The net profit of banks listed in the Gulf Cooperation Council (GCC) countries reached $16.2 billion in the second quarter of 2025, marking a record high and continuing its upward trend for the second consecutive quarter with a growth rate of 3.7%. Year-over-year, the profit growth was 9.2%.
The sustained increase in profits for Gulf banks this quarter is primarily attributed to a significant rise in sector revenues and a reduction in the cost-to-income ratio, which offset the impact of increased provisioning during this period. The growth in revenues indicates a robust lending environment, buoyed by solid economic foundations in the region supported by a strong pipeline of projects.
On a country-specific level, quarterly growth remained largely positive, with five out of six GCC countries reporting consecutive increases in net revenues, while Bahrain’s banking sector saw a decline. Kuwaiti banks recorded the largest absolute increase in net profits, amounting to $204.6 million, or 15.6%. Emirati banks followed with an increase of $191.8 million (+3.2%).
In terms of total revenues, the banking sector achieved a new record this quarter, reaching $35.6 billion after a strong quarterly growth of 3.6%. Emirati banks led the way, achieving a revenue growth of 5.3% equivalent to $674.0 million from the first to the second quarter of 2025.
Data released by the central banks of the GCC countries underscored the resilience of regional economies, with continued growth in outstanding credit facilities during the second quarter of 2025. Official figures indicated a consistent upward trend in total credit facilities across the region, with the exception of Bahrain.
Manufacturing activity reports from Bloomberg have highlighted the strong performance of GCC economies, as purchasing managers’ indices remained above the growth threshold of 50 points in all GCC countries that released data by the end of the second quarter of 2025.
A survey on credit trends for the second quarter of 2025, published by the Central Bank of the UAE, indicated a sustained moderate credit growth driven by strong demand from both individuals and businesses, in light of robust economic conditions, increasing household incomes, and a supportive investment climate. The report noted that Dubai recorded the highest growth rates in commercial lending, while Abu Dhabi saw the largest increase in personal loans. In terms of sectors, real estate development led with the strongest growth, followed by retail and wholesale trade, then construction and manufacturing.
Growth in GCC Bank Lending
Banks listed in the GCC countries continued to demonstrate strong growth rates in lending activities during the second quarter of 2025, supported by robust performance across all regional markets. The total loans reached a new record of $2.32 trillion, achieving the second largest quarterly growth rate in 16 quarters at 3.3%, equivalent to $74.3 billion, compared to 3.6% during the previous quarter. Annual growth remained in double digits at 13.0%.
Emirati banks registered the highest quarterly growth rate in total loans among Gulf nations, driven by strong lending activity across various sectors. The total loans provided by listed banks in the UAE increased by 4.6%, or $29.8 billion, reaching $672.8 billion by the end of the second quarter of 2025.
Regarding the nature of banking activities, Islamic banks in the GCC continued to perform relatively well, with total loans rising by 4.3% to reach $706.8 billion, whereas conventional banks achieved a growth rate of 2.9%, bringing their total loans to $1.6 trillion by the end of the second quarter of 2025.
Customer deposits at banks listed on Gulf stock exchanges reached a new record of $2.74 trillion by the end of the second quarter of 2025, reflecting a quarterly growth of 3.5%. Year-over-year, deposits increased by 13.3%, equivalent to $91.8 billion compared to the second quarter of 2024.
This growth was driven by a widespread increase in customer deposits across all GCC markets. Based on available data from banks in Saudi Arabia, the UAE, and Oman, the rise in customer deposits was mainly fueled by a 3.6% increase in savings deposits in these three countries.
In terms of performance drivers, the growth in revenues for Gulf banks during the second quarter of 2025 was primarily fueled by an increase in non-interest income and modest growth in net interest income. Total non-interest income rose by 7.5% to reach $12.7 billion, while net interest income increased by 0.7% to $22.9 billion. Emirati banks demonstrated the strongest performance in this area, achieving a double-digit growth rate of 10.1%, pushing non-interest income to $5.7 billion, the highest level in the region.
Increase in Provisions for Impairment
Provisions for impairment among Gulf banks rose during the second quarter of 2025 after reaching their lowest levels in three quarters during the previous quarter. Total provisions for impairment increased by 12.4% to $2.4 billion, up from $2.1 billion in the first quarter of 2025.
This increase was primarily driven by higher provisions from Emirati and Qatari banks, which managed to offset the declines noted in other GCC markets. Emirati banks experienced a sharp rise, with their provisions for impairment more than doubling to $0.50 billion in the second quarter of 2025, compared to $0.39 billion in the first quarter of 2025. Most Emirati banks reported similar increases during this period.