Inside the GCC banking sector, Q2 2026 figures show a shift in how the region’s banks earn. Lenders now lean on loan volume, not interest rates, to grow income. Kamco Invest reported GCC bank lending across 55 listed Gulf banks reached a record $2.59 trillion by the end of June. That total rose 2.6 percent from the first quarter and 11.6 percent over the year.
The quarterly pace picked up from 2.2 percent three months earlier. All six Gulf markets grew. Net loans climbed 2.7 percent to $2.51 trillion. Islamic banks added financing faster than conventional ones, 3.3 percent against 2.4 percent. Behind these numbers runs a question the sector cannot avoid. With rate cuts arriving and margins tightening, where does the next dollar of profit come from? Kamco framed the answer plainly. With most repricing finished, growth in interest income now comes from lending more, not charging more.
Where the GCC banking sector Q2 2026 growth came from
UAE banks led the region for a second straight quarter. Their gross loans rose 4.5 percent to $816.5 billion. A large part of that came from one deal. Emirates NBD bought a majority stake in India’s RBL Bank, folding 44 billion dirhams, around $12 billion, of loans into the group. One acquisition, and a national banking sector’s loan book jumps.
Country trends across the Gulf
Saudi banks grew gross lending 1.6 percent to $876.1 billion, the largest book in the region. The tempo there has cooled. Saudi Central Bank data showed private sector credit growth of 6.8 percent year on year in June, down sharply from the 16 to 18 percent seen through much of 2025. Retail mortgage demand eased, and fresh lending tilted toward companies rather than households. Omani banks posted the second-fastest quarterly rise at 4.1 percent, reaching $88.2 billion. Kuwaiti lenders grew 2.3 percent to $290.6 billion. Bahraini and Qatari banks rose 1.9 and 1.4 percent.
Deposits, profit and thinning margins
Customer deposits reached a record $2.92 trillion, up 1.7 percent, slower than loans grew. The gap has a consequence. When lending outruns deposits, banks reach further into debt markets to fund the difference. Net profit hit a record $17.7 billion, rising 5.6 percent in the quarter and 7.2 percent over the year. Total revenue reached $36.2 billion. Non-interest income rose 3.6 percent to $11.3 billion, close to a third of the total. Net interest income climbed 1.9 percent to a record $24.9 billion. The regional net interest margin slipped to 2.78 percent from 2.79 percent, a thin decline that points to the pressure ahead.
The GCC banking sector Q2 2026 outlook
The picture for the GCC banking sector Q2 2026 and beyond carries both support and strain. S&P Global Ratings expects credit growth across the Gulf of 5 to 6 percent in 2026, with Saudi Arabia and the UAE running higher. The same firm sees profitability easing a little in 2026 and 2027 as credit costs rise and lending slows, though thick capital buffers should hold the sector steady. That funding gap is already pushing banks toward wholesale borrowing. Saudi issuers raised $49.3 billion through bonds and sukuk in the first half of 2026, close to half of all GCC issuance, with companies supplying most of the regional total. A record quarter, then, resting on a changing base. The next test is whether volume can carry earnings once the easy gains from rates are gone.
