The lending activities of the banks in the Gulf Cooperation Council (GCC) remained robust during Q3 2022 resulting in record high loan books at the end of the quarter, Kamco Invest said in a report. Aggregate gross loans reached $1.93 trillion, up 1.2% quarter on quarter (q-o-q) and 6.5% y-o-y, mainly led by strong growth across the GCC, except for marginal decline for Qatari banks.
Omani banks reported the strongest q-o-q growth in lending at 4.6% to reach $65.4 billion at the end of Q3 2022. Saudi Arabian banks were next with a growth of 2.7% in gross loans that reached $594 billion after eight out of ten listed banks in the Kingdom reported higher q-o-q gross loans. Aggregate gross loans for Saudi-listed banks ranked second in the GCC after UAE. Meanwhile, the 0.7% decline in gross loans for listed Qatari banks came after four out of seven banks reported a decline in gross loans during the quarter.
The trend in net loans was similar with listed banks in all GCC countries reporting higher q-o-q net loans at the end of Q3 2022, except Qatari banks that reported a 1.4% decline. Aggregate net loans at the end of the quarter reached $1.73 trillion registering a growth of 1.1% or $19.4 billion.
Meanwhile, credit growth in the GCC remained strong during Q3 2022 despite higher interest rates, indicating strong economic activity and business confidence in the region. Manufacturing activity data from Bloomberg (Markit Whole Economy Surveys) showed PMI figures well above the growth mark of 50 for UAE and Saudi Arabia, whereas data for Qatar showed a smaller growth during September-2022 at 50.7 points. The marginal growth in credit offtake in Qatar mainly reflected completion of Fifa World Cup related projects, and new project growth is expected to resume in 2023.
An S&P report also showed that the event is expected to boost economy of the broader GCC region because of higher tourism and logistics related businesses. Another report on Dubai’s real estate sector from ZāZEN Properties showed that the volume and value of the sale of off-plan and secondary properties in Dubai has reached a 12-year high during Q3-2022. The report added that Dubai is expected to see higher demand for real estate in the current quarter as a result of the World Cup in Qatar.
Data from GCC central banks showed strong lending activity across the region, barring a marginal decline in Qatar. In Kuwait, outstanding credit facilities increased by 2.2% during Q3-2022 after seeing healthy lending growth in almost all sectors that more than offset a decline in credit to Trade and Industry during the quarter.
Data from Saudi Central Bank also showed a 3.3% growth in lending during the quarter while credit facilities reported by Bahraini and Omani central banks increased by 1.8% and 0.9%, respectively.