14.2% Return on Equity After Taxes and Provisions
Bloomberg Intelligence anticipates a 7% increase in the revenues of UAE banks by 2025, fueled by loan growth and additional revenue sources compensating for interest rate cuts.
The report states that revenue forecasts for the five largest banks in the UAE have improved, citing a stronger loan growth of 12%, compared to the 9% prediction made in May. Moreover, non-interest income has contributed to an overall revenue growth of 7%, with delayed interest rate reductions potentially enhancing these expectations.
It is projected that non-funded revenue for UAE banks will account for 31% of total revenue, assisting in offsetting the 15% pressure on earnings per share, thereby maintaining profit stability. However, an increase in provisions may reduce the return on equity to 14.2%, down from 15.4% in 2024.
The largest five banks in the UAE recorded an 11% growth in loans in 2024, with a 4% increase in lending during the first quarter of 2025 compared to the fourth quarter of the previous year, driven by retail and corporate loans.
Bloomberg Intelligence added that any interest rate cuts are expected to lower financing costs in the latter half of this year.