Five accelerators for corporate and investment banking in the GCC

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Times are good for corporate and investment banking (CIB) across Gulf Cooperation Council (GCC) countries. From 2021 to 2024, CIB revenue increased by about 14 percent annually—more than double the region’s historical CAGR of about 6 percent—to push total revenue to between $55 billion and $65 billion. Banks across the GCC expect that CIB revenue will increase to $90 billion to $100 billion by 2030 (Exhibit 1), because the high growth rates that have pushed CIB’s share of total banking revenue in the region to more than 50 percent are expected to persist.

Corporate and investment banking in Gulf Cooperation Council countries could reach $90 billion to $100 billion in revenue by 2030.
Exhibit 1 Image description Two charts compare the 2023-2024 and 2030 corporate and investment banking revenue of the Gulf Cooperation Council in four segments: transaction banking, lending, sales and trading, and primary market. In 2023-2024, revenue is about $55 billion to $65 billion; the 2030 forecast revenue is about $90 billion to $100 billion. In both periods, transaction banking makes up about 40% to 60% of revenue, lending makes up about 40% to 45%, and sales and trading and primary market make up the remainder. Source: McKinsey analysis based on market expectations among Gulf Cooperation Council corporate and investment banks End image description

Yet even as the broad environment remains positive, CIB faces increasingly complicated challenges in the GCC, especially from the potential impact of factors such as oil-price uncertainty, geopolitical dynamics, corporate tax increases, and low interest rates. This article identifies five focus areas for banks to remain at the forefront: fueling the CIB engine with transaction banking and foreign exchange, driving capital utilization, expanding offerings and expertise from traditional finance to capital markets and trading, prudently growing and diversifying lending, and managing costs effectively by increasing operational productivity and implementing new technologies.

Understanding current tailwinds and headwinds

While challenges lie ahead for the CIB industry in the GCC, it is still benefiting from significant tailwinds (Exhibit 2). For example, non-oil GDP is growing, propelled partly by long-term government programs.1 As regional economies diversify and the private sector expands, there has been a surge in small and medium-size enterprises (SMEs) in need of segment-specific solutions—for example, cash management product bundles. Meanwhile, multinational corporations are increasing their footprints, prompting a need for more-sophisticated products to support their operations. The growth of foreign direct investment in GCC countries (approximately 8 percent per year from 2014 to 2023) could further stimulate cross-border payments.2

However, at a macro level, mid- to longer-term volatility in oil prices, geopolitical dynamics, and corporate tax increases are all potential headwinds. More specifically for the banking sector, CIBs must overcome funding shortages with record-high loan-to-deposit ratios—nearing or surpassing 100 percent in half of all GCC countries3—which create potential liquidity constraints. In addition, lower interest rates, with more cuts expected this year,4 are putting pressure on returns, given that approximately 85 percent of GCC banks’ income is based on interest.

The corporate and investment banking sector in the Gulf Cooperation Council faces several headwinds and tailwinds.
Exhibit 2 Image description A table depicts tailwinds and headwinds of two aspects of the Gulf Cooperation Council (GCC) banking: macroeconomic shifts and corporate and investment banking intrinsics. The macroeconomic tailwinds are a shift toward non-oil GDP growth, growth of foreign investments, evolving corporate structure, and increased presence of multinational corporations in the GCC. Headwinds are oil price uncertainty, geopolitical dynamics, and corporate tax increase. For corporate and investment banking intrinsics, the tailwind is robust momentum, and the headwinds are record-high loan-to-deposit ratio and pressure on returns. End image description

Five priorities to maintain momentum

While CIB retains strong prospects in the region, maintaining the growth of recent years is not guaranteed, given the potential impact of challenges ranging from uncertainty over oil prices and interest rates to geopolitical dynamics and other macroeconomic shifts. Success requires banks to consider adjustments that may help them capture opportunities, remain competitive, and maintain recent momentum. We have identified five specific areas of focus in which we believe tomorrow’s winners in the region will show significantly more progress than laggards.

1. Fuel the CIB engine with transaction banking and foreign exchange

In the GCC region, transaction banking (TB) accounts for some $25 billion to $35 billion in total CIB revenue—between 40 percent and 60 percent of the total—and is forecast to grow by approximately 7 percent annually. While these are in line with global trends, deeper digging reveals significant differences with the rest of the world (Exhibit 3). In the GCC, about 60 percent of TB revenue relies on income from balances on banking accounts, while the global average is about 45 percent. Trade finance in the GCC accounts for 14 percent of revenue, compared with 8 percent globally. This can be attributed to the proactive strategies of several leading GCC banks, which have been establishing regional trade corridors for their clients to move beyond local confines. However, macroeconomic developments have introduced a degree of uncertainty around trade flows and associated TB income. Payments make up about 13 percent of revenue compared with 15 to 30 percent in other regions, largely because of the GCC practice of offering payments as add-ons to lending or deposits to increase market share. Also, card usage is minimal: just 2 percent of revenue, well below global averages.

Transaction banking revenues in Gulf Cooperation Council countries rely heavily on income from bank accounts.
Exhibit 3 Image description A segmented bar chart compares the share by product of Gulf Cooperation Council (GCC) banking revenues with other countries and regions for 2023-2024. Trade finance and accounts shares are generally higher in the GCC, at 14% and 61%, respectively. In other regions, trade finance is 10% at most, and accounts are between 45% and 49%. Other products, which are liquidity management, collections, payments, merchant acquiring, and cards, have relatively small revenue shares in the GCC, ranging from 1% to 13%. Footnote 1: Revenues include net interest income and commissions. Footnote 2: Accounts are estimated based on wholesale deposits and the average deposit margin. Footnote 3: Figures for Kuwait, Qatar, and the United Arab Emirates are extrapolated based on Saudi Arabia for cards, merchant acquiring, payments, and collections. Source: McKinsey Global Payments Map End image description

Meanwhile, foreign exchange (FX) is becoming a more important source of non-interest revenue as GCC countries become more interconnected globally.

Although TB products already account for a significant share of total CIB revenue, there remains room for growth. Tomorrow’s winners will be the ones who embrace the opportunity to reinvent TB, take leadership roles, and drive revenue by considering several actions:

  • Bolster the financial contribution of all TB products. For example, develop industry-focused propositions focusing on import- and export-heavy subsectors, including those of international subsidiaries; enhance merchant-acquiring strategies; and improve the tracking of deposits and flows across segments and products.
  • Increase product sophistication. This includes enhancing product offerings with tailored tools for financial management and working capital optimization to address all aspects of cash positioning, forecasting, liquidity optimization, and short-term investments. While the GCC currently lags behind other regions on the use of many of these features, we expect the winners of tomorrow to leap several sophistication levels forward soon by establishing a wide range of available franchise or white-label solutions for both traditional and emerging use cases.
  • Lead innovation in new opportunities. Embedded finance and open banking offer opportunities for customer acquisition, product development, and digitalization. We already see varying technology and digital spending among GCC banks, and we believe that the leaders of tomorrow will be the ones who out-innovate competitors. Customers expect embedded finance products and services to be provided by merchants and other consumer and SME platforms.5Embedded finance: How banks and customer platforms are converging,” McKinsey, July 15, 2024. Merchants are increasingly likely to turn to corporate bankers as service providers.
  • Create best-in-class digital journeys. There is currently a wide range of digital maturity in CIB among local banks. Going forward, the implementation of convenient, fast, and reliable digital journeys will become an even bigger differentiator in transaction banking and FX because the corporate customer base and finance functions are getting more sophisticated. To win, banks need a flexible, modular architecture that accommodates various third-party solutions. We already see banks partnering with tech providers and fintech companies to accelerate the adoption of next-generation, analytics-based capabilities across TB. We expect this to become the norm rather than an exception.
  • Navigate uncertainty. Regional and national banks have a prime opportunity to distinguish themselves by offering robust solutions catering to clients’ immediate and long-term needs, especially responsive financial support—such as quick financing and hedging solutions—to navigate unstable supply lines. By becoming trusted partners, banks can leverage local expertise and agility by providing, for instance, market insights and tailored risk-mitigation strategies.

2. Drive capital utilization through capital-light, off-balance solutions and implementing originate-to-distribute models

Capital demands in the GCC are growing, pushing overall banking loan-to-deposit ratios to record levels at a regional level (Exhibit 4). For example, credit demand growth in Saudi Arabia has surpassed deposit growth during the past five years, resulting in a loan-to-deposit ratio6 exceeding 100 percent.

Lending-to-deposits ratios in Gulf Cooperation Council countries have reached record levels.
Exhibit 4 Image description A bar chart shows the total loans to total deposits ratio as of the end of 2024 as a percent for the Gulf Cooperation Council countries. From highest to lowest, the countries are Qatar, Saudi Arabia, Kuwait, the United Arab Emirates, Oman, and Bahrain. Qatar and Saudi Arabia exceed 100%, and Kuwait is nearing 100%. Note: 100% represents the threshold at which loans exceed available funding. Footnote 1: Total loans to total deposits ratio calculated using a unified methodology across countries, excluding deposits from banks and equity. Source: McKinsey analysis of published data of the central banks of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates End image description

This trend is likely to persist, given government-led initiatives to boost domestic private investment, increase homeownership, and embark on various megaprojects, including major sporting events. Demand for credit in Saudi Arabia is projected to grow by 12 to 14 percent annually, while funding supply has the potential to expand by just 8 to 10 percent per year (Exhibit 5).

In Saudi Arabia, growth in credit demand has consistently outpaced that of deposits over the past five years.
Exhibit 5 Image description A line graph depicts growth in credit to the private sector vs. growth in banking deposits in Saudi Arabia from 2014 to 2024, as a percent. Growth in credit slightly outpaces banking deposits growth from 2014 to 2016 and especially so after 2019. At its peak, credit growth reached 15% in 2021, while banking deposits growth was about 8%. Source: “Monthly statistics,” Saudi Central Bank, accessed April 21, 2025 End image description

This dynamic presents an opportunity for banks to provide easier market access for international investors and build an offering of capital-light financing solutions for borrowers—from loan trading and risk transfers to loan securitization. GCC countries would particularly benefit from a more liquid corporate bond market with lending instruments such as securitization, debt funds, and direct lending. Regulators in Saudi Arabia are already putting in place legal frameworks to enable securitization, with the first residential mortgage-backed securities (RMBS) signed in 2025.7 This is likely to usher in a wave of capital-efficient solutions that will shape the market in the years ahead.

In preparation for this new growth avenue, banks should consider preparing to transition from an originate-to-hold model to an originate-to-distribute (OTD) model. Volumes of OTD are expected to almost double in size by 2030, enabling faster turns of the lending book (and higher return on assets), enhancing ROE through increased fee income, and unlocking capacity for larger, more innovative lending initiatives. At the same time, banks and governments may want to assemble a solid international investor base for these investments. Winners of tomorrow will be the ones who can establish steady relationships with a meaningful group of investors with a partnership mindset in line with developments we have seen in recent years in North America and Europe, especially in the private credit space.

3. Expand offerings and expertise from traditional finance to capital markets and trading

As a percentage of GDP, capital markets in the GCC trail the rest of the world. Yet they are expected to grow significantly (Exhibit 6), with three markets a priority for development: debt, equities, and M&A.

Capital markets account for a smaller share of GDP in Gulf Cooperation Council countries than in other regions.
Exhibit 6 Image description A series of bar charts compares the penetration of different banking markets in four regions. The four regions are the Gulf Cooperation Council (GCC); the Americas; Europe, the Middle East, and Africa; and Asia–Pacific. Equity capital markets penetration is about equal in all four regions, but the region of Europe, the Middle East, and Africa has the lowest penetration, at 0.6%. M&A in the GCC and Europe, the Middle East, and Africa is about equal at 2.7% and 2.6%, respectively. Debt capital markets penetration in the GCC is the lowest of all the regions, at 5.7%. End image description

Debt capital markets (DCM) capture the most attention, given the transformative impact they are expected to have on capital markets. Local and regional banks are leaders in DCM today, and they may want to solidify and expand their positions. These banks have less of a foothold in equity capital markets, handling just 2 percent of transactions. International banks’ strong brand recognition and decades-long expertise put them in a strong growth position as more companies seek IPOs. However, local firms also have significant opportunities because of their natural access to the market.

IPOs in the United Arab Emirates (UAE) and Saudi Arabia have been growing at 10 to 15 percent annually for several years, fueling anticipation of more-robust trading in secondary markets. While the GCC still lags behind other regions because of slower development of derivatives, trading in instruments such as FX may accelerate.

CIBs in the GCC could also explore M&A offerings, which today are led by international banks and driven by the energy sector. Emerging trends point to M&A growing at a moderate pace as economies diversify, with outbound M&A activity underpinning this growth (for example, dealmaking by sovereign wealth funds recently hit a 15-year high).

4. Grow and diversify lending prudently

Lending in the GCC region has contributed 40 to 45 percent to wholesale revenue for the past two years, bolstered by elevated interest rates. Saudi Arabia and the UAE accounted for 70 to 80 percent of total GCC lending revenue as of 2023, but declining interest rates are putting additional pressure on GCC bank revenue. Nonetheless, GCC banks have an opportunity to develop a more prudent and agile risk appetite framework that allows them to remain competitive in an external environment that is rapidly changing.

Historically, most lending in the region has flowed to traditional sectors such as oil and gas, mining, and government. That is now transforming amid macroeconomic shifts: Opportunities have surfaced in emerging sectors that are collectively growing by about 20 percent annually, from food to services, education, and finance. The construction and trade sectors are also growing steadily—by approximately 5 and 8 percent a year, respectively—fueled by activity in the UAE and Saudi Arabia. Real estate is growing by about 8 percent annually, boosted by developments in Qatar. And manufacturing is also performing well.

Yet capturing this growth is complicated by falling interest rates, which add pressure to revenue from banking and lending, in particular. That underscores the urgency to shift toward sustainable lending models that balance sectoral growth with prudent risk management. For example, banks in Saudi Arabia have strategically increased their lending exposure in nontraditional sectors such as financial services, utilities, and transportation, improving the quality of lending (Exhibit 7). Portfolio diversification such as this is vital to driving growth in emerging sectors for banks across GCC countries and aligns with the region’s goals for economic diversification and sustainable development.

The quality of lending in Saudi Arabia is improving across almost all sectors.
Exhibit 7 Image description A plotted series of circles on a matrix shows lending volume and expected credit loss volume of different sectors. The y-axis is lending CAGR and the x-axis is expected credit loss CAGR. Sectors that fall on the left side of the matrix have increasing quality of lending. These sectors are electricity, water, gas, and health; services; financial and insurance; mining; transportation; trade; and manufacturing. Sectors that fall on the right side of the matrix have decreasing quality of lending. These sectors are construction and agriculture. End image description

Lending will also be affected by a continuing focus on environmental, social, and governance (ESG) practices, which are expected to remain pivotal for banks in the Middle East because of national sustainability agendas and market demand. GCC banks are increasingly integrating ESG considerations into their financial products and services, including sustainability-linked financing and innovative green financial instruments, and several of the region’s largest banks have joined initiatives such as the Net-Zero Banking Alliance (NZBA), committing to align their lending and investment portfolios with net-zero emissions by 2050. While recent global developments have seen some banks leave the NZBA, Middle Eastern banks have so far remained committed to the initiative, signaling their intent to align with international climate goals while addressing the unique economic and energy dynamics of the region.

5. Manage costs effectively by increasing operational productivity and implementing new technologies to maintain pace

Several banks have improved their productivity in recent years. But the CIB sector has further room to improve overall in terms of optimizing client service efficiency and internal operations. For example, front-office productivity varies widely among GCC banks today: While coverage teams of lagging banks today spend about 20 percent of their time on client-facing activities—compared with 30 percent among current leaders—we estimate that future front-runners will push that to 40 percent by 2030, a shift that will demand significant investments in AI adoption and internal digitalization. In recent years, we have seen several GCC banks closing the gap on analytics with European banks, which is why we believe leaders in the GCC will also be able to implement AI at scale over the next years.


While the CIB sector in the GCC is poised to maintain its strength, the changing dynamics of future growth will require banks to adjust as the spread between winners and laggards continues to grow. As local markets mature and more international players enter the region, CIB has an opportunity to offer more-sophisticated products and services, such as capital-light solutions to propel lending growth. They may also incorporate new technologies, such as gen AI, into operations to improve productivity and power risk models that are more precise and responsive to even minor market fluctuations.

Banks that can adapt will likely be best positioned to not only help shape the market but also capture significant opportunities.

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