Blogs

08

Jun

UAE banks spur GCC profit surge with $639.6m Q1 growth

The UAE banking sector has emerged as a standout performer in the GCC in the first quarter of 2025, posting the largest absolute growth in net profits at $639.6 million, an 11.8 per cent increase year-on-year, according to data provided by Kamco Invest.This robust performance contributed to the GCC banking sector’s record-high net profits of $15.6 billion, reflecting a 7.1 per cent quarter-on-quarter (q-o-q) and 8.6 per cent year-on-year (y-o-y) growth.Despite a decline in net interest income, UAE banks leveraged higher non-interest income, lower operating expenses, and a sharp seasonal drop in impairments to drive this growth, underscoring the sector’s resilience amid evolving economic conditions, analysts at Kamco Invest said.The UAE’s banking sector benefited from a dynamic economic backdrop, with outstanding credit facilities surging 24.1 per cent y-o-y in February 2025, outpacing Saudi Arabia’s 16.3 per cent growth, as per central bank data. This lending boom, driven by a strong project pipeline and resilient non-oil sector growth, saw net loans in the GCC rise 4.1 per cent q-o-q to $2.2 trillion, the highest in 15 months.Financial sector experts said amid tighter liquidity and shifting deposit trends faced by the GCC banking sector, UAE banks are well-positioned to capitalise on regional opportunities, particularly in project finance and real estate. With a strong economic foundation and strategic lending, the UAE continues to set the pace for banking excellence in the region, driving sustainable growth in 2025, they pointed out.UAE-listed banks contributed $20.1 billion to this growth, a 3.2 per cent q-o-q increase, reflecting robust demand across sectors like real estate, construction, and services. However, aggregate contract awards in the GCC dipped 26.8 per cent y-o-y to $52.4 billion, though the UAE and Kuwait bucked the trend with healthy growth.Despite a 1.7 per cent q-o-q decline in GCC net interest income to $22.8 billion, driven by rate cuts in the second half of 2024, UAE banks mitigated the impact through diversified revenue streams. The aggregate yield on credit in the GCC fell to 4.16 per cent from 4.21 per cent in Q4-2024, reflecting lower interest rates. UAE banks, however, maintained revenue growth of 0.6 per cent q-o-q, reaching a share of the GCC’s record $34.6 billion in banking revenues. Non-interest income, including fees from advisory services and wealth management, played a pivotal role in offsetting the decline in interest-based earnings.Customer deposits in the UAE surged to $903.8 billion, a 6.7 per cent q-o-q increase, outpacing the GCC’s 5.1 per cent growth to $2.65 trillion. This deposit growth, driven by financial market volatility, bolstered liquidity but led to a decline in the loan-to-deposit ratio to 67.3 per cent ---- the lowest in the GCC --- down 220 basis points from Q4-2024. This shift reflects improved asset utilisation and a strategic pivot towards high-yield lending, with UAE banks increasingly financing projects in Saudi Arabia to support yields, according to Bloomberg.The UAE’s economic vitality is evident in its manufacturing activity, with a PMI of 54.0 points in March 2025, slightly below Saudi Arabia’s 58.1 but ahead of Qatar’s 52.0 and Kuwait’s 52.3, per Bloomberg’s Markit Whole Economy Surveys. Dubai’s PMI stood at 53.2, signaling steady growth driven by new orders and output. This aligns with the UAE’s non-oil sector expansion, which supports lending growth in sectors like real estate (up 2.5 per cent q-o-q in Kuwait, a comparable market) and construction.While Saudi banks led in lending growth with a 5.5 per cent q-o-q increase to $801.5 billion, the UAE’s strategic focus on diversification and high-yield opportunities positions it as a regional leader. Challenges remain, including pressure on funding costs, with GCC banking sector costs at 3.83 per cent in Q1-2025, and a decline in low-cost CASA deposits to 52 per cent from 54 per cent in Q4-2024. However, the UAE’s ability to navigate these pressures through operational efficiency and non-interest income growth highlights its adaptability.

08

Jun

Managing Delinquent Business Loans: Safeguarding Your Finances & Credit

Closing on a business loan often brings a sense of relief and excitement as you secure the funds to grow your business. However, it’s not uncommon to find yourself overwhelmed after a few months or years, realizing that you’ve taken on more than you can handle. With over one-third of Americans struggling with delinquent debt and the risk of loan defaults, taking immediate action is crucial when you fall behind on loan payments. This article provides essential information on delinquent loans, defaults, and practical strategies to protect yourself and minimize the associated damage.Understanding Delinquent LoansA loan becomes delinquent when you miss a payment, even in just one day. If you miss payments or cannot make them for an extended period (typically 90 to 120 days), the lender may classify the loan as default and initiate collection procedures. Both delinquent loans and defaults have negative implications for your credit. It’s important to note that the timing of your delinquency rarely matters. For example, if your payment is due on February 1 and the lender doesn’t receive it that day, the loan becomes delinquent on February 2.Consequences of Delinquent LoansThe consequences of a delinquent loan depend on your lender’s policies and the terms outlined in the loan agreement. However, there are three typical outcomes:Penalty Rates & Late Fees: Loan agreements often permit lenders to charge late fees after a few days grace period. Some agreements also permit the lender to increase the interest rate on overdue amounts, known as a “penalty rate” or “default rate.” Late fee structures vary among lenders, so it’s essential to understand their specific policies to avoid surprises.Negative Impact on Credit Score: Once you are 30 days late on payments, lenders can report the late payment to credit bureaus. Beyond this period, a late payment can decrease your credit score by nearly 100 points. In addition, poor credit score makes qualifying for future business loans more challenging. Late payments can remain on your credit report for up to seven years, even if you pay the lender after the item is reported.It’s worth noting that this 30-day rule does not apply to business credit reports, as lenders can report late payments to commercial credit bureaus even if you are just one day late.Increased Contact from LendersWhen you have a delinquent loan, expect frequent calls and emails from your lender urging you to make payments. Lenders prioritize collection efforts while the deadline is fresh in your mind. As delinquency continues, it becomes more challenging for lenders to collect the debt.Delinquent Loans vs. Defaulted LoansA loan transitions from delinquency to default when you have an outstanding balance for an extended period specified in the loan agreement. Typically, lenders wait 90 to 120 days before considering a loan as default.How to Identify Defaulted LoansWhen a loan goes into default, the lender will send you a written notice stating that you have breached the loan agreement and must immediately repay the entire loan balance. The lender might also sell or transfer the debt to a collection agency, escalating collection efforts to recover the outstanding balance. If the lender believes they won’t recover the money, they can charge off the loan, removing it from their books. However, you remain responsible for paying the debt.Actions After DefaultThe lender’s subsequent actions depend on whether the loan is secured or unsecured. Secured loans have collateral or personal guarantees backing them, while unsecured loans do not.

08

Jun

UAE Islamic banks' assets cross Dh1-trillion mark in 2024-2025

The UAE Islamic banks' assets have crossed the Dh1 trillion mark in 2024, according to the global rating agency Moody's Ratings."Islamic asset growth rebounded after the pandemic slow down. The total assets of the UAE's Islamic banking during 2021-2024 increased at a much faster pace of 11 per cent CAGR to reach Dh1.089 trillion ($296 billion) as of end-2024. The share of Islamic banks in the total banking assets was 24 per cent as of end-2024," said Moody's analysts."Currently, the banks in the UAE operate in a stable environment supported by diversification efforts and structural reforms which will continue to promote growth in the non-oil economy," said Moody's analysts.The UAE recently announced plans to significantly increase the assets of Islamic banks in the federation and the value of locally listed sukuk by 2031. Specifically, the government aims to increase the assets of Islamic banks to Dh2.56 trillion, the total amount of listed local Islamic sukuk to more than Dh660 billion and the total amount of international sukuk to Dh395 billion. In 2024, $12.7 billion (Dh46.60 billion) of sukuk was issued in the UAE, of which UAE banks issued $4 billion.The Central Bank of the UAE is advancing the Islamic finance sector to establish the country as an international centre for Islamic finance. This regulator aims to enhance market development, competitiveness, and sustainability. The UAE already boasts a well-established Islamic financial sector, which includes Islamic banks, Islamic banking windows, Islamic finance companies, and Islamic insurance (Takaful) companies. The country has nine fully-fledged Islamic banks and ten Islamic insurance (Takaful) companies.Moody's analysts said that the UAE's decision to boost the Islamic finance sector is expected to considerably expand the global sukuk market, currently dominated by Malaysia and Saudi Arabia, with total global issuance reaching approximately $242 billion in 2024."The projected increase in Islamic banking assets will cement the UAE's position as the third-largest contributor to the Islamic finance market," it said.

08

Jun

UAE halts hike in minimum bank account balance until further notice

 Several big banks had planned to impose the new minimum balance requirement, in accordance with updated Central Bank regulations. UAE banks, minimum account balance, monthly fee, Central Bank, current accounts .On Tuesday, the UAE Central.Bank issued an order to all banks to stop raising the minimum balance requirement for personal accounts. (Reuters).The UAE Central Bank ordered all banks to halt planned hikes to the minimum balance requirement for personal accounts on Tuesday, pending a formal evaluation of the policy’s effects on customers, reports Gulf News.In a circular received by Emarat Al Youm, the Central Bank directly addressed recent reports claiming that some large banks were planning to raise the minimum necessary deposit from Dh3,000 to Dh5,000 beginning June 1.At least one major institution has already executed the move, which would have charged non-compliant customers up to Dh105 per month, reported Gulf News.“With reference to what has been circulated in the media and social platforms about some banks’ intention to raise the minimum balance to Dh5,000, the Central Bank has decided to study the impact of this increase on customers,” the circular read. “Accordingly, banks are instructed to suspend the increase and refrain from applying it until further notice.”There were reports that several major banks had planned to implement the new Dh5,000 threshold starting June 1, in line with updates to Central Bank regulations.STORIES YOU MAY LIKESinner vs Alcaraz, French Open 2025 Men’s Final Live: New rivalry promises fireworks at iconic red clay court in ParisInsiders reveal a physical fight broke out between Musk and Bessent; later, Trump called Elon a 'drug addict'‘Kill PM Modi’s politics’: Canada-based journalist claims assault by Khalistan supporters at Vancouver rally ‘glorifying’ Indira Gandhi’s assassinsAccount holders expressed concern about the financial burden on low-income households and small businesses following the revelation of the possible hike, which sparked intense public outrage.Under the now-paused policy, customers who did not maintain a Dh5,000 balance in their current accounts would have been charged a monthly fee of Dh25, unless they met certain exemption conditions. These included transferring a monthly salary of at least Dh15,000, keeping an aggregate account balance of Dh20,000 or more, and having an active credit card, overdraft, or loan with the bank.Customers with monthly salaries less than Dh5,000 and no qualifying banking products would have been automatically charged the cost, with some banks apparently proposing to raise the penalty to Dh 100 or more, depending on the account type.

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