The impact of mergers and acquisitions on the financial performance of GCC banks

Abstract

This study investigates the impact of mergers and acquisitions (M&A) on GCC banks' financial performance measured by profitability, asset quality, and leverage. It compares seven major bank mergers in Saudi Arabia, Kuwait, the UAE, and Oman that occurred between 2015 and 2022. Using financial data from Refinitiv Eikon and banks' reports, the study compares the trajectory of the key CAMEL ratios three years prior to and following the merger. Empirical techniques including descriptive analysis, correlation coefficients, paired sample t-tests, and regression analysis were employed in testing the significance of the change in performance. The results show that while some mergers achieved improved profitability (ROA, ROE) and liquidity (Loans-to-Deposits Ratio), others had mixed changes in capital adequacy (CAR) and asset quality (NPL). These variations attest to the complexities of M&A outcomes, since financial improvements are not guaranteed and often depend on internal integration approaches and external economic conditions. The findings contribute to the literature on the heterogeneous impacts of bank mergers in the GCC and provide implications for policymakers and financial institutions that are considering mergers.