Tuesday 20, February 2018 by Jessica Combes

Core income growth drives higher quarterly profits at largest UAE banks


Strong growth in net interest, as well as fee and commission income, helped the four largest banks in the United Arab Emirates report higher net profit in the fourth quarter despite higher provisioning and operating costs, according to a recent report by Moody's Investors Service.

Moody's report, which was published today focuses on key takeaways from the Q4 2017 results of the four largest banks in the United Arab Emirates (UAE): First Abu Dhabi Bank PJSC (FAB, Aa3/Aa3 Stable, a3); Emirates NBD PJSC (ENBD, A3/A3 Stable, ba1); Abu Dhabi Commercial Bank (ADCB, A1/A1 Stable, baa3); and Dubai Islamic Bank PJSC (DIB, A3/ A3 Stable, ba2). The banks accounted for around 62 per cent of UAE banking sector assets as of December 2017.

"The four largest UAE banks delivered a solid rise in net profits in the final quarter of 2017. This was largely driven by higher business volumes and recent interest rates hikes, which generated higher recurring income, both in the form of net interest income and fees and commissions. The four banks reported a solid combined net profit of AED7.3 billion ($2 billion) in the fourth quarter of 2017, up eight per cent compared with the same period in 2016 and two per cent higher quarter on quarter. Operating expenses at the large UAE banks rose 10 per cent quarter on quarter and seven per cent from a year ago. The increases were mainly related to investments in technology to drive digitalisation and to improve operational efficiency" said Nitish Bhojnagarwala, a Vice President at Moody's.

Customer deposits at the four banks increased two per cent to AED1 trillion (around $273 billion), compared with the third quarter of 2017. Deposits grew fastest at FAB and DIB, (up 4.5 per cent and 2.5 per cent respectively for the quarter) reflecting their solid deposit franchises as the largest UAE bank (FAB) and the oldest Islamic bank (DIB).



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