The Middle East banking sector grew revenues by nearly seven percent in 2012, according to a new study by The Boston Consulting Group.
On the back of the 6.9 percent increase, profits rose 8.1 percent, stemming largely from extraordinary income sources, the report said.
While banks in Qatar grew revenues by 12 percent and banks in Saudi Arabia and Oman achieved high single digit growth rates, banks in the UAE, Kuwait and Bahrain achieved a revenue growth rate of 5 percent or below.
The report showed banks in all countries achieved above 7 percent profit growth rates, except in Kuwait (3 percent).
In 2012, loan loss provisions varied significantly by country, the report added.
Banks in Saudi Arabia and Kuwait had to build higher provisions due to increasing delinquencies in sectors such as real estate, construction, banks, financial services, and manufacturing.
UAE banks were, on aggregate, able to significantly reduce the existing high provisioning levels by 13 percent, Boston's report said, adding that Bahrain banks also saw higher LLPs but with a less steep growth rate.
The BCG index includes 32 banks from across the GCC capturing nearly 80 percent of the total regional banking sector.
Dr Reinhold Leichtfuss, senior partner and managing director in BCG's Dubai office, said: "While the performance of Middle East banks settled at high single digit growth figures in 2012, it still compared very well with the international banks which experienced a further revenue decline.
"This provides the Middle East banks the opportunity to undertake the necessary investments in capabilities and regional expansion."
The report said retail banking revenues in the GCC saw an uptick of four percent after a number of flat years, largely due to an increase in the three biggest markets - the UAE, Saudi Arabia and Kuwait.