Saudi, U.A.E. Banks To See Jump as Profit Lags on Loan Demand

Saudi, U.A.E. Banks To See Jump as Profit Lags on Loan Demand

Banks To See Jump as Profit Lags on Loan Demand. (Bloomberg) - While banks in Saudi Arabia and the United Arab Emirates can look forward to burgeoning loan growth in 2020, higher earnings could be slow to follow as lower interest rates pressure profit margins.. We're seeing an improvement in credit volumes in Saudi Arabia, a recovery in loan growth in Turkey in the fourth quarter of 2019, and strong volume in Egypt.. The trends will also be supportive of U.A.E. banks' loan growth in 2020.". In neighboring Saudi Arabia, loans may increase by an average of 7%, compared with about 6% in 2019, Bilandani said.. Saudi retail mortgages will continue to remain a key driver of credit after expanding 31% year-on-year during the third quarter, compared with total-loans growth of 4%, he said.. Net-income growth at the biggest Saudi banks could slow to about 4% in 2020, compared with 14% last year, as the costs of holding deposits outpace deposit growth, Bilandani said.. And while lower net interest margins will filter through this year to banks in the region, lower interest rates "are positive for lending growth and credit quality of the banking sector," she said..