KPMG recently released the seventh edition of its Gulf Cooperation Council (GCC) listed banks’ results report which analyzes the financial outcomes and key performance indicators for the leading listed commercial banks across the GCC, as compared to the previous year. This report provides banking industry leaders with succinct analysis along with insights and forward-looking views. The report titled ‘A new reality’ highlights some of the major financial trends identified in the banking sector across the region. Through this publication, KPMG aims at sharing the views of the Heads of Financial Services from its member firms in the six GCC countries, where they share insights on their respective banking markets, specifically on the financial results of the leading listed banks. In addition, KPMG trusts that its analysis, insights, and predictions will continue to help drive banking strategies and shape the industry across the region.

Commenting on some of the significant trends concerning the GCC banking sector, Mahesh Balasubramanian, Partner and Financial Services Leader at KPMG in Bahrain stated, “The banking sector in Bahrain and the region emerged resilient and witnessed improved profitability over the past year, despite the unprecedented challenges they faced dealing with the potential aftermath of Covid-19. In addition to the government support, banks invested significantly in their digital transformation strategy to build the agility required to meet with the changing customers’ needs and expectations, and to remain competitive within the marketplace. In line with the transformation in the industry, ESG related risks and opportunities are rapidly rising to the top of the priority list amongst leaders across the world. In Bahrain, the Central Bank of Bahrain (CBB) published a circular towards the end of 2021 announcing their intent and commitment towards addressing social and climate-related risks within the financial services sector. This encourages banks to play a vital role to embed ESG within the financial eco-system and institutions will soon need to adopt a formal framework to embed ESG within their strategy development and risk management processes.”

Key highlights from the report are a 35.8% increase in profitability, after a double-digit dip in 2020, which was primarily due to reduced cost of funds and lower loans provisioning by 14.5%. Market sentiment also followed the fundamentals with a 36.6% rise in listed bank share prices. There was a noted improvement across numerous key financial metrics with a robust asset growth of 6.4%, ROE and ROA improving by 0.3% and 2.8% respectively, an increase in the capital adequacy ratios to a sector average of 19.0%, and a cost reduction in the cost-to-income ratio by 0.3%.

The report also presents a forward-looking view of “A new reality” being established with six key themes for the GCC banking sector. Lending is expected to be cautious and selective as banks focus on quality while effectively managing their NPLs and loan impairment across all sectors of the economy. Costs are expected to decline further as the effects of digital investment and consolidation come to fruition. Digital transformation will most likely continue as technology and innovation become business as usual and as banks embrace disruptive trends. ESG is likely to remain a front-and-center focus for investors, regulators, banks, and customers. The rising interest rate environment and effective NPL management is likely to help drive profitability and growth. Lastly, we see a robust economic environment, fueled by higher oil prices, that could help to stabilize any potential credit volatility and continue to support a resilient GCC banking sector.

Highlights from the report:

2021 GCC listed bank results:

  1. Asset growth of 6.4% to US$2.6tn
  2. Capital Adequacy Ratio (CAR) up to 19.0%
  3. Net profit increased by 35.8% to US$34.5bn
  4. RoA now stands at 1.3%, up from 1.1%
  5. RoE now stands at 11.3%, down from 8.5%
  6. Loan impairment decreased by 14.5% to US$17.8bn
  7. NPL coverage ratio increased by 5.3% to 66%
  8. NPL ratio stands at 3.0%, down by 0.2%
  9. Share prices rose by 36.6%
  10. Cost to income ratio declined by 0.3% at stood at 41.1% 

2022 outlook:

  1. Increased regulatory oversight
  2. Cautious and selective lending
  3. Improved NIMs
  4. Effective NPL management
  5. ESG drive
  6. Further consolidation
  7. Continued digital transformation
  8. Declining costs
  9. Robust economic environment to support resilience


You can download the full report here: