(MENAFN) A report from Alvarez & Marsal revealed that the profitability of the ten largest banks listed on UAE markets surged to 21.5 billion dirhams (approximately USD5.8 billion) in the second quarter of 2024. This increase was attributed to a 2 percent rise in interest income compared to the previous quarter, driven by a higher loan-to-deposit ratio and reduced provisions. Specifically, loans and advances grew by 3.2 percent from the previous quarter, with retail lending seeing an 8 percent increase. Deposits experienced a modest growth of 0.4 percent, while the net interest margin remained unchanged due to stable benchmark interest rates.

The report highlighted that UAE banks maintained robust capital levels, with the total capital adequacy ratio rising to 17.6 percent, an increase of 0.34 percentage points from the previous quarter. This steady growth reflects continued strong performance driven by lending growth and improved asset quality. Asad Ahmed, Managing Director and Head of Financial Services for the Middle East at Alvarez & Marsal, noted that UAE banks are expected to benefit further from their investments in digital initiatives, which are anticipated to enhance cost efficiency. Additionally, the UAE Central Bank’s decision to keep the benchmark interest rate at 5.4 percent, linked to US Federal Reserve rates, contributed to the stable financial environment. 

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