The largest banks in the UAE enjoyed a surge in profit in 2021 thanks to higher non-interest income and lower provisions.
According to a report from rating agency Moody’s, the emirates’ four largest banks – First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank and Dubai Islamic Bank – reported a combined net profit of $8 billion in 2021, a 31% increase on the previous year.
The improved profit was attributed to improving consumer confidence and a recovery in the UAE’s macroeconomic conditions including loosening pandemic restrictions and recovering oil prices.
The report also predicts that net profitability among the banks over the next 12 to 18 months will be driven by growth in net interest income, underpinned by rising interest rates expectations and strong business momentum supporting non-interest income
“The four largest banks’ profitability rebounded to near pre-pandemic levels in 2021, largely reflecting robust non-interest income and softening loan loss provisions,” said Nitish Bhojnagarwala, senior credit officer at Moody’s and the author of the report.
“We expect a full return to pre-pandemic levels of profitability in the next 12-18 months,” he added.
Although net profitability has broadly bounced back to pre-pandemic levels, the return on assets may not recover for some banks until 2023 noted the report.
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