Higher rates, lower risk cost to underpin UAE banks’ profitability

Higher rates, lower risk cost to underpin UAE banks’ profitability

Banks' performance in the UAE improved in first-half 2022 on the back of lower cost of risk and higher interest rates

The 11 national banks listed on the UAE capital markets have registered net profits of $5.69 billion in the first half of this year. — File photo

Published: Thu 22 Sep 2022, 6:18 PM Last updated: Thu 22 Sep 2022, 6:19 PM

Higher interest rates and lower cost of risk will continue to support banks' profitability in the UAE while across the GCC, earnings for most banks are expected to reach almost pre-pandemic levels by end-2022.

In the second half, asset quality of banks in the UAE will stabilise while non-performing loan (NPL) increases will remain contained as the economy improves and corporate activity recovers, analysts at S&P Global Ratings said.

Banks' performance in the UAE improved in first-half 2022 on the back of lower cost of risk and higher interest rates. The Central Bank of the UAE (CBUAE)'s Covid-19-related targeted economic support scheme (Tess) helped the system through a period of stress, limiting the increase in NPLs, said S&P Global Ratings credit analyst Zeina Nasreddine.

The 11 national banks listed on the UAE capital markets have registered net profits of $5.69 billion in the