MUSCAT: Oman's banking sector continues to make strides in its financial performance, showcasing steady growth in return on equity (RoE) amidst an overall positive trend in the Gulf Cooperation Council (GCC) banking sector. According to Kamco Invest, the aggregate RoE for GCC banks during Q2 2023 reached one of the highest levels in recent years at 13.0%, indicating an improvement from the previous quarter's 12.6%. This growth was supported by increased 12-month profitability and a controlled expansion of shareholders' equity.
Leading the region in RoE performance were UAE-listed banks, boasting an impressive 15.9% RoE at the end of Q2. Saudi Arabian and Qatari banks followed suit, reporting RoEs of 12.8% and 12.1%, respectively. Notably, UAE banks also experienced the largest quarter-on-quarter growth in RoE, with an increase of 110 basis points (bps), driven by elevated trailing twelve-month profits.
In comparison, Oman's banking sector demonstrated stability and steady progress with an RoE of 8.1%. Although slightly lower than the top-performing countries in the GCC, Oman's banks showcased resilience and promising growth potential. This positive performance underscores the effectiveness of the financial management strategies implemented by Omani banks.
While Kuwaiti banks maintained a solid double-digit RoE of 10.5%, Bahraini banks reported an RoE of 7.5%, indicating steady growth with room for improvement. Oman's banking sector, with its 8.1% RoE, demonstrated its commitment to financial stability and has positioned itself for further enhancement in the future.
Oman's banking industry has been actively working towards strengthening its financial stability and expanding its market presence. Prudent risk management practices, improved operational efficiency, and the diversification of revenue streams have played integral roles in driving the sector's growth. Furthermore, the Omani government's initiatives to promote digital transformation, encourage entrepreneurship, and attract foreign investment have created a favorable environment for the banking sector.
The positive outlook for Oman's banking sector is supported by ongoing infrastructure projects and the country's commitment to economic diversification. These endeavours are expected to generate new opportunities for banks, fostering sustained growth and increased profitability in the coming quarters.
Overall, while the GCC banking sector demonstrates an improved RoE, Oman's banking industry stands out with its steady growth and commitment to financial stability. As Oman continues to implement strategic measures and capitalize on emerging opportunities, the sector is poised to contribute significantly to the country's economic growth and development.