GCC banking sector remains resilient with strong performance in H1
The Peninsula
Doha, Qatar: According to the EY GCC Banking Sector Outlook H1 2025, banks across the region maintained a strong performance in the first half of the...
Doha, Qatar: According to the EY GCC Banking Sector Outlook H1 2025, banks across the region maintained a strong performance in the first half of the year, with sustained profitability, asset quality, and capitalization all improving. The sector continues to demonstrate resilience even as monetary policy easing and tighter liquidity begin to impact margins.
The GCC economy is forecast to grow by 3% in 2025, rising further to 4.1% in 2026, supported by infrastructure investments, diversification initiatives and private sector dynamism. Oil GDP is expected to recover modestly by 1.7% in 2025 before accelerating to 5.4% in 2026, while non-oil sectors drive growth through ongoing reforms and foreign investment. These conditions provide a supportive backdrop for banking activity across the region.
Mayur Pau (pictured), EY MENA Financial Services Leader, said: “The first half of 2025 demonstrates the resilience of the GCC banking sector. With solid capital buffers, healthier balance sheets and improved efficiency, banks are well-positioned to navigate near-term pressures and pursue long-term opportunities. As digital adoption, sustainability and regulatory readiness advance, the sector will continue to play a central role in supporting the region’s economic transformation.”
The GCC banking industry’s average return on equity stood at 13.2%, reflecting higher noninterest income and stronger cost efficiency. The cost-to-income ratio improved to 32.0%, indicating sustained benefits from operational optimization and digital transformation.
Asset quality strengthened, with non-performing loans declining to 2.4% from 2.8% a year earlier, while coverage ratios remained above 140%. Capitalization remained a core strength with an average Tier 1 ratio of 17.5% and a capital adequacy ratio of 18.9%, reinforcing the sector’s capacity to absorb external shocks.
