The profitability of the UAE’s four largest banks will remain strong in 2020, Moody’s said in its recent report. Last year, the combined net profit of First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank and Dubai Islamic Bank increased 13 percent to Dh37 billion.
The UAE’s four banks accounted for 73 percent of banking assets as of December 2019. Their combined net interest income rose 6 percent last year. The banks’ net interest income was driven by loan book growth in 2019, the report said.
It is reported that the four banks’ technology investments in 2020 will be adjusted by strict cost management. Mik Kabeya, AVP-Analyst at Moody’s, said, “We expect the banks’ profitability to remain resilient in 2020, with a net income to tangible assets ratio at around 1.8 percent. Non-interest income accounted for 30 percent of operating income in 2019 and will remain solid, given the sizable portion of relatively resilient foreign exchange and credit card related income.”
According to UAE central bank data, the outward remittance market stood at Dh80.96 billion in the first half of 2019, compared to Dh164.4 billion in 2017, media reported.
New technology is expected to improve customer experience and drive the financial sector in the UAE. The UAE’s recent KYC consortium will positively impact the banks’ growth, according to Moody’s. The platform will validate digital customer data and documents using blockchain powered technologies. The KYC platform will be launched this quarter. It will encourage qualified financial institutions and licensing authorities to join the consortium.