The UAE’s four biggest banks reported first-half net profits rose to Dh19 billion ($5.3 billion), helped by asset growth and strong non-interest income, as well as a one-time gain at one of the banks, Moody’s Investors Service said in a new report.
First Abu Dhabi Bank PJSC, Emirates NBD, Abu Dhabi Commercial Bank and Dubai Islamic Bank account for over two-thirds of the UAE’s banking sector assets. A large one-time gain from Emirates NBD’s partial disposal of a stake in payment processing company Network International contributed to the banks’ combined 16 per cent increase in year-on-year profits. Excluding that gain, profits rose by 3 per cent.
“The banks’ combined net interest income increased slightly, buoyed by solid lending growth,” said Mik Kabeya, AVP-analyst at Moody’s. “And non-interest income rose materially on foreign-exchange trading revenue and increased investment banking activity.”
Moody’s expects full-year profitability to decline to a still sound 1.7 per cent, from 1.8 per cent in 2018. Operating expenses will increase owing to technology investments and expansion-related spending. Provisioning charges will increase owing to pressure in the property and hospitality sector, and in the retail segment, amid a soft non-oil economy.