KPMG: Banks in Qatar achieve the lowest cost-to-income ratios

While banks seek to get out of the difficulties of the pandemic towards economic recovery and stability, KPMG issued the eighth edition of the results related to banks listed on the GCC list. Under the title “Cautious Optimism”, the report reviews a comprehensive analysis of the financial results and key performance indicators of the leading listed commercial banks in the region, and provides a comparison of these results with those of previous years to shed light on financial trends in the GCC countries. Commenting on the report, Omar Mahmoud – Director of Financial Services, KPMG in the Middle East, South Asia and Caspian Sea, and partner in KPMG in Qatar – said: “The banks listed in the GCC countries continued their recovery after the Covid pandemic, with the growth of Significant in the amount of assets while continuing to follow a conservative approach to credit provision, careful control of costs and maintaining healthy levels of capital, in the context of a cautiously optimistic outlook. Of all the GCC countries, Qatari banks showed the lowest cost-to-income ratios of 22.8 percent and the highest coverage ratio for Tier 3 loans at 91.6 percent, with Qatar National Bank topping the list of banks in the region in terms of assets at $327 billion. The report concluded the following observations by analyzing the financial results for the year ending on December 31, 2022 for the entire GCC region: Profitability witnessed a significant increase of 25.3 percent, specifically supported by the increase in the number of loans, higher interest margins and lower provisions for non-performing loans. Continued focus on cost-effectiveness. Asset growth remained robust as banks increased their asset base by 9.9 percent, spurred by high-quality customer lending. Net interest margins increased by 0.2 percent, as a result of higher interest rates helping to stimulate profit growth. The ratio of non-performing loans in general in the banking sector of the Gulf Cooperation Council countries decreased by 0.1 percent to reach 3.8 percent, which reflects the conservative approach to credit risk management. Net provisions for loans and advances decreased by an average of 11.2 percent. This indicates an improvement in credit quality, and the return on assets increased by 0.2 percent compared to the previous year (1.3 percent in 2022). percent), reflecting the continued focus on cost reduction and operational efficiency improvement initiatives. The average coverage ratio for Stage 2 and Stage 3 loans increased by 0.4 percent and 1.7 percent, respectively, when compared to the previous year, which reflects the continued caution of banks in their approach to loan provisions. Share prices remained generally stable year-on-year with a marginal increase estimated at by 0.7 percent compared to the previous year. The report also indicates an estimated decline of 1.2 percent on capital returns, compared to 2021. The pace of capital growth has outpaced the rate of increase in profitability. Profits exchange rates also witnessed an almost identical decline of about 1.3 percent, as banks sought to protect their profits to enhance the capital position and support future growth. According to the report, banks continued to provide adequate coverage for their regular loans, as net provisions for Stage 1 loans grew six times compared to 2021.