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Reasons behind UAE banks’ huge surge in net income

The top ten lenders in UAE had their net income increase by 24.4% to AED12.6 billion during the second quarter of the year

According to Alvarez & Marsal, the central banks in the UAE have reported a significant rise in earnings due to better asset quality, profitability, and margins (A&M).

The top ten lenders in UAE had their net income increase by 24.4% to AED12.6 billion during the second quarter of the year, according to the consultancy firm’s most recent Banking Pulse report.

First Abu Dhabi Bank (FAB), Emirates NBD, Abu Dhabi Commercial Bank, Dubai Islamic Bank, Mashreq Bank, Abu Dhabi Islamic Bank, Commercial Bank of Dubai, National Bank of Fujairah, National Bank of Ras Al Khaimah, and Sharjah Islamic Bank were among the central banks in the UAE whose performance A&M had examined.

According to Alvarez & Marsal, increased interest income and improved customers’ “personal economic standing” have benefited banks’ earnings.

The banks’ aggregate interest income increased by 19.5% compared to the prior quarter.

Compared to the previous quarter, advances and deposits climbed by 1.8% and 4.5%, respectively, while total non-interest income (NII) jumped by 15.1%.

Rising benchmark rates increased net interest in the margin (NIM) by 26.1 basis points.

Non-performing loans (NPLs), loans, and advances decreased by 0.4% to 5.7% during the same time, resulting in an improvement in overall asset quality.

Additionally, customer deposits grew faster than loans and advances at the top ten banks. The loan-to-deposit ratio (LDR) decreased from 84.5% to 82.4%.

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