• Lending growth accelerated by 20.7% Year-on-Year (YoY) outpacing deposit growth of 16.6% YoY
• Operating income growth remained broadly stable at 10.6% YoY, while cost-to-income ratio improved to 28.1% due to tighter cost control and productivity gains
• Asset quality continued to improve as NPL ratio and CoR declined to 2.4% and 0.47%, respectively
• The rate-cut environment continued to pressure margins, with NIM declining to 2.48%, RoE and ROA also moderated to 18.3% and 2.0%, respectively

Dubai – 23^rd March, 2026 – Leading global professional services firm Alvarez & Marsal (A&M) has released its latest edition of the United Arab Emirates (UAE) Banking Pulse, analyzing the FY 2025 performance of the country’s ten largest listed banks. The year was marked by strong credit demand and deposit growth, while disciplined risk management continued to strengthen balance-sheet resilience. Despite geopolitical headwinds, sector performance was underpinned by a supportive macro backdrop and sustained business activity.

Lending growth continued to outpace deposit mobilization, with net loans and advances (L&A) growing by 20.7% YoY, compared to aggregate deposits grew by 16.6% YoY. Operating income rose by 10.6% YoY to AED 162.5bn, driven by steady net interest income growth of 6.7% YoY amid the rate-cut cycle and strong non-interest income growth of 18.3% YoY. Net income also grew by 8.5% YoY.

The continued rate-cut environment weighed on UAE banks’ margin profiles, with aggregate NIM moderated to 2.48%, reflecting sustained pressure on spreads. YoC declined to 8.0%, while CoF decreased to 3.9%. Profitability of banks was impacted, with RoE declining to 18.3% and RoA easing to 2.0%.

While credit expanded rapidly, asset quality remained resilient: the NPL ratio declined to 2.4% and CoR improved to 0.47%. In addition, the coverage ratio strengthened to 109.4%, underscoring prudent risk management and provisioning.

The report analyzes the top ten UAE banks by asset size: First Abu Dhabi Bank (FAB), Emirates NBD (ENBD), Abu Dhabi Commercial Bank (ADCB), Dubai Islamic Bank (DIB), Mashreq Bank (MASQ), Abu Dhabi Islamic Bank (ADIB), Commercial Bank of Dubai (CBD), National Bank of Ras Al-Khaimah (RAK), Sharjah Islamic Bank (SIB), and National Bank of Fujairah (NBF).

Mr. Sam Gidoomal, Managing Director and Head of Middle East Financial Services, commented: “UAE banks experienced strong credit demand, which drove double-digit growth in both loans and deposits, while disciplined risk management continued to enhance balance sheet resilience. Despite geopolitical headwinds, sector performance was supported by a favourable macroeconomic environment and sustained business activity.”

Prevailing Trends Identified for FY 2025

• Credit growth accelerated, while deposit growth remained strong. Net L&A increased by 20.7% YoY, while deposits rose by 16.6% YoY, resulting in a 2.6% YoY increase in the LDR to 78.9%.
• Operating income growth remained broadly stable. Net interest income grew by 6.7% YoY, reflecting resilience despite rate cuts, while non-interest income increased by 18.3% YoY, driving overall operating income growth of 10.6% YoY.
• Cost efficiency improved, driven by cost optimization and productivity gains. The C/I ratio fell by 78bps YoY to 28.1%
• The rate-cut environment continued to presuure net interest margins and overall bank profitability. NIM declined by 19bps YoY to 2.48%, while RoE and RoA moderated by 63bps and 12bps YoY to 18.3% and 2.0%, respectively.
• Asset quality strengthened, supported by prudent underwriting and a supportive macro environment. NPL declined by 1.2% to 2.4%, while CoR improved by 3bps YoY to 0.47%. 
• The banks' valuation remained appealing. As of year-end 2025, UAE banks trade at 8.8x P/E and 1.64x P/TBV, remaining attractively positioned versus regional peers.

Overview

Source: Financial statements, investor presentations, A&M analysis

Read the full report