UAE banks’ Q1 earnings will reflect continued pressure on profitability | Banking – Gulf News
UAE banks reporting their first quarter results for 2021 starting this week are expected to reflect continued pressure on their profitability, largely due to margin pressures, modest loan growth and slow growth in non-interest income streams.
The aggregate net profit of the top 10 UAE banks declined by about 40 per cent year on year in 2020, on the back of lower operating income and increased provisions, according to data analysed by Alvarez & Marsal (A&M) and KPMG.
A&M expects the operating environment for the UAE’s banking sector to remain less volatile in 2021 compared to last year, although profitability isexpected to remain under stress.
“The anticipated economic recovery in 2021 should support the operating environment and the fundamentals of banks in the UAE. Profitability in the sector has shown signs of vulnerability with declining interest income and increased provisioning weighing on the net profit,” said Asad Ahmed, A&M Managing Director and Head of Middle East Financial Services.
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