The UAE banking sector outperformed its GCC peers, achieving strong revenue and lending growth. Moreover, analysts highlighted disciplined management, operational efficiency, and diversified income as key drivers. In addition, strategic lending practices strengthened the UAE banking sector’s resilience while supporting broader economic stability.
In the second quarter, UAE banks generated $13.3 billion in revenue, up 5.3 percent from the previous quarter. Meanwhile, non-interest income rose 10.1 percent, driven by fee-based activities and income diversification. Similarly, gross loans increased 4.6 percent to $672.8 billion, fueled by personal loans, property development, retail, wholesale trade, construction, and manufacturing. Consequently, credit demand remained steady, reflecting rising household incomes and growing investor confidence.
Customer deposits reached $941 billion, the highest in the GCC, while the loan-to-deposit ratio stayed at 67.9 percent. As a result, strong liquidity and careful lending allowed the UAE banking sector to expand credit safely. These measures enabled banks to manage risk effectively while simultaneously supporting economic growth and investment in various sectors.
Operational efficiency also improved as operating expenses fell 6.1 percent to $4.6 billion. Additionally, the cost-to-income ratio dropped to 38 percent, the lowest in the region. Although loan impairments increased slightly to $0.50 billion, the cost of risk remained below long-term averages. Furthermore, return on equity reached 16.4 percent, showing strong financial fundamentals. Notably, net interest margin stayed high at 3.26 percent despite regional rate adjustments, demonstrating stability.
Experts believe the UAE banking sector is well-positioned for continued growth. In particular, non-oil sectors are expanding, and a robust project pipeline supports lending and investment opportunities. Therefore, analysts emphasize that income diversification, operational efficiency, and careful risk management will help banks maintain profitability and regional competitiveness.
Even amid global hydrocarbon challenges, UAE banks maintained revenue growth, efficient lending, and strong liquidity. Overall, their performance reflects a firm commitment to economic diversification and sustainable financial growth. With strategic management and adaptive practices, the UAE banking sector continues to set benchmarks for the GCC.
