A report by global financial consultancy Alvarez & Marsal reveals that the top 10 banks in the UAE showed higher profitability as return on equity improved by 1.3 per cent to 15.1 per cent.
Stronger economic activity, higher interest rates and elevated oil prices are behind the increase said Alvarez and Marsal.
The top ten UAE banks reported an increase in profitability driven by higher core interest income despite a slowdown in loans and advances growth.
Top UAE bank profitability
Aggregate net interest income surged by 12.2 percent quarter-on-quarter and net interest margins improved by 18bps quarter on quarter supported by higher credit yield on back of rising benchmark rates.
Asset quality improved as non-performing loans fell by 0.2 percent to 5.5 percent during the quarter, said Alvarez & Marsal.
The country’s 10 largest listed banks analysed in the Alvarez & Marsal report are:
- First Abu Dhabi Bank
- Emirates NBD
- Abu Dhabi Commercial Bank
- Dubai Islamic Bank
- Mashreq Bank
- Abu Dhabi Islamic Bank
- Commercial Bank of Dubai
- National Bank of Fujairah
- National Bank of Ras Al-Khaimah
- Sharjah Islamic Bank
Asad Ahmed, Managing Director and Head of Middle East for Alvarez & Marsal said: “With the tailwinds of stronger economic growth and higher interest rates, UAE banks reported improved profitability.
“The Q3 2022 earnings momentum gathered pace with elevated margins, and asset quality pickup.
“We expect the improving trend to continue in the fourth quarter, but remain cautious of the effect of higher rates on retail and corporate borrowers”.
Alvarez & Marsal’s UAE Banking Pulse examines data of the 10 largest listed banks in the UAE, comparing the Q3 results against Q2 results. Using independently sourced published market data and 16 different metrics, the report assesses banks’ key performance areas, including size, liquidity, income, operating efficiency, risk, profitability, and capital.
The sum is a twelve-fold increase on the $75bn held at the start of the century and testament to the nation’s developing position as a global financial hub.
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