• Skip to main content
  • Skip to after header navigation
  • Skip to site footer
The Halal Times

The Halal Times

Global Halal, Islamic Finance News At Your Fingertips

  • Home
  • Regions
    • Latin America
    • North America
    • Europe
    • Africa
    • Central Asia
    • South Asia
    • Australia
  • Marketing
  • Food
  • Fashion
  • Finance
  • Tourism
  • Economy
  • Cosmetics
  • Health
  • Art
  • Halal Shopping

UAE Lenders Upbeat as Growth Prospects Surge

growth-prospects-surge-in-uae
2018-02-01 by Hafiz M. Ahmed

Banks in the United Arab Emirates are upbeat about 2018 with faster economic growth and higher interest rates set to boost earnings.

Banks are expected to raise lending by about 4 percent to 6 percent this year as Dubai prepares to host the Expo 2020. Interest rate increases by the Federal Reserve, which is shadowed by Gulf central banks, will also allow banks to raise loan pricing and improve net interest margins.

“Banks should do better because quality loan demand should pick up,” said Sanyalak Manibhandu, head of research at Abu Dhabi-based FAB Securities LLC. UAE economic growth will recover after decelerating for the past three years due to higher oil prices, he said.

Full-year results for those UAE. lenders that have reported have mostly beaten analyst estimates. Still, competition to win loan deals and higher provisions could weigh on earnings.

Economic growth is expected to accelerate to 3 percent this year from an estimated 1.8 percent in 2017, according to the mean estimate of 13 economists compiled by Bloomberg. The recovery in oil prices will allow the government to restart delayed projects and may persuade companies to increase investments, all of which will need financing, according to Manibhandu.

First Abu Dhabi Bank PJSC expects its loan book to grow by a mid-single digit percent this year compared with a 1 percent decline in 2017. Dubai’s biggest lender Emirates NBD PJSC also sees a mid-single digit percentage growth compared with a 5 percent increase in 2017. Dubai Islamic Bank expects loans to expand between 10 percent and 15 percent.

Slower economic growth since 2014 and lower commodity prices led to a surge in loan defaults, with problem loans peaking in 2016. Still, provisions for bad loans climbed to 5.3 percent of gross credit at the end of November, from 5.1 percent a year earlier, according to central bank data.

Provisions at some banks could rise with the implementation of new IFRS 9 accounting rules from this year where lenders have to provide for losses on loans that are expected to turn bad instead of when they actually do, according to Manibhandu at FAB Securities.

“There are no signs so far to suggest that credit quality could deteriorate in 2018,” said Shabbir Malik, a Dubai-based analyst at EFG-Hermes Holding SAE. “The macro-economic environment is largely favorable and some of the stresses that we have seen in small and medium enterprise and retail loans have already peaked or started to come down.”

Most UAE banks expect stable or better net interest margins — the difference between what banks earn on assets and pay on liabilities and customer deposits — this year amid three projected interest rate hikes in the U.S. Still, some of these gains on margins could be squeezed as banks lower pricing on loans for borrowers to win deals, according to Malik at EFG-Hermes.

Emirates NBD sees its net interest margin to improving to between 2.55 percent and 2.65 percent, up from 2.47 percent in 2017. Dubai Islamic Bank projects that its will stabilize between 3 percent and 3.15 percent, compared with 3.11 percent last year.

Originally published on www.arabianbusiness.com

Author

  • Hafiz M. Ahmed

    Hafiz Maqsood Ahmed is the Editor-in-Chief of The Halal Times, with over 30 years of experience in journalism. Specializing in the Islamic economy, his insightful analyses shape discourse in the global Halal economy.

    View all posts

Like this:

Like Loading...

Related

Previous Post:Dubai Islamic Bank Launches $1bn Dollar Sukuk
Next Post:International Food Buyers, Sellers Meet In Dubai For Halal Businessdubai-halal-expo

Reader Interactions

Leave a Reply Cancel reply

You must be logged in to post a comment.

Sidebar

  • LinkedIn
  • X
  • Facebook
  • Instagram

The Halal Times

The Halal Times, led by CEO and Editor-in-Chief Hafiz Maqsood Ahmed, is a prominent digital-only media platform publishing news & views about the global Halal, Islamic finance, and other sub-sectors of the global Islamic economy.

  • Facebook
  • Twitter
  • Instagram
  • LinkedIn
  • YouTube

News

  • Home
  • Halal Shopping
  • Food
  • Finance
  • Fashion
  • Tourism
  • Cosmetics
  • Healthcare
  • Marketing
  • Art
  • Events
  • Video

Advertise

  • Advertise With Us
  • Zakat Calculator
  • Submit News
  • Subscribe

About

  • About
  • Write For Us
  • Contact Us

Copyright © 2025 · The Halal Times · All Rights Reserved ·

%d