Why GCC Banks Are Lending More at Lower Rates
The GCC banks lending trend is accelerating as falling interest rates spur a wave of loan growth across the UAE, Saudi Arabia, and Qatar. Major lenders, including Emirates NBD, First Abu Dhabi Bank (FAB), Al Rajhi Bank, and Qatar National Bank (QNB), are reporting double-digit increases in lending activity alongside stronger income projections for 2025.
Loan Growth Driven by Rate Cuts
According to S&P Global Market Intelligence, five of the Gulf’s top banks posted robust lending gains in Q2. Saudi Arabia’s Al Rajhi Bank led with 19.3% growth, nearly triple its performance a year ago. Saudi National Bank followed with 12.2% growth, while FAB raised its 2025 loan growth forecast to the low double digits after a 10.7% quarterly increase.
Dubai’s Emirates NBD posted a 14.3% rise in loans, prompting a forecast revision, while QNB lifted its growth target to 7–9% after a 9.4% gain, with nearly half of that coming from Turkey.
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Profits Rise With Higher Lending
Higher loan volumes boosted net interest income (NII) for most lenders. QNB’s NII climbed to $2.34 billion from $2.12 billion a year ago, while Emirates NBD’s rose 6% to $2.28 billion despite a narrower net interest margin of 3.36%.
Al Rajhi Bank recorded the largest NII jump—25% year-on-year to $1.95 billion—driving a 31% net profit surge to $1.64 billion. FAB also reported record profits of $1.50 billion in Q2, up 29% from last year. Saudi National Bank and QNB posted earnings growth of 18% and 4%, respectively.
Emirates NBD was the exception, with a 10% profit drop due to a $31 million impairment charge versus a reversal in the prior year.
Outlook for the Rest of 2025
With the US Federal Reserve expected to cut rates in the second half of 2025 and GCC central banks likely to follow, GCC banks lending is set to expand further. This environment could benefit UAE residents by improving access to credit and lowering borrowing costs for personal loans, mortgages, and SME financing.
For the banking sector, easing rates combined with growing loan portfolios point toward sustained profitability, especially for lenders with strong domestic demand and diversified operations.
