Coverage: Q4 2024 · Information to 14 April 2025
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TGB Quarterly Regional Banking Monitor · 14 April 2025
Saudi, UAE and Bahraini policy rates fell by 100bp in step with the Federal Reserve between September and December 2024, while Kuwait stopped after a single cut, Egypt held its overnight deposit rate at 27.25% and Morocco eased to 2.25% by March 2025.
The desk view
The fourth quarter of 2024 split MENA banking into two monetary regimes. The Saudi Central Bank, the Central Bank of the UAE and the Central Bank of Bahrain each cut by 100bp from September to December, matching the Federal Reserve move for move, while Kuwait cut once and its rate still stood at 4.00% on 18 December. Egypt kept its overnight deposit rate at 27.25% against 24.0% inflation, and Morocco cut twice to 2.25%. Balance sheets diverged too: UAE deposits grew faster than credit in 2024, whereas Al Rajhi Bank grew financing by 16.7% against 9.6% deposit growth. The points to watch are Saudi funding, the dip in UAE capital ratios at year-end and the timing of Egypt's first cut.
The regional picture
The Federal Reserve set the pace for the Gulf. The Federal Open Market Committee cut the federal funds target range by 50bp to 4.75–5.00% on 18 September 2024, by 25bp to 4.50–4.75% on 7 November and by 25bp to 4.25–4.50% on 18 December. The Federal Reserve Board lowered the interest rate on reserve balances (IORB) to 4.4% from 19 December. It held the range on 19 March 2025.
The Saudi Central Bank (SAMA) cut its repo rate on the same three days, by 50bp to 5.50%, by 25bp to 5.25% and by 25bp to 5.00%. The Central Bank of the UAE (CBUAE) cut its Base Rate to 4.9% in September, 4.65% on 7 November and 4.40% on 18 December. The CBUAE anchors its Base Rate to the IORB, and its December level matched the new IORB of 4.4%. The Central Bank of Bahrain (CBB) cut its overnight deposit rate on the same three days, by 50bp to 5.50%, by 25bp to 5.25% and by 25bp to 5.00%.
Kuwait broke the pattern. The Central Bank of Kuwait (CBK) cut its discount rate from 4.25% to 4.00%, effective 19 September 2024, and its statement of 18 December, the day of the last Federal Reserve cut of the year, still gave the rate as 4.00% and described its approach as gradual and balanced. The CBK says Kuwait's exchange rate regime provides relative flexibility and anchors monetary policy.
Outside the Gulf, domestic inflation set policy. The Central Bank of Egypt (CBE) kept its overnight deposit rate at 27.25% on 20 February 2025, while Bank Al-Maghrib cut its key rate to 2.50% on 17 December 2024 and to 2.25% on 18 March 2025.
Policy rates at end-December 2024, %
Source: Board of Governors of the Federal Reserve System, Implementation Note issued December 18, 2024, 18 December 2024; Saudi Central Bank (SAMA), SAMA's Decision on Repo and Reverse Repo Rates (18 December 2024), 18 December 2024; Central Bank of the UAE (CBUAE), CBUAE lowers the Base Rate by 25 basis points (18 December 2024; Arabic release), 18 December 2024; Central Bank of Bahrain (CBB), CBB Cuts Overnight Interest Rate by 25 basis points, 18 December 2024; Central Bank of Kuwait (CBK), Statement on the Local Economic, Financial and Banking Development (18 December 2024), 18 December 2024; Bank Al-Maghrib, Press release: Bank Al-Maghrib Board meeting (17 December 2024), 17 December 2024; Central Bank of Egypt (CBE), MPC decides to keep key policy rates unchanged (20 February 2025), 20 February 2025.
Egypt is left off the chart because its 27.25% rate sits on a different scale.
Policy-rate moves, September 2024 to March 2025
| Central bank | Rate | Moves | Rate after last listed move |
|---|---|---|---|
| Federal Reserve | Federal funds target range | −50bp (18 Sep 2024), −25bp (7 Nov), −25bp (18 Dec); held 19 Mar 2025 | 4.25–4.50% |
| SAMA | Repo rate | −50bp (18 Sep 2024), −25bp (7 Nov), −25bp (18 Dec) | 5.00% |
| CBUAE | Base Rate | −50bp (Sep 2024), −25bp (7 Nov), −25bp (18 Dec) | 4.40% |
| CBK | Discount rate | −25bp (effective 19 Sep 2024) | 4.00% |
| CBB | Overnight deposit rate | −50bp (18 Sep 2024), −25bp (7 Nov), −25bp (18 Dec) | 5.00% |
| CBE | Overnight deposit rate | Held (20 Feb 2025) | 27.25% |
| Bank Al-Maghrib | Key rate | −25bp (17 Dec 2024), −25bp (18 Mar 2025) | 2.25% |
Source: Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (18 September 2024), 18 September 2024; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (7 November 2024), 7 November 2024; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (18 December 2024), 18 December 2024; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (19 March 2025), 19 March 2025; Saudi Central Bank (SAMA), SAMA's Decision on Repo and Reverse Repo Rates (18 September 2024), 18 September 2024; Saudi Central Bank (SAMA), The Saudi Central Bank's Decision on Repo and Reverse Repo Rates (7 November 2024), 7 November 2024; Saudi Central Bank (SAMA), SAMA's Decision on Repo and Reverse Repo Rates (18 December 2024), 18 December 2024; Central Bank of the UAE (CBUAE), Quarterly Economic Review, December 2024, 31 December 2024; Central Bank of the UAE (CBUAE), CBUAE Lowers the Base Rate by 25 Basis Points (7 November 2024), 7 November 2024; Central Bank of the UAE (CBUAE), CBUAE lowers the Base Rate by 25 basis points (18 December 2024; Arabic release), 18 December 2024; Central Bank of Kuwait (CBK), CBK Cuts Discount Rate by 25 Basis Points to 4.00%, 18 September 2024; Central Bank of Kuwait (CBK), Statement on the Local Economic, Financial and Banking Development (18 December 2024), 18 December 2024; Central Bank of Bahrain (CBB), CBB Cuts Overnight Interest Rate by 50 basis points, 18 September 2024; Central Bank of Bahrain (CBB), CBB Cuts Overnight Interest Rate by 25 basis points (7 November 2024), 7 November 2024; Central Bank of Bahrain (CBB), CBB Cuts Overnight Interest Rate by 25 basis points, 18 December 2024; Central Bank of Egypt (CBE), MPC decides to keep key policy rates unchanged (20 February 2025), 20 February 2025; Bank Al-Maghrib, Press release: Bank Al-Maghrib Board meeting (17 December 2024), 17 December 2024; Bank Al-Maghrib, Press release: Bank Al-Maghrib Board meeting (18 March 2025), 18 March 2025.
Saudi Arabia: financing outpaces deposits
SAMA's three cuts took 100bp off the repo rate. On 26 November its Governor said the banking sector maintained strong solvency, adequate liquidity and the capacity to face challenges. The latest system data in SAMA's Financial Stability Report 2024 refer to 2023: a capital adequacy ratio of 20.1%, corporate credit growth of 13.2% and a non-performing loan ratio of 1.5%, down from 1.8%. Provision coverage was 151% and the average liquidity coverage ratio 178%.
Al Rajhi Bank's 2024 results show how balance sheets moved after that. Net income after zakat rose 18.7% to SAR 19,722 million, and net financing grew 16.7% to SAR 693 billion, with corporate financing up 31.8% and SME financing up 29.6%. Customers' deposits grew 9.6%, so financing outran deposits by 7.1 percentage points. The loan-to-deposit ratio rose to 85.5% from 82.9%, and amounts due to banks and other financial institutions rose 78.3%. Interbank funding therefore grew much faster than deposits.
Profitability and credit quality held up. The net financing and investment margin widened by 14bp to 3.13% and return on equity was 21.1%. The NPL ratio was 0.76% with coverage of 159%, while the cost of risk rose 7bp to 0.32%. The total capital adequacy ratio was 20.2%.
Competition is widening. SAMA allowed the digital bank D360, one of three licensed digital banks, to start operations on 17 December 2024, and STC Bank followed on 28 January 2025. With Tal Finance, SAMA counted 62 licensed finance companies on 31 December 2024; after it licensed Tamara Finance on 3 March 2025, the number licensed and permitted reached 65.
United Arab Emirates: deposits outrun credit
The CBUAE kept the rate on its standing credit facilities at 50bp above the Base Rate, and in the third quarter of 2024 the Dirham Overnight Interest Average traded around 15bp below it.
Total assets of banks operating in the UAE reached AED 4,560.0 billion at the end of the fourth quarter of 2024, up 12.0% on the year. Deposits rose 12.9% to AED 2,847.0 billion, with non-resident deposits up 14.0% in the quarter. Gross credit grew 9.5% to AED 2,181.1 billion, but only 0.9% in the fourth quarter after 2.9% in the third. Deposit growth exceeded credit growth by 3.4 percentage points over the year. Personal loans to residents rose 17.0%, well ahead of total credit. In its quarterly review the CBUAE put the loan-to-deposit ratio at 78.3% in the third quarter.
Capital ratios dipped at year-end. The capital adequacy ratio fell to 17.8% in the fourth quarter of 2024 from 18.6% in the third, but stayed well above the 13.0% minimum; the CET1 ratio fell to 14.8% from 15.5%. Capital and reserves rose 2.9% in the quarter, so the dip did not stem from lower capital and reserves. The non-performing loan ratio fell to 5.2% in the third quarter, 1.4 percentage points lower than a year earlier.
UAE banking indicators, Q4 2023 to Q4 2024 (AED billion unless stated)
| Indicator | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|---|---|---|---|---|---|
| Total assets | 4,071.1 | 4,254.5 | 4,310.2 | 4,401.7 | 4,560.0 |
| Gross credit | 1,991.3 | 2,047.0 | 2,100.9 | 2,161.9 | 2,181.1 |
| Personal loans to residents | 417.8 | 430.6 | 450.7 | 473.3 | 488.8 |
| Total deposits | 2,521.9 | 2,657.1 | 2,692.5 | 2,761.4 | 2,847.0 |
| Capital and reserves | 489.3 | 476.6 | 495.2 | 519.5 | 534.7 |
| Capital adequacy ratio (%) | 17.9 | 18.0 | 18.3 | 18.6 | 17.8 |
| CET1 ratio (%) | 14.9 | 15.0 | 15.3 | 15.5 | 14.8 |
UAE banks' capital adequacy ratio, %
Source: Central Bank of the UAE (CBUAE), Quarterly Monetary, Banking & Financial Markets Developments Report, 2024 4th Quarter, 28 February 2025; Emirates NBD, Emirates NBD's Profit Before Tax increases by 15% to record AED 27.1 billion in 2024 (results press release), 29 January 2025.
At Emirates NBD, profit before tax rose 15% to AED 27.1 billion in 2024, but profit after tax rose only 7%, as the tax charge rose to AED 4.1 billion from AED 2.1 billion. The net interest margin narrowed by 31bp to 3.64%, while the NPL ratio fell to 3.3% from 4.6%.
Kuwait: one cut, then a pause
The September cut followed nine increases since March 2022 that had lifted the discount rate by 275bp, so 250bp of tightening remained in place. Inflation slowed to 2.44% in October 2024 and averaged about 3.00% over January to October, against 3.64% in 2023. Residents' deposits grew 6.7% at the end of September, and credit to residents and non-residents 5.7%. By the end of October, residents' deposits were up about 4.2% and credit to residents about 3.2%. The measures differ, but both show single-digit growth in a system that did not follow the later Federal Reserve cuts.
Egypt: holding at 27.25%
The CBE kept its overnight deposit, overnight lending and main operation rates at 27.25%, 28.25% and 27.75% on 20 February 2025. Headline inflation stabilised at 24.0% in January 2025, so the deposit rate stood 3.25 percentage points above it. The Committee judged its stance sufficiently tight and said the timing of easing would be assessed meeting by meeting. It saw higher upside risks to inflation, but expected headline inflation to decline substantially in the first quarter of 2025.
Morocco: cuts reach lending rates
Bank Al-Maghrib cut three times by 25bp from June 2024 to March 2025, as inflation averaged 0.9% in 2024. Lending rates to the non-financial sector fell 35bp between the second and fourth quarters of 2024, more than the 25bp cut in the key rate. Credit to the non-financial sector grew only 2.6% in 2024; the central bank projects 5.9% in 2025. It is also refinancing bank lending to very small enterprises at the key rate minus 25bp.
Bank results and regulation
Al Rajhi Bank and Emirates NBD, full-year 2024
| Indicator | Al Rajhi Bank (Saudi Arabia) | Emirates NBD (UAE) |
|---|---|---|
| Net profit | SAR 19.7bn after zakat (+18.7%) | AED 23bn after tax (+7%) |
| Loan growth | Net financing +16.7% | Loans +10% |
| Deposit growth | +9.6% | +14% |
| Margin | 3.13% (2.99% in 2023) | 3.64% (3.95% in 2023) |
| NPL ratio | 0.76% | 3.3% |
| Capital | Total capital 20.2% | CET1 14.7% |
| Returns | Return on equity 21.1% | Return on tangible equity 21.8% |
Source: Al Rajhi Bank, 4Q 2024 Earnings Release, 29 January 2025; Emirates NBD, Emirates NBD's Profit Before Tax increases by 15% to record AED 27.1 billion in 2024 (results press release), 29 January 2025.
Al Rajhi Bank widened its margin while financing outgrew deposits; Emirates NBD grew deposits faster than loans but its margin narrowed.
Selected regulatory actions, October 2024 to February 2025
| Date | Authority | Action |
|---|---|---|
| 17 Oct 2024 | SAMA | Updated debt-based crowdfunding rules; finance above SAR 7,500,000 for large enterprises |
| 13 Nov 2024 | SAMA | E-Wallets Rules on wallet opening, identity checks and inactive wallets |
| 24 Nov 2024 | CBK | Seven companies registered as e-payment and e-money providers |
| 25 Feb 2025 | SAMA | Close-out netting and collateral regulations, effective immediately |
Source: Saudi Central Bank (SAMA), SAMA Issues the Updated Rules for Engaging in Debt-Based Crowdfunding, 17 October 2024; Saudi Central Bank (SAMA), SAMA Issues E-Wallets Rules, 13 November 2024; Central Bank of Kuwait (CBK), CBK Adds 7 New Companies to the Register of e-Payment Services Providers, e-Money Services Providers & e-Payment Systems Operators, 24 November 2024; Saudi Central Bank (SAMA), SAMA Issues Close-out Netting and Related Collateral Arrangements Regulations, 25 February 2025.
Cross-country comparison
MENA banking monitor: policy rates and system indicators (reference dates in brackets)
| Country | Policy rate | Credit | Deposits | Other |
|---|---|---|---|---|
| Saudi Arabia | Repo 5.00% (18 Dec 2024) | Corporate credit +13.2% (2023) | Not available | Capital adequacy 20.1%; NPL 1.5% (2023) |
| UAE | Base Rate 4.40% (19 Dec 2024) | Gross credit +9.5% (Q4 2024) | +12.9% (Q4 2024) | Capital adequacy 17.8% (Q4 2024); NPL 5.2% (Q3 2024) |
| Kuwait | Discount rate 4.00% (19 Sep 2024) | Credit to residents +3.2% (Oct 2024) | Residents' deposits +4.2% (Oct 2024) | Inflation 2.44% (Oct 2024) |
| Egypt | Overnight deposit rate 27.25% (20 Feb 2025) | Not available | Not available | Inflation 24.0% (Jan 2025) |
| Morocco | Key rate 2.25% (18 Mar 2025) | Non-financial credit +2.6% (2024) | Not available | Inflation 0.9% (2024) |
Source: Saudi Central Bank (SAMA), SAMA's Decision on Repo and Reverse Repo Rates (18 December 2024), 18 December 2024; Saudi Central Bank (SAMA), SAMA Publishes Financial Stability Report 2024, Affirms Resilience of Saudi Financial System, 30 September 2024; Saudi Central Bank (SAMA), Financial Stability Report 2024, 30 September 2024; Central Bank of the UAE (CBUAE), CBUAE lowers the Base Rate by 25 basis points (18 December 2024; Arabic release), 18 December 2024; Central Bank of the UAE (CBUAE), Quarterly Monetary, Banking & Financial Markets Developments Report, 2024 4th Quarter, 28 February 2025; Central Bank of the UAE (CBUAE), Quarterly Economic Review, December 2024, 31 December 2024; Central Bank of Kuwait (CBK), Statement on the Local Economic, Financial and Banking Development (18 December 2024), 18 December 2024; Central Bank of Egypt (CBE), MPC decides to keep key policy rates unchanged (20 February 2025), 20 February 2025; Bank Al-Maghrib, Press release: Bank Al-Maghrib Board meeting (18 March 2025), 18 March 2025.
On these data, UAE deposits grew far faster than Kuwaiti deposits, alongside double-digit asset growth, while credit growth in Kuwait and Morocco stayed in low single digits. The Saudi system figures used here refer to 2023, so bank results are the better guide to 2024.
Outlook risks
The Federal Reserve held its range on 19 March 2025, and with the UAE Base Rate anchored to the IORB, the next UAE move rests on the Federal Reserve. In Saudi Arabia the risk is funding: Al Rajhi Bank's loan-to-deposit ratio reached 85.5%, and amounts due to banks rose 78.3% against 9.6% deposit growth. In the UAE, slower fourth-quarter credit and lower year-end capital ratios need watching, though both remain comfortable. In Egypt, higher upside risks to inflation could delay the first cut. In Morocco, the test is whether credit reaches the 5.9% projected for 2025.
What to watch
- April 2025: the Federal Reserve cuts its monthly redemption cap on Treasury securities from $25 billion to $5 billion.
- 2025: Google Pay is due to launch in Saudi Arabia through the mada network.
- CBE meetings in 2025: the timing of the first cut will be assessed meeting by meeting.
- Morocco: rollout of Bank Al-Maghrib's refinancing for very small enterprises at the key rate minus 25bp.
Primary sources: Central Bank of the UAE (CBUAE), Quarterly Monetary, Banking & Financial Markets Developments Report, 2024 4th Quarter, 28 February 2025; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (18 September 2024), 18 September 2024; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (7 November 2024), 7 November 2024; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (18 December 2024), 18 December 2024; Saudi Central Bank (SAMA), SAMA's Decision on Repo and Reverse Repo Rates (18 September 2024), 18 September 2024; Saudi Central Bank (SAMA), The Saudi Central Bank's Decision on Repo and Reverse Repo Rates (7 November 2024), 7 November 2024; Saudi Central Bank (SAMA), SAMA's Decision on Repo and Reverse Repo Rates (18 December 2024), 18 December 2024; Central Bank of the UAE (CBUAE), Quarterly Economic Review, December 2024, 31 December 2024; Central Bank of the UAE (CBUAE), CBUAE Lowers the Base Rate by 25 Basis Points (7 November 2024), 7 November 2024; Central Bank of the UAE (CBUAE), CBUAE lowers the Base Rate by 25 basis points (18 December 2024; Arabic release), 18 December 2024; Central Bank of Bahrain (CBB), CBB Cuts Overnight Interest Rate by 50 basis points, 18 September 2024; Central Bank of Bahrain (CBB), CBB Cuts Overnight Interest Rate by 25 basis points (7 November 2024), 7 November 2024; Central Bank of Bahrain (CBB), CBB Cuts Overnight Interest Rate by 25 basis points, 18 December 2024; Central Bank of Kuwait (CBK), CBK Cuts Discount Rate by 25 Basis Points to 4.00%, 18 September 2024; Central Bank of Kuwait (CBK), Statement on the Local Economic, Financial and Banking Development (18 December 2024), 18 December 2024; Central Bank of Egypt (CBE), MPC decides to keep key policy rates unchanged (20 February 2025), 20 February 2025; Bank Al-Maghrib, Press release: Bank Al-Maghrib Board meeting (18 March 2025), 18 March 2025; Al Rajhi Bank, 4Q 2024 Earnings Release, 29 January 2025; Bank Al-Maghrib, Press release: Bank Al-Maghrib Board meeting (17 December 2024), 17 December 2024; Board of Governors of the Federal Reserve System, Implementation Note issued December 18, 2024, 18 December 2024; Board of Governors of the Federal Reserve System, Federal Reserve issues FOMC statement (19 March 2025), 19 March 2025; Central Bank of Kuwait (CBK), Statement on the Local Economic, Financial and Banking Developments (7 November 2024), 7 November 2024; Saudi Central Bank (SAMA), Governor of SAMA: FY2025 Budget Boosts the Kingdom's Economic Growth Trajectory, 26 November 2024; Saudi Central Bank (SAMA), SAMA Publishes Financial Stability Report 2024, Affirms Resilience of Saudi Financial System, 30 September 2024; Saudi Central Bank (SAMA), Financial Stability Report 2024, 30 September 2024; Saudi Central Bank (SAMA), SAMA Announces the Launch of D360 Banking Operations in the Kingdom, 17 December 2024; Saudi Central Bank (SAMA), SAMA: "STC Bank" Launches its Banking Operations in the Kingdom, 28 January 2025; Saudi Central Bank (SAMA), SAMA Licenses "Tal Finance" Company to Provide Debt-Based Crowdfunding Solutions, 31 December 2024; Saudi Central Bank (SAMA), SAMA Licenses "Tamara Finance" Company to Provide Consumer Finance and BNPL Services, 3 March 2025; Emirates NBD, Emirates NBD's Profit Before Tax increases by 15% to record AED 27.1 billion in 2024 (results press release), 29 January 2025; Saudi Central Bank (SAMA), SAMA Issues the Updated Rules for Engaging in Debt-Based Crowdfunding, 17 October 2024; Saudi Central Bank (SAMA), SAMA Issues E-Wallets Rules, 13 November 2024; Central Bank of Kuwait (CBK), CBK Adds 7 New Companies to the Register of e-Payment Services Providers, e-Money Services Providers & e-Payment Systems Operators, 24 November 2024; Saudi Central Bank (SAMA), SAMA Issues Close-out Netting and Related Collateral Arrangements Regulations, 25 February 2025; Saudi Central Bank (SAMA), SAMA and Google Sign Agreement to Bring Google Pay to KSA during 2025, 15 January 2025.