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April 17, 2017

Dubai – Leading global professional services firm Alvarez & Marsal (A&M) today released its first UAE Banking Pulse. The report, which leverages independent, published market data will be issued on a quarterly basis, examines the 10 largest listed UAE banks, and is based on a series of different key performance indicators.

UAE Banking Pulse was developed through A&M’s analysis of quarterly data published since Q4 2015 by Emirates NBD, National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, First Gulf Bank, Dubai Islamic Bank, Mashreq Bank, Abu Dhabi Islamic Bank, Union National Bank, Commercial Bank of Dubai and National Bank of Ras Al-Khaimah and the application of a series of metrics to identify key industry trends.

A&M’s report uses 17 different metrics to assess the key performance areas of size, liquidity, revenue and operating efficiency, risk, profitability and capital. Of the 17 metrics deployed, 10 worsened in Q4 2016 as compared with the equivalent in Q4 2015 while 9 metrics worsened in Q4 2016 as compared with the equivalent in Q3 2016.

Dr. Saeeda Jaffar, a Managing Director with A&M’s Performance Improvement and Financial Institutions Advisory Services Practices served as lead author. Managing Directors Asad Ahmed and Stephen Millington served as co-authors.


The report’s underlying theme is that profitability continues to be under pressure, largely driven by conservative lending, whilst in response, liquidity profile and risk metrics have strengthened.

In terms of individual banks’ performance, UAE Banking Pulse findings cite that:

  • Most large top 10 banks grew deposits faster than the market overall, with varying appetites for loan growth; Emirates NBD, National Bank of Abu Dhabi and Abu Dhabi Commercial Bank gained market share, whilst Dubai Islamic Bank secured a greater share of the loans market.
  • Six of the top 10 banks witnessed a decline in Net Interest Margin (NIM) while four remained constant; National Bank of Ras Al-Khaimah witnessed largest fall in NIM as higher yielding assets were replaced with lower yielding assets.
  • Seven of the top 10 banks improved their Cost/Income (C/I) ratios compared to Q4 ’15, based on prudent cost management by delaying investments and hiring; National Bank of Ras Al-Khaimah showed the largest decline, driven by decrease in headcount and lower bonuses, expected to inch up in 2017.
  • Profitability of most banks was impacted by deteriorating asset quality and tightening liquidity leading to increase in cost of funds
  • First Gulf Bank, Emirates NBD and Abu Dhabi Islamic Bank had the smallest relative decline in profitability; in general, Islamic banks DIB and ADIB maintained higher profitability than most of their peers

Dr. Jaffar commented: “Our Banking Pulse report illustrates the challenges and potential opportunities facing the UAE banking industry. In 2016, year on year returns were not as high as in previous years, as a sustained period of more conservative lending and an increase in deposits took its toll.”

“However, the good news is we are seeing signs of this downward cycle bottoming out. There is plenty of reason for banks’ shareholders to feel optimistic. Returns are still considerably higher than in other parts of the world, and banks are being run very prudently.  Capital adequacy ratios and coverage ratios, a sure sign of a bank’s health, have also been increasing. We will be looking for more positive signs as banks start to report their Q1 2017 results.”

The full report is available for download here.

About Alvarez & Marsal

Companies, investors and government entities around the world turn to Alvarez & Marsal (A&M) when conventional approaches are not enough to activate change and achieve results.

Privately held since 1983, A&M is a leading global professional services firm that delivers business performance improvement, turnaround management and advisory services to organizations seeking to transform operations, catapult growth and accelerate results through decisive action. Our senior professionals are experienced operators, world-class consultants and industry veterans who leverage the firm's restructuring heritage to help leaders turn change into a strategic business asset, manage risk and unlock value at every stage.

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