Recently released figures of top UAE banks show a remarkable improvement in the reported second-quarter profits on the back of swift economic recovery and lower provisioning for exposure to state-linked entities.
Recently released figures for the top UAE banks show strong quarterly performance and surging profits.
During this week, Dubai’s biggest bank Emirates NBD and National Bank of Abu Dhabi, the largest lender by market value in UAE, unveiled their quarterly reports. The Emirates NBD performed better than expected to record a 50 percent surge in profits. Net profit stood at AED 972 million (USD 264 million) for 2nd quarter ending June 2013, compared to AED 647 million (USD 176.2 million) during the same period last year.
The bank attributed a rise in profits to a strong performance of the UAE economy due to increased tourism, higher oil prices, and lower provisioning for bad debts.
Compared to the same period last year, the NBAD earned a net profit of 1.21 billion dirhams (USD 329.4 million) versus 1.05 billion dirhams in the three months to June 30. This figure was, however, slightly lower than the analysts’ forecast of a net quarterly profit of 1.29 billion dirhams. The profits were driven mainly by higher non-interest and net interest income, with the net fee and commissions income also rising by 23.5 percent.
The outlook for banks in the MENA region remain positive as they derive strength from strong performance of the domestic economies. In particular, the UAE banks will benefit from the revival of the real estate sector, which will reduce their exposure to bad debts. The banks area also experiencing greater liquidity in the system and their asset quality has also shown signs of improvement. As a result, the banks will have the capacity to tap into future growth opportunities and lend capital to more resilient sectors of the economy.
The demand for banking and financial services is expected to maintain its momentum as the overall macro-economic backdrop remains strong. With consumer sentiment and domestic demand showing no signs of cooling off, UAE banks are on track to witness record profitability during this year.