Many GCC banks have seen profit growth slow or reverse as their operating environment due to low oil prices and slowing economic growth, 2016 first half results reveal.

The largest bank in Saudi Arabia, National Commercial Bank, saw its net profits reach $1.35bn in the first half, just a 2 per cent increase year on year. Its loan growth stayed high at 13 per cent year on year, but deposits fell 12.8 per cent.

Smaller Saudi banks saw profits fall, such as Samba Financial Group, whose net profit decreased 1.4 per cent year on year to $686m as its loan portfolio stopped growing.

However, some banks were able to buck the trend, with Al Rajhi Bank posting a 17.6 per cent increase in profits, recovering from a difficult few years, to $1.09bn.

The UAE showed a similar profile. Emirates NBD increased its H1 profits by 12 per cent to $1.01bn, thanks to reduced provisioning for impaired loans. Its loanbook grew 12 per cent year on year, while deposits increased by 8 per cent.

Meanwhile Abu Dhabi Commercial Bank saw a 15 per cent fall in net profits to $585m despite loan and deposit growth of 13 per cent year on year. Union National Bank and Commercial Bank of Dubai also posted significant falls in net profits on increased provisioning.

In Qatar, rapid loan growth continued despite the stagnation of deposits. Qatar National Bank increased its loan portfolio by 39 per cent thanks to an acquisition, while Qatar Islamic Bank (QIB) recorded a 25 per cent increase in financing. This drove an 18 per cent increase in profits at QIB to $290m.

Despite the very high and increasing loan to deposit ratios at Qatar banks, Moody’s Investors Service is not concerned as the ratio does not cover other sources of funding. Although Qatar’s banks will be more reliant on market funding, capital buffers remain strong. Profitability should continue to be good despite a slight deterioration in asset quality.

Kuwait’s flagship lender, the National Bank of Kuwait, reported a 7.8 fall in net profits to $498m. Other Kuwaiti banks fared better, with Boubyan Bank reporting an 18 per cent rise in first half net profits to $62m.

Oman’s largest lender, Bank Muscat, saw net profit growth fall to 0.7 per cent year on year, reporting $235m so far in 2016. This is despite 10.8 per cent loan growth. Smaller Omani banks had mixed results. National Bank of Oman’s net profits rose 5 per cent to $76m. Bank Sohar reported a 36.5 per cent fall in net profits to $23m due to a weaker operating environment and impairments, whle its merger partner Bank Dhofar increased its profits by 15.7 per cent to $68m.

A number of banks are yet to issue results.

Selected GCC bank results H1 2016          
Bank Country Net profit ($m) Change yoy (%) Operating Income ($m) Change yoy (%) Total assets ($bn) Change yoy (%) Total loans or financing ($bn) Loan growth yoy (%) Total deposits ($bn) Deposit growth yoy (%) LDR (%) NPLs (%)
Qatar National Bank  Qatar  1700 12     136.5 36 136.5 39 134.1 29 101.7% 1.8
NCB Saudi Arabia 1351 2 2486 6.8 120.7 -1.9 70.6 13 83.9 -12.8 84.1%  
Emirates NBD UAE 1012 12 2089 2 115.9 10 77.9 12 81 8 96.1% 6.6
Al Rajhi Bank Saudi Arabia 1085 17.6 2025 9.2 88.4 1.3 59.9 6.6 72.3 0.6 82.8%  
National Bank of Kuwait Kuwait 498 -7.8 1197 -2.9 79.7 4.9            
Abu Dhabi Commercial Bank UAE 585 -15 1159 1 65.6 13 42.2 13 40.6 13 103.9% 2.7
Samba Saudi Arabia 686 -1.4 1038 -0.7 62.4 3.6 34.9 -0.1 45.9 0.7 76.0%  
Riyad Bank Saudi Arabia 619 0.9 1070 -4.8 60.8 2.4 41.3 12.8 43.7 -1.8 94.3%  
Saudi British Bank Saudi Arabia 611 1.8 949 4.9 51.2 -0.2 35 3.3 40.1 -0.6 87.2%  
Qatar Islamic Bank Qatar 290 18 730   37.1 15 26.7 25 26.1   102.1% 1
Commercial Bank of Qatar Qatar 132   503 -11.7 34.9 7 21.3 6.6 19.8 12.4 107.5% 4.8
Bank Muscat Oman 235 0.7 548 5.3     19.8 10.8 19.9 2.9 99.4%  
Abu Dhabi Islamic Bank  UAE 270   810   33.1       26.5      
Union National Bank UAE 251 -22 457 -12 27.8 -2 19.1 4 20 0 95.6% 3.6
Masref al-Rayan Qatar 289 5.3     24.3 8.3 7.3 11.9       0.1
Commercial Bank of Dubai UAE 132 -20.3 325 1 16.7 18.9 11.1 6.9 11.3 15.9 98.2%  
Emirates Islamic UAE 37   335 11 15.6 8 10.6 14.5 11.4 6.2 93.7% 8.5
Boubyan Bank Kuwait 62 18 169 17 11.2 18            
Bank of Bahrain & Kuwait Bahrain 83 6.5 178 11.5 9.9   4.6   7   65.7%  
Bank Dhofar Oman 68 15.7 175 22.6 9.9 12.1 7.4 13.5 7.1 4.6 103.5%  
National Bank of Oman Oman 76 5 177 5 9.2 9 7.3 15 6.3 -1 -114.5%  
Bank Sohar Oman 23 -36.5 89 -5.9 6.1 6.4 4.7 5 3.9 4.8 122.3%  
Kuwait International Bank Kuwait 40 15 104 -2 5.9 5.9            
Source: Published bank results