Fitch gives UAE banks a stable future outlook

Abu Dhabi – Mubasher: Fitch, in its report entitled “Middle East Banks Outlook 2024,” gave UAE banks a stable future outlook.

The agency expected that favorable business and operating conditions for UAE banks would continue in 2024, and real GDP growth would accelerate moderately to 3.9 percent in 2024 (2023: 2.3%); According to the report.

While it expected non-oil GDP to slow to 2.7 percent in 2024 from 4 percent, supported by government and institutional spending, a strong real estate sector, and dynamic population growth.

The agency expects UAE banks’ non-performing loan ratios and the cost of risk to decline moderately in 2024, supported by a favorable operating environment and loan growth..

It is also expected that most UAE banks will write off higher levels of old fully allocated loans, and the average percentage of non-performing loans in the sector will remain higher than 5 percent.

Fitch expected the sector’s average operating profit to risk-weighted assets ratio to reach 3.4 percent for the full year. Largely driven by strong expansion in net interest margins and lower cost of risk.

The agency expects the average adequate capital ratios for the sector to remain stable in the medium term, with the average ordinary capital ratio remaining in the range of 13.5 percent – 14 percent.

Fitch also expected banks’ financing and liquidity to remain strong. This reflects the moderate growth of loans and the rise in oil prices.

The agency also expected that the share of current and savings accounts would remain healthy at more than 50 percent, which supports the net interest margin of banks.

It is expected that the share of current and savings accounts will remain good at more than 50 percent, which supports the net interest margin of banks, and liquidity will remain supported by large government deposits.

Last November, Fitch Ratings Agency expected banks in the UAE to record record performance in 2023, after the combined semi-annual net profits announced by the banks rated by the agency reached 38 billion dirhams..

She said that this means achieving a strong annual return on average shareholders’ equity of 20.3 percent, compared to 14.5 percent in 2022..

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Fitch affirms the ratings of two Emirati banks with a stable outlook