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ZAWYA: GCC banks optimistic on loan growth in 2025, report strong performance in Q2 - S&P
ZAWYA: GCC banks optimistic on loan growth in 2025, report strong performance in Q2 - S&P
About this update from Al Rajhi Bank
First published: 06-Aug-2025 11:24:00Staff WriterGCC banks remain optimistic about loan growth in the region for the remainder of 2025, driven by favourable interest rates, according to S&P Global Market Intelligence.In its outlook, the firm said the UAE, Saudi Arabia and Qatar markets are expected to reduce interest rates in step with US Federal Reserve in the second half of the year.Last week’s US Fed decision to keep interest rates unchanged resulted in most GCC Central Banks opting to keep borrowing costs unchanged. The only exception was Kuwait, whose currency is not pegged to the US dollar.However, analysts anticipate a cut is coming in September, based on the underlying softness in the US labour market data in July.Sharp loan growthWith borrowing costs remaining steady this year, S&P’s Q2 data for the GCC revealed optimism in the market, with Saudi Arabia’s Al Rajhi Bank recorded the sharpest loan growth among the five biggest banks in the region, increasing to 19.31% from 7.37% a year earlier.Domestic peer Saudi National Bank’s (SNB) loan growth rose year on year to 12.21% from 10.25%.Banks in the UAE followed suit, with the country’s largest lender, First Abu Dhabi Bank (FAB), reporting a year-on-year uptick in loan growth, from 6.34% to 10.71% in Q2. The bank also raised its full-year guidance to low double-digit growth from its previous guidance of single-digit growth.Meanwhile, the Dubai-based Emirates NBD Bank revised its own loan growth guidance to low double digits after reporting second-quarter loan growth of 14.28%.Qatar National Bank (QNB) was the other major lender that registered a loan growth of 9.38% and also upgraded its loan growth guidance to 7%-9% from 5%-7%.Net interest income risesAs lending increased, GCC banks also reported a net interest income (NII) rise in the second quarter, with Saudi’s Al Rajhi Bank reported the highest jump at 25% YoY to $1.95 billion.This, along with higher net financing and investment income and banking services fees, propelled its net profit for the quarter to $1.64 billion, an increase of 31% YoY, S&P said.QNB’s NII climbed to $2.34 billion from the year-ago $2.12 billion, despite margin pressures due to the impact of high interest rates in its Turkish business.In its July earnings call, QNB’s senior vice president for group financial consolidation, Durraiz Khan, said the bank expects its net inter...