Top 10 UAE banks’ profits shrunk 40% in 2020: A&M

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(The Gulf News)

Less volatile year seen, but with potential spike in provisions in second-half

The aggregate net profit of the top 10 UAE banks declined by 38.3 per cent year on year in 2020, on the back of lower operating income and increased provisions, according to data analysed by Alvarez & Marsal (A&M).

A&M expects the operating environment for the UAE’s banking sector to remain less volatile in 2021 compared to last year; banks might witness deterioration of their asset quality after the completion of Central Bank of the UAE’s deferral programme in June 2021.

“The anticipated economic recovery in 2021 should support the operating environment and the fundamentals of banks in the UAE. Profitability in the sector has shown signs of vulnerability with declining interest income and increased provisioning weighing on the net profit,” said Asad Ahmed, A&M Managing Director and Head of Middle East Financial Services.

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