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The UAE’s four largest banks are expected to maintain strong bottom lines in 2024, buoyed by expectations for interest rates to remain high until 2H 2024, Moody’s said in a report cited by Zawya. Despite forecasting robust revenues and steady stable provisioning charges, lenders’ earnings may be dampened by pressures from higher operating costs and the new corporate tax that came into effect last year.
S&P sees things differently: S&P Global expects banks to see their bottom lines narrow as the US Federal Reserve ends its monetary tightening cycle and begins to cut interest rates, leading to lower interest rate margins. GCC banks on the whole are expected to experience slightly slower credit growth this year, moderating due to an unfavorable base effect and heightened lending caution, S&P Global said previously.
ICYMI- Emirati banks turned in high returns in 2023, fueled by minimal loan loss provisions, augmented interest margins, and high deposit rates that outperformed lending. The collective income of the Emirates’ largest lenders — First Abu Dhabi Bank (FAB), Emirates NBD, Abu Dhabi Commercial Bank (ADCB), and Dubai Islamic Bank — climbed 49% y-o-y in 2023, reaching USD 14.3 bn. The lenders collectively accounted for 74% of the entire banking sector’s earnings.
What drove the performance? Among the factors which contributed to the four lenders’ improved performance was higher income from net interest, which rose 24% y-o-y while the combined non-interest income increased 32% y-o-y in 2023 on the back of higher trading gains and income from FX, and the banks’ investments in fee-generating activities.
