Top #UAE banks report lower Q3 profits on higher impairments | ZAWYA MENA Edition

Top UAE banks report lower Q3 profits on higher impairments | ZAWYA MENA Edition

Challenging macroeconomic conditions—low interest rates leading to repricing of portfolios, falling oil price and disruptions to economic activities due to COVID-19 lockdowns—led top UAE banks to report lower net profit in Q3 2020.

The net profit of four largest banks—First Abu Dhabi Bank (FAB), Emirates NBD, Abu Dhabi Commercial Bank (ADCB) and Dubai Islamic Bank (DIB)—fell nearly 26 percent to 5.60 billion dirhams in Q3 compared with the same period last year.

However, the performances were well within guidelines and market expectations.

“Despite lower profitability, the banks, generally speaking, were able to keep within market estimates in terms of net income,” Asad Ahmed, managing director at Alvarez and Marsal, told Zawya.

Mohamed Damak, primary credit analyst at S&P, told Zawya that “the decline in profit was part of our base case scenario because of lower lending growth, a drop in interest margin as a result of lower interest rates, and higher cost of risk.”