UAE Banks Show Strong Q1 2026 Performance, Lending Grows 5.8%
The largest listed banks in the United Arab Emirates demonstrated strong balance sheet growth and improved asset quality in Q1 2026. Lending expanded by 5.8% quarter-on-quarter, according to a report by Alvarez & Marsal.
Banks in the United Arab Emirates (UAE) delivered a strong performance in the first quarter of 2026, marked by significant balance sheet expansion and improvements in asset quality. According to a report by management consulting firm Alvarez & Marsal, net loans and advances grew by 5.8% quarter-on-quarter.
Operating income increased by 7.7% over the quarter, driven by a substantial 23.9% rise in non-interest income. Bank profitability remained resilient, with return on equity (ROE) rising to 18.7%. Asset quality showed resilience, as the non-performing loan (NPL) ratio declined to 2.3%.
The net interest margin (NIM) saw a slight decrease to 2.37% as a result of earlier interest rate cuts. While deposits grew by 3.8% quarter-on-quarter, lending growth outpaced deposit mobilization, leading to an increase in the loan-to-deposit ratio.
However, the report highlighted increased uncertainty due to geopolitical tensions towards the end of the quarter, which may affect future lending growth and asset quality. Sam Gidoomal, Managing Director at Alvarez & Marsal, commented on heightened concerns regarding provisioning and asset quality heading into the second quarter.