UAE banks’ exposure to property and construction sector slips in Q2

UAE banks’ exposure to property and construction sector slips in Q2

The UAE banks’ exposure to the real estate and construction sector fell as a percentage of total gross loans by 86 basis points (bps) quarter on quarter (QoQ) to 16.7% from 17.6%, according to a report by the consultancy Alvarez & Marsal Inc.

Meanwhile, most banks operating in the UAE saw a rise in profitability in Q2 2023 due to an increase in non-core income and lower impairment charges, said the report issued on Thursday.

The aggregate net income for UAE banks increased marginally by 4.8% QoQ to AED 19.2 billion for the latest period.

Total interest income of top ten UAE banks grew by 9.9% QoQ in Q2, marginally higher than in the previous quarter.

Total operating income increased by 3.2% QoQ in Q2 compared with 3.7% QoQ in Q1. The growth in total operating income was driven by non-interest income which increased by 7.7%

Net interest income (NII) growth slowed to 1.3% QoQ as higher cost of funds weighed, following the UAE Central Bank's hike in policy rates.

Net interest margin (NIM) narrowed by 4bps to 2.7% in the quarter.

Loans and advances increased 2.7% QoQ while growth in deposits slowed to 0.8% in Q2 compared with 6.2% growth in the previous quarter.

The higher profitability