Bahraini lenders led the Gulf Cooperation Council in net interest margins during the second quarter of 2026, holding steady at 3.03 percent as the only banking sector in the region to exceed the three percent threshold. According to analysis by Kamco Invest, total credit facilities in the kingdom rose 8.5 percent year-on-year to reach 13.54 billion Bahraini dinars, largely propelled by a 70.9 percent surge in government borrowing. By contrast, private sector credit expansion remained more tempered, growing 2.2 percent overall with gains in real estate and services offset by contractions across construction, trade, and financial services.

Across the broader region, listed GCC banks achieved record net profits of 17.7 billion dollars in the second quarter, representing a 7.2 percent annual increase driven by sustained non-oil corporate activity in Saudi Arabia and the UAE. Aggregate revenues reached a record 36.2 billion dollars, supported by strong non-interest income as treasury and transaction fees offset higher deposit funding costs. While benchmark interest rates remained anchored to the U.S. Federal Reserve’s target range, gross lending rebounded to a record 2.59 trillion dollars, pushing the region’s overall loan-to-deposit ratio to a new peak of 85.9 percent as loan growth outpaced deposit accumulation.

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