UAE’s Top 10 Banks Report $5.8 Billion Aggregate Income in Q2

UAE’s Top 10 Banks Report AED 21.5 Billion Income in Q2 2024

During the second quarter of 2024, the UAE’s top 10 banks achieved an aggregate income of AED 21.5 billion ($5.8 billion), driven by increased interest income and reduced impairment charges. This result highlights improved asset quality and a higher return on equity.

Financial Highlights:
Income Growth: The significant increase in interest income and lower impairment charges contributed to the strong income figures.
Deposit Growth: The growth rate for deposits slowed to 0.4%, a sharp decrease from the 5.1% recorded in the previous quarter. This slowdown suggests a deceleration in deposit mobilization.
Loans and Advances: Growth in loans and advances moderated to 3.2%, down from 3.4%, indicating a slowdown in lending activity.
Efficiency and Returns:
Return on Equity (ROE): ROE increased to 20.8%, up from 20.3% in Q1, showing enhanced profitability relative to shareholders’ equity.
Return on Assets (ROA) and Return on Risk-Weighted Assets (RoRWA): Both remained steady at 2.2% and 3.5%, respectively, reflecting stable returns on assets and risk-adjusted assets.
Cost to Income Ratio: The ratio worsened to 28.1% from 27.9% in Q1, indicating rising operational costs relative to income and increased cost pressures.
Net Interest Income (NII): NII grew by 2% due to a higher loan-to-deposit ratio (LDR), benefiting from efficient interest rate management despite stable rates.
Operational Insights:
Credit Outlay: Credit disbursement remained robust, continuing to support economic activity even with slower deposit growth.
Cost of Risk (CoR): CoR reached a multi-year low of 0.3%, with impairments falling to AED 1.3 billion, showing a significant improvement in asset quality and reduced credit losses.
Cost Efficiency: Six of the top ten banks reported worsened cost efficiency. The cost-to-income ratio increased as total operating expenses rose by 1%, outpacing the 0.4% rise in operating income.