evolving with an increased focus on AI and automation to en- hance operational efficiencies, alongside the strengthening of ESG frameworks to embed sustainability within banking strategies. The rise of regulatory technology (RegTech) is expected to support compliance and risk management, while further in- dustry consolidation will likely foster stronger and more competitive finan- cial institutions. By offering data-driven insights and forward-looking perspectives, KPMG’s Momentum and Transforma- tion report serves as a valuable re- source for banking leaders, regulators, and policymakers navi- gating an increasingly complex fi- nancial landscape. the BANKING EXECUTIVE 22 ISSUE 195 MARCH 2025