The income of companies and investment banks in the Gulf are booming while lenders subscribe to the economic transformation of the region.
Lenders like what they hear from companies in the Gulf region. The corporate and investment banking services (CIB), which already represented more than half of the total bank income in the Gulf Cooperation Council (GCC), develops at an annual rate of 14%, more than double the regional average, according to a recent McKinsey study. Lenders expect the CIB’s revenues reaching the $ 100 billion mark by 2030 while the region deepens its economic transformation.
“All CCG nations actively strive to diversify their economies of hydrocarbon dependence, which will unlock significant growth opportunities in all sectors,” explains Wissam Haddad, CEO of Sico Capital, based in Riyadh, which develops products and services focused on emerging technologies.
From the 2030 Saudi Arabia Vision plan to digital and green ambitions of the United Arab Emirates, the Gulf countries have embarked on quests of several billion dollars to reshape their savings. Countless initiatives at all levels stimulate the demand for complex financing solutions and banking services. “While governments are prioritizing large -scale infrastructure, energy transition and technology growth, financial institutions play an increasingly strategic role,” explains Abbas Husain, a global infrastructure and development manager at Standard Chartered. “In this environment, funding needs are becoming more and more sophisticated. There is an increasing interest in integrated capital solutions that combine bank loans with broader access to capital. ” CIB customers are wide: sovereign funds and government entities in multinational companies entering the region, wealthy individuals, institutional investors, listed companies and small and medium -sized businesses.
“In this environment, funding needs are becoming more and more sophisticated.”
Abbas Husain, world leader in infrastructure and development financing, Standard chartered
“Many are deeply involved in the execution of national transformation programs and are at the forefront of innovation, sustainability and the development of infrastructure,” notes Husain. “What they are increasingly common is the need for integrated and prospective financial solutions that support complex and multi-market strategies. This extends over debt financing, risk management and strategic advice, often with a strong cross -border dimension. ”
Capital markets
As the CCC’s savings evolve, their financial markets, extending the debt issue, share offers and mergers and acquisitions, which all contribute to the sharp increase in CIB income. In the first quarter of 2025, the activity of mergers and acquisitions jumped by 66%, reaching $ 46 billion out of $ 225 transactions, reports Ernst & Young, with water representing more than half of all the transactions announced. The stock exchange markets of the United Arab and Saudi Arab Emirates have recorded regular growth of 10% to 15% in annual shift in the last decade.
“The increase in the activity of the IPOs, in particular to water, creates an important dynamic”, explains Karim Shoeib, CEO of the group, Investment Banking, at Al Ramz, a public basin of Dubai. “The privatizations led by the government and the lists of family activities expand the investable universe and generate new opportunities for institutional and detail customers.” Although Saudi water and Arabia dominate market activity, he advises investors an eye on other countries, including Oman and Bahrain, where Al Ramz has recently been authorized.
Family companies constituting a large part of the private sector – 90% of water and 60% in Saudi Arabia – family lists seem to be an important catalyst for the activity of the capital market. The region is on the verge of unprecedented generational wealth transfer; By 2030, more than 1 billion of dollars of assets should change hands, opening up rare opportunities for investors to become shareholders of some of the crown jewels of the region.
A high -level example is the retail giant Emirati Majid Al Futtaim. After the death of the founder without will in 2021, years of internal disputes can culminate in an IPO.
“The region is witnessing an increasing number of business lists, strategic projects, a growing preference for more advanced and hybrid debt products and continuous consolidation,” explains Haddad, “in particular in fragmented sectors such as hospitality and insurance.
Global banks
Global financial institutions increase their presence in the CCG. BNY Mellon recently created its regional headquarters in Riyadh, after Goldman Sachs and Citigroup, which was authorized last year.
The American Investing Capital Company I Squared Capital has engaged $ 1 billion in Saudi infrastructure projects while Azura, a wealth management company based in Monaco, supervising $ 5 billion in assets, moves its operations to Abu Dhabi. UBS should also open an office in the capital of water and JPMorgan plans to hire more than 100 additional employees to strengthen its already considerable presence in the Middle East.
“It’s healthy and the reflection of solid fundamentals and the future potential of local markets,” notes Shoeib. “We consider this development as a natural element of a financial ecosystem which matures which continues to evolve both on a scale and to sophistication.”
Regional banks retain key advantages, including relations with deep customers, intimate knowledge of local regulatory environments and cultural proximity in fields such as Islamic finance, but global participants provide large assessments and often more advanced digital infrastructures.
Although the presence of world banks intensifies competition, “it also increases industry standards, introduces global practices and attracts deeper capital basins in the region,” notes Haddad. “In many ways, international interests complete our efforts,” he adds, “expand market participation and widen the ecosystem rather than threaten it”.
However, the success of local actors will demand more than local familiarity and competitive products.
“To really succeed in this environment, it is no longer enough to be a source of liquidity,” explains Husain, citing the interest of its customers for sustainable finance, digital transformation and long -term capital structuring. “What differentiates institutions is the ability to offer holistic solutions based on local understanding and global scope. Deep relationships, a coherent presence and a delivery history are essential.
Upcoming challenges
Despite a strong momentum, the CIB sector of the GCC faces significant opposite winds. Geopolitical tensions, the volatility of petroleum prices, the new corporate tax regimes and the increase in interest rates weigh on the cost of capital, the depreciation of the appetite of investors and affecting the deadlines for carrying out agreements.
“Larger geopolitical tensions and global economic changes, such as inflationary pressures and interest rate cycles, continue to shape the feeling of investors in the region,” said Shoeib. “With CCG currencies set to the US dollar, navigation on these macroeconomic dynamics requires agility and a constant accent on the creation of long -term value.”
Another structural challenge concerns the availability of qualified human capital and the ability of the sector to keep up with the rate of rapid technological innovation, including a generative AI. “The future of the Bank of Business and Investments in the CCG will be shaped by those who can align innovation with execution and combine global connectivity with a strong understanding of regional ambition,” explains Husain.
“Financial institutions that can work through the courts, connect world capital to local opportunities and give clarity in a complex landscape are well placed to direct.” At the same time, the increase in capital requirements of the GCC exerts pressure on liquidity. In most countries, credit demand now exceeds the growth of deposits, leading ready / deposit ratios to historical heights. In Saudi Arabia, the ratio exceeds 100%, private sector loans should increase by 12% to 14% per year, while deposits should increase by 8% to 10%. This dynamic creates both opportunities and risks for regional lenders.
“The CIBs must overcome funding shortages with record ready -deposit ratios – not reappearing or exceeding 100% in half of all CCG countries – which create potential liquidity constraints,” concludes the recent McKinsey study. “In addition, interest rates lower, with more reductions expected this year, are pressuring performance, since around 85% of GCC banks are based on interest.”
To maintain growth and profitability, banks based on the Gulf will have to adapt. “Success obliges banks to take into account the adjustments that can help them seize opportunities, remain competitive and maintain recent momentum,” says McKinsey, suggesting that local actors focus on improving profitability, diversifying their loan portfolios, deepening their imprint on capital markets and exchanges, and to extend Change.