Largest Gulf banks see bad loan increase in Q4'21

The five largest banks in the Gulf Cooperation Council all saw an uptick in problem loans in the fourth quarter, a trend that S&P Global Ratings expects to continue into 2022.

Qatar National Bank QPSC, the United Arab Emirates' First Abu Dhabi Bank PJSC and Emirates NBD Bank PJSC and Saudi Arabia's The Saudi National Bank and Al Rajhi Banking & Investment Corp. all posted year-over-year increases in bad loans, according to an analysis by S&P Global Market Intelligence.

QNB saw fourth-quarter problem loans rise to $5.04 billion from $4.34 billion; First Abu Dhabi Bank booked $4.62 billion, up from $4.31 billion; Emirates NBD's increased to $7.66 billion from $7.56 billion; Saudi National Bank's rose to $2.20 billion from $1.63 billion; and Al Rajhi's increased to $802 million from $652 million.

Problem loan ratios increased at QNB, First Abu Dhabi and Emirates NBD, and declined at the two Saudi banks.

The asset quality of banks in the GCC region the asset quality of banks in the region to weaken further, albeit slightly, this year, according to Ratings. Their aggregate nonperforming loan ratio could rise in the next 12 to 24 months without exceeding 5% on average, compared with 3.7% at the end of September 2021 and 3.1% at the end of 2019, the rating agency said in its GCC Banking Sector Outlook report in January.

QNB, First Abu Dhabi and Emirates NBD Bank booked fourth-quarter 2021 net attributable income of $810 million, $905 million and $548 million, respectively, versus the prior-year $691 million, $879 million and $358 million. Al Rajhi had net attributable income of $1.07 billion, an increase from $832 million a year ago. Saudi National Bank's net income was roughly flat year over year.