The UAE: profitability of UAE banks set to improve in 2018

Credit rating agency Moody’s said that the UAE’s banking sector outlook remains stable amid economic resilience, robust capitalisation and stable funding and liquidity conditions.

2018 is expected to see improving economic conditions in the Gulf economy as non-oil activity including government spending in Dubai picks up. A further boost to the economy will be provided by large-scale infrastructure projects in Dubai, made in preparation for the 2020 World Expo.

Accelerating economy will provide favourable conditions for the banking sector’s growth and the country’s banks are expected to benefit from credit expansion.

Mik Kabeya, an analyst at Moody’s, signaled “faster economic growth in 2018 will support the banking system’s credit growth, and we forecast credit growth of around 5 percent in 2018, after a forecast lower growth of around 2 percent in 2017, from 5.8 percent in 2016 and 8 percent in 2015.”

The UAE boasts a highly competitive banking sector with nearly fifty banks competing for a share of the market with just over 9 million population. 

According to RFi Group data, Emirates NBD, a Dubai based lender, is the largest retail bank in the market. However, the bank has lost some market share in favour of Abu Dhabi based providers.
 

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