GCC banks impress with earnings in first quarter

• Performance of 21 banks analysed
• Combined Q1 profit of $13.2bn
• 17 of 21 show stock gains

Major banks in the six-country Gulf Cooperation Council (GCC) generated more than $13 billion in net profit in the first quarter of 2025.

This was up by nearly one-tenth compared to a year earlier as increased lending and low loan defaults boosted the banks’ bottom lines.

AGBI analysed the earnings of 21 banks across the GCC including the six largest by assets in each of Saudi Arabia and the UAE, the three biggest in Qatar, and the top two in each of Kuwait, Oman and Bahrain.

Gulf banks are fundamentally strong with good loan growth and manageable risks, our research showed. For example the non-performing loan ratios of Saudi National Bank and First Abu Dhabi fell year on year by 0.21 and 0.4 percentage points respectively.

Overall, 18 of the 21 banks analysed reported a year-on-year increase in first quarter profit. Combined profits totalled $13.2 billion, up from $12.1 billion a year earlier.

Saudi Arabia’s Al Rajhi Bank posted the biggest quarterly profit increase – 34 percent – while the median change was a rise of 4.5 percent.

Banks’ stock price performance has been similar, with 17 making gains this year to May 26 and a median change of +6 percent.

As such, banking stocks remain reasonably priced with an average price to earnings ratio of 10.6, according to AGBI calculations.

For comparison, the PE ratios of the UAE and Saudi Arabian stock markets is 15.4 and 17 respectively according to Simply Wall Street.

Saudi Arabia’s big banks prospered in the first quarter thanks to soaring borrowing demand from companies, although lending growth will slow and margins are shrinking because of rising fund costs and intensifying competition.

The biggest worry for Saudi Arabia’s banking industry is the potential impact of lower oil prices on government revenue and spending and the knock-on effects this may have on the wider economy.

The US Energy Information Administration forecasts crude will average $66 per barrel this year, down from $81 in 2024.

“Oil price in the mid-60s is challenging but not catastrophic,” EFG Hermes wrote in a note on Saudi banks’ first-quarter earnings.

“It will encourage the kingdom to tighten its budget and discipline its spending, which would be positive in the long run. Competitive pressures on loan pricing appear to have intensified.”

In the UAE, consumer demand for mortgages, credit cards and personal loans as well as increased corporate and government borrowing helped most major banks post double-digit rises in first-quarter profit.

Qatar National Bank (QNB), the Middle East and Africa’s largest by assets, made a first-quarter net profit of $1.2 billion, up 2.8 percent versus a year earlier.

“Qatar is markedly more subdued than Saudi Arabia and the UAE in terms of loan growth,” says Elena Sanchez-Cabezudo, head of Mena financials, equity research at EFG-Hermes in Dubai.

Qatar’s introduction of a minimum 15 percent corporation tax for multinationals crimped QNB’s net profit; its quarterly pre-tax profit rose 11 percent, but net profit grew only 3 percent.

Other Qatari lenders that operate solely domestically were not liable for the tax, adds Sanchez-Cabezudo.