UAE banks are poised for strong performance in 2024

UAE banks

Despite anticipated interest rate cuts, UAE banks are projected to maintain robust performance in 2024. Strong economic growth and prudent banking policies bolster confidence in the sector.

S&P Global Ratings foresees three interest rate reductions totaling 75 basis points in the latter half of 2024, with further cuts of 125 basis points in 2025. However, even with this expected trend, banks are poised to sustain their solid performance. In the first quarter of 2024, all banks in the UAE reported significant profit growth, reflecting the sector's resilience.

Fitch Ratings analysts anticipate that the UAE banking sector's growth will be driven by dynamic non-oil sectors and comprehensive economic diversification programs. Similarly, banking experts at S&P Global predict overall stability in key metrics for GCC banks in 2024, with robust credit growth and profitability expected, particularly in the UAE and Saudi Arabia.

Moody's Investors Service revised the outlook for UAE banks to positive, citing strong economic growth and diversification efforts. With the UAE's real GDP forecasted to expand by 4.6% in 2024, driven by a 4.5% growth in the non-oil economy, banks are expected to benefit from increased borrowers' repayment capacity.

Bank investments in the UAE have surged, reaching Dh640.1 billion by January 2024, indicating confidence in diverse investment opportunities. The Central Bank of the UAE's prudent policies have contributed to maintaining a stable and efficient banking system, ensuring compliance with high standards of governance, transparency, and risk management.

Overall, despite the anticipated rate cuts and potential risks, the outlook for UAE banks remains positive. Continued economic growth, prudent banking policies, and confidence in diverse investment opportunities are expected to underpin the sector's resilience and sustained performance in 2024.