Tuesday, 8 September 2026
Banks across the Gulf Cooperation Council reached record profitability in the second quarter of 2026, while renewed lending growth strengthened the flow of capital into corporate activity, infrastructure and selected property-related sectors. Combined net profit among the 55 listed GCC banks covered by Kamco Invest reached USD 17.7 billion, rising 5.6% from the first quarter and 7.2% from a year earlier. Revenue increased to a quarterly record of USD 36.2 billion, despite continued pressure on lending margins and funding costs.
The UAE and Saudi Arabia remained the largest contributors to regional banking earnings. UAE-listed banks generated approximately USD 6.8 billion of net profit, while Saudi banks produced around USD 6.6 billion. Oman and Kuwait also recorded strong annual profit growth during the quarter.
Lending regained momentum after a relatively subdued start to the year. Gross loans across listed GCC banks increased 2.6% during Q2 to USD 2.59 trillion, compared with growth of 2.2% in the previous quarter. On an annual basis, gross lending was 11.6% higher, while net loans increased to USD 2.51 trillion. Every GCC country recorded quarterly growth.
The direction of credit is particularly relevant to the region’s property, construction and infrastructure markets. Central-bank figures analysed by Kamco show total outstanding credit across the six GCC countries at approximately USD 2.20 trillion at the end of June. Saudi Arabia represented 41.4% of the total, followed by the UAE with 26.9% and Qatar with 18.4%. Utilities, government-related borrowing, consumer finance and selected international activities contributed to growth, while lending remained weaker in parts of real estate, trade and mining.
The UAE recorded the fastest annual credit expansion. Outstanding facilities reached AED 2.18 trillion at the end of June, 13.8% higher than a year earlier. During Q2, lending connected with construction and real estate increased 4.2%, while transport financing advanced 11.1%. Utilities and government borrowing were among the strongest areas on an annual basis.
Saudi Arabia continued to generate significant financing demand, although credit expansion was more moderate than during the rapid growth of previous periods. Banking credit reached SAR 3.42 trillion at the end of June, increasing 7.3% year-on-year and 1.9% from March. Financing for electricity, water, gas and health activities recorded particularly strong growth, while construction lending increased 6.1%. The figures also indicate a shift towards corporate and infrastructure financing, with household credit becoming a less dominant source of new lending.
Oman also produced strong credit growth. Outstanding facilities reached OMR 30.25 billion at the end of June, 12.7% above the previous year. Private-sector financing increased 9.8% and accounted for around 62% of the annual increase, showing that expansion was not limited to government-related borrowing.
Qatar presented a more uneven picture. Credit facilities reached QAR 1.47 trillion, up 5.9% annually, but most of that increase came from lending outside Qatar. Domestic credit grew only marginally from the previous year and declined slightly during Q2, while real estate and industrial lending contracted.
The strength of lending is beginning to place greater emphasis on how banks finance their balance sheets. Customer deposits at listed GCC banks reached a record USD 2.92 trillion, but quarterly growth slowed to 1.7%, compared with 3.4% during Q1. Oman recorded the strongest deposit increase, while the UAE remained above USD 1 trillion. Because loans expanded faster than deposits, the regional net loan-to-deposit ratio increased to a record 85.9%. Saudi-listed banks stood at 100.1%, compared with 95.1% in Qatar and 87.5% in Oman, while the UAE remained considerably lower at 74.1%.
Saudi banks are increasingly supplementing deposits through capital-market funding. Saudi issuers raised USD 49.3 billion from bonds and sukuk during the first half of 2026, representing close to half of GCC issuance during the period. The greater use of more expensive market funding could continue to affect banking margins even if lending demand remains healthy.
Profitability has nevertheless remained resilient. Net interest income reached USD 24.9 billion, another quarterly record, while non-interest income rose to USD 11.3 billion and represented 31.2% of total banking revenue. The regional net interest margin edged down to 2.78%, indicating that balance-sheet expansion and other sources of income are becoming increasingly important to earnings growth.
Credit quality also remained relatively stable. Loan impairment charges declined 6.5% during the quarter to USD 2.5 billion, although there were significant differences between individual countries. Kuwait and the UAE recorded lower provisions, while Saudi banks increased charges following an unusually light first quarter and a more cautious economic outlook.
For real estate investors and developers, the Q2 results point to a Gulf banking market that continues to provide substantial financing to the wider economy, but where the distribution of credit is becoming increasingly dependent on geography and sector. Infrastructure, utilities, transport, government-related activity and selected corporate borrowers are attracting significant lending, while the direction of real estate credit differs considerably between individual GCC markets.
Record banking profits therefore tell only part of the story. As the Gulf’s development programmes compete for financing, the more important issue for property markets may increasingly be where banks are prepared to allocate capital. With lending expanding faster than deposits and funding conditions becoming tighter in parts of the region, access to finance could become an increasingly important factor separating projects that proceed from those that face longer development timelines.
