The profitability of the UAE's four biggest banks is predicted to decline slightly to 1.7 per cent in 2019, from 1.8 per cent last year, Moody’s Investors Service said in a report on Wednesday.
Operating expenses will increase as investments are made on technology and expansion plans, the ratings agency said.
“Provisioning charges will also increase owing to pressure in the property and hospitality sector, and in the retail segment, amid a soft non-oil economy,” it added.
The UAE's four biggest banks reported higher first-half net profits of Dh19 billion, helped by asset growth and strong non-interest income, as well as a one-time gain at one of the banks.
"The banks' combined net interest income increased slightly, buoyed by solid lending growth," said Mik Kabeya, an analyst at Moody's.
"And non-interest income rose materially on foreign-exchange trading revenue and increased investment banking activity."
The four big banks — First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank (ADCB) and Dubai Islamic Bank — account for more than two-thirds of the UAE's banking sector assets.
A large, one-off gain from Emirates NBD's partial disposal of a stake in payment processing company Network International contributed to the banks' combined 16 per cent increase in year-on-year profits. Excluding that gain, profits rose 3 per cent, according to Moody's.
First Abu Dhabi Bank’s net income for the first six months climbed 4 per cent year-on-year to a record Dh6.3bn, driven by a 3 per cent rise in group revenue to Dh10.1bn.
ADCB’s net profit for the six months to June 30 stood at Dh2.78bn and Dubai Islamic Bank posted a 12.5 per cent year-on-year rise in its first half net income to Dh2.7bn on the back of an increase in revenue and a strong liquidity position.