Big UAE banks await profits rebound

Analysts are hoping for a long-awaited rebound in profits at Dubai's biggest banks as they report quarterly earnings in the coming weeks.

But a return to full health remains far off for the majority of the sector. The latest Central Bank data showed that levels of capital lent out at the end of August were barely higher than two months earlier. Expectations are that poor revenue growth may yet mar the performance of the rest of the sector.

"Loan growth numbers continue to be sluggish and we do not see the situation improving in the near term, given the ongoing deleveraging process in the corporate sector and tighter regulations surrounding retail, corporate and sovereign exposures," analysts from Deutsche Bank wrote in a research note.

Dubai's economy has steadily recovered from the property crash of 2009, with increased tourism and a strengthening housing market helping to propel growth figures.

A higher price of oil has also underpinned improved growth prospects for lenders operating in Abu Dhabi.

Corporate debt troubles have dragged on banks' earnings, with Dubai Group's $10 billion (Dh36.73bn) restructuring proving particularly intractable.

But profit estimates for Emirates NBD from analysts polled by Bloomberg are Dh681.3m in the third quarter, almost triple the earnings generated during the same quarter a year earlier.

At the time, Emirates NBD set aside the highest level of capital to cover bad debts in its history, in a move that surprised many analysts.

For Abu Dhabi's big lenders, the consensus is for growth in quarterly net profits of between 1 and 8 per cent during the same period, though Abu Dhabi Commercial Bank is expected to increase profits by as much as 22.3 per cent.