The quarterly rise reached 1.7 percent, showing banks still expanded income despite softer fee generation. Net interest income did most of the work as lending volumes increased across major Gulf markets. Non-interest income slipped after seven rising quarters, trimming part of the gain from core banking activity. At the same time, impairments climbed to their highest level in eighteen quarters regionwide. That shift pushed aggregate net profit down to 15.6 billion dollars from Q3 2025 levels. Broad lending trends gave the quarter its main support, and credit facilities growth stayed widespread.
Listed GCC banks lifted gross loans by 2.7 percent, ending the quarter at 2.47 trillion dollars. Net loans also moved higher, rising 2.5 percent to 2.37 trillion dollars across the region. From my perspective, this pattern shows banks still found healthy demand outside oil-linked segments. Recent project awards and service activity supported borrowing needs in corporate and retail channels. Kamco also linked the trend to resilient non-oil growth across several major economies recently.
Personal and consumer lending remained the strongest driver in the UAE, Qatar, Kuwait, and Oman. Government borrowing also increased in the UAE, Oman, and Bahrain, backing public investment plans.
GCC banking sector revenues and lending strength
Customer deposits then fell 0.6 percent, reaching 2.78 trillion dollars after nineteen straight quarters of gains. This drop, paired with stronger lending, lifted the loan-to-deposit ratio to 85.4 percent. That level stood above the prior quarter reading of 82.8 percent, showing tighter liquidity. Banks still held large funding bases, yet the shift deserves close attention during 2026. Topline growth varied across markets, with Oman, Kuwait, Bahrain, and Saudi lenders posting revenue increases. UAE and Qatari-listed banks reported slight revenue declines, which softened the regional result.
Even so, the record headline confirmed strong earning power from core balance sheet expansion. GCC banking sector revenues also reflected stronger activity in households, government projects, and energy-related segments. Net interest income stayed central because lower yields on credit did not stop loan book growth. Non-interest income moved the other way, reflecting softer fees, trading flows, or related income lines. Energy and utilities lending also showed firm growth, especially in Kuwait and the UAE.
Those patterns matched wider regional spending on infrastructure, power systems, and transition-related projects.
Why profits slipped despite record revenue
Profit pressure came from higher impairments and a second straight rise in operating expenses. Those costs more than offset revenue growth, pulling quarterly earnings back from record levels. Oman stood out as the only market avoiding a quarterly profit decline during Q4 2025. Elsewhere, banks faced broader credit costs as some portfolios required heavier provisioning during the quarter. Construction and manufacturing also weakened in Saudi Arabia, Kuwait, and Bahrain during the period. That pullback may reflect project completion cycles or a more careful industrial expansion phase.
The sector still entered 2026 with scale, lending momentum, and clear support from investment programs. For readers, the main lesson is simple: revenue strength looked solid, yet risk costs rose. Analysts will watch whether GCC banking sector revenues keep rising if deposit competition increases. GCC banking sector revenues should stay linked to lending demand, deposit trends, and credit quality.
