KPMG publishes the ninth edition of the results of the banks listed in the GCC; Kuwaiti banks are recording robust year-on-year growth

April 2024, Kuwait: KPMG underlined the continued resilience of the region’s banking sector and published the ninth edition of the results of the GCC-listed banks. The report, titled Adaptation and growth, provides a concise analysis of the financial performance of major listed commercial banks for the year ending December 31, 2023 versus the previous year (ending December 31, 2022).

The strength of the GCC economies was reflected despite global economic challenges as the region achieved double-digit growth (23.1%) in terms of net profit to reach US$53.2 billion in 2023. Total assets and stock prices in the region were also part of the growth, rising by 8.1% and 7.7% respectively.

Also in the green, albeit marginally, were capital adequacy ratio, cost-income ratio, net interest margin (NIM), return on equity and return on assets. The region saw a decline in the overall non-performing lending (NPL) ratio, driven by banks’ conservative approach to credit risk management.

Findings from the report show that these figures are driven by eight primary financial trends reflected in KPMG analysts’ outlook on the GCC region’s banking sectors. These were: (i) robust capital growth; (ii) significant increase in profitability; (iii) improved NIM; (iv) lower NPL ratio; (v) reduced loan impairments; vi) stability in the cost-income ratio; (vii) strengthened capital adequacy; and (viii) rising stock prices.

Bhavesh Gandhi, Head of Financial Services at KPMG in Kuwait, said: “The banking sector in Kuwait witnessed healthy year-on-year growth, with a notable increase observed in several identified KPIs such as net loan provisioning, capital adequacy ratio and coverage ratio on phase 3 loans. While more work remains to be done at the regional level, the results highlight the effectiveness of Kuwaiti banks’ forward-looking approach and provide further reason to build on it in 2024.”

Kuwait showed the best year-on-year (yoy) growth in terms of net loan provisioning costs (28.8%), capital adequacy ratio (1.0%) and coverage ratios for Phase 3 loans (2.7%).

According to the analysis, Kuwait also recorded the highest value growth in terms of Phase 3 loans with expected credit losses (ECL) (1.5%).

At the bank level, National Bank of Kuwait SAKP had the highest year-on-year growth in net loan provisions (1,324.1%), almost four times that of the second-place bank.

In terms of loan coverage ratios, Kuwait International Bank KSCP had the highest year-on-year growth (20%) among all 52 banks included in the report. When it came to value growth, Gulf Bank KSCP was the best performer in terms of loan coverage ratios (110.2%) and Boubyan Bank KSCP in terms of stage 3 loans with ECL obligation (1.0%).

The report underlines the point that effective government support, coupled with the banks’ proactive and timely initiatives, has promoted the continued resilience of the banking sector in the GCC region. The key highlight of the report remained the positive trend in each of the identified financial KPIs, supported by effective management, digital transformation and improved return on investment.

Looking ahead, KPMG professionals predict effective NPL management, rapid balance sheet growth, healthy NIMs and measures to control costs. They also expect that by 2024, the banking sector will see increased awareness of ESG, focus on AI and Regtech, and consolidation.

This edition of the publication aims to provide insights and forecasts to support the implementation of measures and strategies that will help shape the future of the banking sector in the GCC region.

To read the full report, visit kpmg.com/kw.