UAE banks booked another strong quarter in 2Q 2025, leading the GCC in loan and revenue growth, Kamco Invest said in its latest banking sector quarterly report (pdf). Net income rose 3.2% q-o-q (USD 191.8 mn), the second biggest absolute gain in the bloc.

Loans and revenues: Gross loans expanded 4.6% q-o-q — the fastest pace in the GCC — adding USD 29.8 bn to reach USD 672.8 bn. Revenues also rose 5.3% q-o-q to a regional high of USD 13.3 bn, driven by a 10.1% jump in non-interest income to USD 5.7 bn and a 1.8% uptick in net interest income to USD 7.6 bn.

Customer deposits also topped the region, climbing 4.1% q-o-q to USD 941 bn. That left the UAE’s loan-to-deposit ratio at 67.9%, up slightly from the previous quarter but still the lowest among Gulf peers, signaling ample liquidity.

Margins remained the strongest in the GCC: Net interest margins came in at 3.26%, down from 3.34% in 1Q but well ahead of other markets — thanks to low-cost CASA deposits and a heavy weighting toward retail lending. Operating expenses fell 6.1% q-o-q to USD 4.6 bn, helping push the cost-to-income ratio down to 38% from 38.7% in the prior quarter.

However, impairments more than doubled to USD 500 mn, lifting the cost of risk to 0.5%, in line with the GCC average. Even so, UAE banks delivered the highest return on equity in the bloc at 16.4%. The figure edged lower for the fourth straight quarter but remained comfortably above regional peers.

THE REGIONAL PICTURE-

GCC banks collectively posted record net income of USD 16.2 bn in 2Q 2025, up 3.7% q-o-q and 9.2% y-o-y. Sector-wide revenues rose 3.6% q-o-q to USD 35.6 bn, with non-interest income up 7.5% and net interest income also edging higher.

At the aggregate level, GCC gross loans rose 3.3% q-o-q to a record USD 2.3 tn, while deposits climbed 3.5% to USD 2.7 tn. Return on equity held steady at 13.6%, as the sector’s cost-to-income ratio dipped below 40% on a three-quarter low in operating expenses.

Kuwait led in net income growth, climbing USD 204.6, or 15.6%, while Saudi Arabia saw growth of USD 152.3 mn, up 2.6%. KSA and Kuwait also followed behind the UAE in gross loan growth, up 2.5% q-o-q in Saudi Arabia to reach USD 20.3 bn and up 4.2% in Kuwait to USD 10.8 bn.

ICYMI- In 1Q 2025, UAE banks posted the biggest absolute net income growth in the region, up 11.8% q-o-q, while deposits jumped 6.7% to USD 903.8 bn. GCC-wide net income hit a record USD 15.6 bn, with Saudi banks also recording strong double-digit annual net income growth.

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