{"id":95259,"date":"2024-08-29T00:00:00","date_gmt":"2024-08-29T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/uae\/uae-banks-were-the-top-lenders-in-the-gcc-in-2q\/"},"modified":"2024-08-29T00:00:00","modified_gmt":"2024-08-29T00:00:00","slug":"uae-banks-were-the-top-lenders-in-the-gcc-in-2q","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/uae\/2024\/08\/29\/uae-banks-were-the-top-lenders-in-the-gcc-in-2q\/","title":{"rendered":"UAE banks were the top lenders in the GCC in 2Q"},"content":{"rendered":"

UAE-listed banks had a strong 2Q 2024 compared to its GCC peers<\/strong>, topping the region in terms of lending growth, return on equity, and net interest margins, while also logging the lowest cost-to-income ratios and the steepest drop in loan impairments in the region, according to a Kamco Invest report (pdf)<\/a>. <\/p>\n

Lending accelerated 3.4% q-o-q to <\/strong>USD 554.1 bn<\/strong> in net loans<\/strong>, fueled by robust lending activity for the retail sector, the report said.<\/p>\n

Emirati-listed banks also recorded a 16.9% return on equity (ROE), <\/strong>up from 16.7% in 1Q 2024, and posting a 160 bps y-o-y growth. Growth was driven by high net incomes and modest growth in shareholders\u2019 equity. <\/p>\n

Net interest margins came in at 3.47% in 2Q 2024<\/strong>, indicating \u201cample liquidity that allows UAE banks to capitalize on the tightening interest rate cycle with more modest asset growth,\u201d Kamco said. Margins inched down from 3.49% in 1Q. <\/p>\n

Cost-to-income ratios and loan impairments were down: <\/strong>UAE banks reported the lowest cost-to-income ratio in the GCC, dipping to 38.2% in 2Q from 38.4% in 1Q 2024. Loan impairments also saw the steepest drop among GCC banks, falling 27% q-o-q, to USD 380 mn. UAE banks contributed to the GCC banking sector\u2019s total impairments sliding to USD 1.9 bn, the lowest recorded level in 33 quarters, according to Kamco. <\/p>\n

REMEMBER- UAE banks\u2019 gross credit <\/strong>hit AED 2.1 tn<\/a><\/strong> during the first two months of 2Q 2024,<\/strong> rising by 1.5% by the end of May. This growth was primarily driven by a 1.9% increase in Islamic banks\u2019 lending, while conventional banks\u2019 credit grew at a slower pace of 1.4%. <\/p>\n

\n

THE REGIONAL PICTURE-<\/p>\n

GCC banks posted a record high of USD 14.8 bn in net income in 2Q 2024,<\/strong> rising 9.2% y-o-y and 2.6% q-o-q on the back of the sharp drop in loan impairments. GCC banks\u2019 aggregate ROE climbed to 13.6% in 2Q 2024, matching pre-pandemic levels and reflecting a 70 bps y-o-y growth. Saudi and Qatari banks followed the UAE in ROE growth at 12.8%, while Kuwaiti banks\u2019 ROE remained at 10.4%.<\/p>\n

After dipping 4.5% in 1Q, the regional banking sector saw a rise in operating expenses to one of the highest on record, <\/strong>inching up 0.8% q-o-q to USD 12.55 bn. The uptick was driven by a 7.5% expense hike in Saudi Arabia\u2019s banking sector to USD 4.2 bn.<\/p>\n

GCC banks\u2019 aggregate net interest margins held steady at 3.2% for the fifth consecutive month, <\/strong>signaling that it has peaked already as elevated interest rates over the past year are now fully priced in. <\/p>\n

With surging funding costs and anticipated rate cuts, net interest margins are expected to \u201ccome under pressure\u201d <\/strong>unless they were offset by \u201ccheaper sources of funding and continued growth in lending,\u201d according to Kamco.<\/p>\n","protected":false},"excerpt":{"rendered":"

UAE banks\u2019 cost-to-income ratio improved to 38.2%<\/p>\n","protected":false},"author":1,"featured_media":95260,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1618],"tags":[159,7,331],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-95259","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-banking","tag-enterpriseam-uae","tag-interest-rates","wpautop","entry"],"acf":{"mongo_id":"fe314def-ff79-4890-b79b-79628e5d3c6d","order":"7","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2024\/8\/2587.jpg","photo_position":"above","homepage_title":"","full_issue_title":"UAE banks\u2019 lending rose 3.4% q-o-q in 2Q 2024","related_issue":[95247],"teaser":"UAE banks\u2019 cost-to-income ratio improved to 38.2%","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2024\/8\/.dae4a816-9b21-46c0-b2e5-612ab6f5e6a3.mp3"},"yoast_head":"\nUAE banks were the top lenders in the GCC in 2Q - 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