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April 11, 2017

Alvarez & Marsal Middle East Limited (A&M) is delighted to launch the inaugural edition of the UAE Banking Market Pulse.

In the first issue of this quarterly series, we will share results from our research examining the 10 largest listed UAE banks and highlight key performance indicators of the UAE banking industry. The Pulse aims to help banking executives and board members stay current on industry trends.

Key trends over the last quarter include:

  • Deposits grew by 2.2% quarter over quarter (QoQ) while loans remained flat (QoQ), resulting in the loan-to-deposit ratio (LDR) decreasing from 93.6% to 91.5%.
  • Income margins declined by 11 basis points (bps) from 3.83% in Q3 '16 to 3.72% in Q4 '16, while net interest margins (NIMs) declined by 7 bps over the same period, driven by a reduction in LDR rather than impact of cost of funds (CoF) and yield on credit (YoC).
  • Cost-to-income (C/I) ratio for the top 10 banks increased slightly from 33.4% in Q3 '16 to 33.7% in Q4 '16, but C/I remained below its Q4 '15 level of 33.9%.
  • Coverage ratio continued to increase in Q4 '16 with loan loss reserves standing at 117% of non-performing loans (NPLs) compared to 114% in Q3 '16 and 109% in Q4 '15.
  • Cost of risk flattened in Q4 '16 at 1.00% and remained higher than its Q4 '15 level of 0.88%.
  • Return on equity (RoE) decreased from 15.1% to 14.8% last quarter, significantly below the Q4 '15 level of 17.0%.


UAE Banking Market Pulse