- Despite the most challenging economic situation and global meltdown as witnessed on the global scale, Middle Eastern Banking sector is all sailing smoothly.
- The positive news is that UAE Banking Industry has managed to generate better revenues in Q1, despite being struck by turbulent times.
According to a recent report by Alvarez & Marsal’s latest UAE Banking Pulse for Q1, “UAE’s premier Banking pioneers and the industry as a whole has generated healthier earnings than expected norms despite facing the toughest conditions.”
The report provided fundamental insight into the fact that the Net operating income has surged ahead significantly from Q4 2018 and primarily driven by non-interest revenue, off-setting decrease in interest income.
It also showed out that the central theme in the three months to the end of March is a surge in profitability, and mainly built on an increase in loans and advances and a stabilized yield on credit.
The Alvarez and Marsal’s report and analyzed research wing has compiled the data from amongst the ten most significant and topmost banking pioneers listed in UAE. The banks that were analyzed and data collected from are First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank, Dubai Islamic Bank, Mashreq Bank, Abu Dhabi Islamic Bank, Commercial Bank of Dubai, National Bank of Ras Al Khaimah and the National Bank of Fujairah.
The report with its big analyzed data revealed a remarkable fact that the Loans and Advances for the top ten banking sector grew at a rapid rate (1.54 percent) than deposits which was showing negative signs (-0.67 percent) after six successive periods of the surge.
In overall loans to deposit, the ratio increased to 88.3 percent with eight to nine top-notch banks coming in the LDR “Green Zone” between 80-100 percent.
Despite the turbulent meltdown of the economy, the liquidity in banks is expected to continue to be stable during the 2019-2020 period adding the operating income growth surged ahead significantly on the back of an increase in non-interest income that followed increased lending activity.
The report also stated that return on the equity maintained higher levels despite a surge in the cost of funds and fringe increase in operating income. As per the words stated by Dr. Saeeda Jaffar, A&M managing director, and Middle East Office co-head, “The net profitability of UAE banks have increased and it rose from the operating income, decreased pricing and surge in leveraging the cost of balance sheets, and rise of the cost of the risks associated.