Gulf banks are expected to maintain strong performance in 2025, supported by resilient economic conditions, diversification efforts, and robust project pipelines, according to EY’s latest GCC Banking Sector Outlook 2024 report.
“As we go into the first quarter of 2025, the GCC banking industry should remain strong due to considerable capital cushions, healthy asset quality indicators and adequate profitability,” said Mayur Pau, EY MENA Financial Services Leader. “Resilient economies, the region’s economic diversification efforts and enabling policies will support higher consumption and investment, further boosting the sector’s performance.”
EY notes that the sector’s outlook is supported by rising credit growth, increased fee income, and stable margins across the region. In Saudi Arabia, loan growth continues to be driven by large-scale infrastructure and Vision 2030-linked projects. UAE banks are seeing strong deposit inflows and stable asset quality, while Qatar’s banks remain well-capitalised with adequate liquidity to support expansion in LNG and infrastructure.
GDP growth across the GCC is forecast to reach 3.5% in 2025, with non-oil activity expected to rise by 3.4% in both Saudi Arabia and the UAE. The IMF projects the region’s fiscal surplus to be 3.9% of GDP, and the current account surplus to hit 8.2%.
The report highlights that credit conditions have improved following monetary easing by the US Federal Reserve in late 2024, prompting GCC central banks to reduce rates and boost domestic liquidity. These shifts are expected to support lending and reduce funding costs in 2025.
Qatar, Oman, and Bahrain are expected to benefit from a combination of infrastructure completions and broader economic activity, while Kuwait’s banking system remains stable, with foreign assets accounting for over 30% of total bank holdings as of end-2024.
Fitch Ratings also forecasts that GCC banks will issue over $30 billion in US dollar debt this year, largely to refinance maturities, with Saudi, Qatari, and Emirati banks contributing most of the volume.
