UAE banks reap the benefits of an economic boom

UAE banks reap the benefits of an economic boom

The UAE banking system has largely demonstrated its resilience to slower global economic growth and the recent collapse of three banks in the US, as well as the takeover of Credit Suisse, which precipitated a loss of confidence in the global banking system. Banks operating in the country reported higher net profits in the first quarter of the year after a robust performance in 2022, as strong economic growth helped to drive an increase in margins and net interest income. The aggregate net income of UAE’s top 10 lenders surged by 35.3 per cent quarter-on-quarter to Dhs18.3bn, driven by enhanced cost efficiencies and lower impairment charges, according to Alvarez & Marsal’s UAE Banking Pulse Q1 2023 report. This increase in profitability was further supported by a rise in non-core income. The country’s banking industry has adequate capital and liquidity buffers to withstand severe shocks. It will continue to benefit from stable and strong capital buffers and good funding profiles. The UAE’s real GDP is projected to expand by 3.3 per cent in 2023, as the country remains relatively insulated from the global economic downturn. “We expect the UAE’s economic growth to slow modestly in 2023 due to OPEC+ agreed oil