Alvarez & Marsal: UAE Banks Show Stable Profitability Amid Growth Slowdown in Q2 2026

Alvarez & Marsal released its Q2 2026 UAE Banking Pulse report on September 21, 2026, analyzing the performance of the ten largest listed banks in the United Arab Emirates. The quarter saw continued balance sheet expansion but a slowdown in lending growth.

Lending grew by 4.2% quarter-on-quarter (QoQ), while deposits increased by 2.3% QoQ. Aggregate operating income contracted by 1.2% QoQ, with the cost-to-income ratio rising to 27.9%. However, lower credit impairment charges and recoveries supported earnings, leading to a 2.7% QoQ increase in net income for the sector.

Asset quality remained stable, with the non-performing loans (NPL) ratio holding at 2.3%. The net interest margin (NIM) saw a slight decrease of 3 basis points to 2.34%, while return on equity (RoE) rose to 18.9% and return on assets (RoA) remained steady at 2.0%.

The report noted that regional challenges have increased concerns about potential asset quality deterioration and the need for higher credit provisioning in the latter half of 2026. The analysis covers major banks including First Abu Dhabi Bank and Emirates NBD.