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Strong earnings growth for UAE banks in 2Q -CI Capital: Earnings season is quickly approaching, and analysts are weighing in on expected earnings growth for 2Q 2025. Top UAE banks are expected to see a 1.3% y-o-y increase in earning growth for 2Q 2025, CI Capital wrote in a recent report seen by EnterpriseAM UAE. Saudi banks are expected to top their Gulf counterparts for 2Q in terms of earning growth, with a 14% y-o-y increase.
What are the UAE banks covered? The top five Emirati banks covered in CI Capital’s report are First Abu Dhabi Bank (FAB) which emerges as the potential leader among local peers, followed by Abu Dhabi Islamic Bank (ADIB), Abu Dhabi Commercial Bank (ADCB), Emirates NBD and Dubai Islamic Bank (DIB).
FAB is flagged potential outperformer for the quarter: FAB, the country's biggest lender by assets, is foreseen to be “the potential outperformer for the quarter on higher than peers’ non-interest-income, compensating for the expected NIM compression,” according to the report.
Loan growth is also anticipated to increase by 2.8% q-o-q in the UAE during 2Q, according to the report. “UAE loan growth is gradually picking up, gaining momentum towards the double-digit territory, boosted by increased investor and consumer confidence as well as high population growth,” the report said. Government-related lending and a strong real estate market are expected to remain key pillars for loan growth through next year, the report read.
Some downside risks remain: CI Capital cautions that the new regulations imposed in the UAE banking sector could increase the cost of risk (CoR) and tax headwinds, which in turn could limit its forecasted income growth figures for 2025.
From an investment perspective, CI Capital sees the Emirati market as a more compelling destination, shifting its position from an earlier preference for Saudi Arabia, due to “its lower vulnerability to volatility in oil prices.”
REMEMBER- UAE-listed banks saw their net income increase by 11.8% (USD 639.6 mn) in 1Q 2025, marking “the biggest absolute growth” among banks in the region, according to Kamco Invest’s banking sector quarterly report published in May. S&P Global also noted in April that the country’s banks have “the strongest net external asset position” among GCC countries, giving them the highest resilience to any potential capital outflows resulting from current volatility in the market.
