GCC Banks Reap Record Profits Amid Rising Lending

The banking sector across the Gulf Cooperation Council (GCC) is delivering robust profitability, underpinned by strong loan growth, deposit inflows and operational efficiency, with the region’s lenders well poised to navigate near-term headwinds.
In the second quarter of 2025, GCC‐listed banks posted a record net profit of US$16.2 billion, driven largely by higher lending volumes and non-interest income. GCC Business Watch+1 According to a recent sector outlook, the average return on equity for the region’s banks in H1 2025 stood at 13.2 % and the cost-to-income ratio improved to 32.0 % — an indicator that transformation and digitalisation efforts are beginning to pay dividends. Consultancy ME+1
The underlying story is two-fold. On one hand, GCC governments are injecting stimulus and continuing large infrastructure, tourism and real-estate programmes — creating strong credit demand. On the other, the banks are leveraging operational efficiencies and digital-channel growth to reduce costs. According to risk management specialists, banks are entering 2025 from a position of strength, with non-performing loans (NPLs) declining to around 4 % in some markets. GOsome+1
Particular markets stand out. For example, Bahrain’s Bank of Bahrain and Kuwait (BBK) recently signed a strategic partnership with UK investment bank Panmure Liberum, enhancing investment banking capabilities across the Kingdom and the wider region. BBK
However, the sector is not immune to challenge. Macro-headwinds like rising interest rates, global trade headwinds and regional geopolitical spill-overs remain relevant. The strength of capital buffers will matter — banks that have strengthened their provisioning and digital platforms are better placed to withstand shocks.
Outlook: With diversified revenue streams, improving efficiency and still-favourable regional growth trajectories, GCC banks appear well-positioned to deliver another year of solid performance. The key for investors will be identifying those institutions with strong digital programmes, relatively low cost bases and conservative balance-sheet profiles.