Bahrain’s banking sector demonstrated strong resilience and consistent growth from Q1 2023 to Q1 2025, according to Kamco Invest’s ‘GCC Banking Sector Report – Q1-2025’.
Total assets surged from $87.7 billion in Q1 2023 to $108.1bn by Q1 2025, reflecting significant balance sheet expansion. Net loans also grew positively, from $40.1bn to $51.9bn, indicating increased lending. Customer deposits, a robust funding base, rose from $64.4bn to $76bn. The loan-deposit ratio (LDR) remained stable (62pc to 68pc), highlighting prudent liquidity management.
Total bank revenue increased from $0.73bn in Q1 2023 to $1.04bn in Q1 2025, with net interest income (NII) remaining dominant. The net interest margin (NIM) generally trended upward, from 2.7pc to approximately 3pc by Q1 2025, signalling improved lending profitability. Operational efficiency improved, as the cost-to-income ratio (CIR) decreased from 57pc to around 50pc.
Net income showed robust growth, rising from $0.21bn in Q1 2023 to $0.29bn by Q1 2025, reflecting strong overall profitability. Loan loss provisions (LLP) remained low and stable ($0.07bn to $0.09 bn), indicating sound asset quality. While the cost of fund increased from 3pc to approximately 4pc, robust revenue growth and strong NIM mitigated this impact.
In conclusion, Bahrain’s banking sector exhibits strength and expansion, with consistent growth across key metrics, improved operational efficiency, and stable asset quality, painting a picture of a resilient and dynamic financial landscape.
Zooming out, the report finds that the GCC banking sector achieved a new high in net income during Q1 2025, reaching $15.6bn. This represented a 7.1pc quarter-on-quarter (q-o-q) and 8.6pc year-on-year (y-o-y) growth.
This record bottom-line growth occurred despite a decline in net interest income, primarily driven by higher non-interest income, reduced operating expenses, and a sharp seasonal decrease in impairments. The fall in net interest income stemmed from interest rate cuts in H2 2024, causing the aggregate yield on credit for the GCC banking sector to drop 5 basis points (bps) to 4.16pc in Q1 2025 (from 4.21pc in Q4 2024).
Country-level net income growth was largely positive q-o-q, with five of six GCC aggregates showing sequential growth; only Kuwait’s banking sector saw a marginal decline. UAE-listed banks recorded the largest absolute growth, up $639.6 million (11.8pc), followed by Saudi ($338.4m) and Bahraini banks ($72.6m). Year-on-year net income growth was mixed, with Qatar and Kuwaiti listed banks declining, while Saudi Arabian banks posted double-digit growth of 17.2pc.
Aggregate banking sector revenues also hit a new record of $34.6bn in Q1, though growth was the smallest in four quarters at 0.04pc. This near-flat growth was due to revenue declines in Kuwait and Oman, which largely offset increases elsewhere.
Lending growth remained robust, with net loans growing 4.1pc sequentially in Q1 2025, the highest in 15 months, reaching $2.2 trillion. This reflected resilient non-oil sector expansion, with non-oil manufacturing consistently performing well. Gross loans also showed a healthy 3.6pc growth during the quarter.
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