UAE banks’ Q1 profit surges 35%: Alvarez & Marsal

UAE banks’ Q1 profit surges 35%: Alvarez & Marsal

UAE banks’ profitability grew by 35 percent in Q1 from the previous quarter due to enhanced cost efficiencies and lower impairment charges as well as a rise in non-core income, a report said.

Incremental deposit growth outstripped credit growth for the first time since Q1’22 amidst monetary tightening, added the latest UAE Banking Pulse released by leading global professional services firm Alvarez & Marsal (A&M).

L&A growth was up by 2.0 percent quarter-on-quarter (QoQ), while deposits increased by 6.2 percent QoQ.

Aggregate net interest income (NII) increased marginally by 0.4 percent QoQ and the overall NIMs remained stable at 2.8 percent for the quarter. Overall asset quality showed some improvement with non-performing loan (NPL) / net loans ratio decreasing by 16 basis points (bps) to 5.4 percent.

Overall, top lenders reported higher profitability and return on equity (RoE) improved by 5.9 percent points QoQ to 19.3 percent, whereas return on assets (RoA) increased to 2.2 percent marking a return to new levels not seen for the last four years.

A&M’s UAE Banking Pulse examines data from the 10 largest listed banks in the UAE, comparing the Q1’23 results against Q4’22 results. Using independently sourced published market data and 16 different metrics, the report assesses banks’