UAE banks have delivered strong third-quarter results, supported by loan growth and improving loan books even as recent interest-rate cuts have compressed the margins lenders earn on new credit, according to market commentary from eToro.
eToro analyst Nagham Hassan said the first four lenders to report Q3 results, including Abu Dhabi Commercial Bank (ADCB), Emirates NBD, Commercial Bank of Dubai (CBD) and Dubai Islamic Bank (DIB), showed expansion in lending alongside “cleaner” credit profiles. Hassan framed the key debate heading into the fourth quarter around funding. The analyst said the sector’s next challenge is not only maintaining loan quality, but also securing deposits to fund growth at competitive prices.
Margin squeeze alongside improved asset quality
Hassan said lending rose between 7.7% and 18% across the four banks this year, excluding an additional category of lending growth at Emirates NBD after it took control of India’s RBL Bank. The analysis also cited that ADCB and CBD posted record profits for the first nine months of the year.
The commentary attributed lower margins to the impact of three rate cuts in late 2025, which narrowed the difference between what banks earn on loans and what they pay for funding. Hassan said margins were lower than a year ago at ADCB, Emirates NBD and DIB.
ADCB was highlighted as an example of the broader pattern. eToro’s analyst said ADCB’s margin slipped to 2.22% from 2.47%, while pre-tax profit rose 28%. Hassan said the profit increase was helped by a 44% drop in loan-loss charges.
Loan quality indicators were reported as improving across the group. Hassan said the share of problem loans fell at all four banks to a range of 1.6% to 3.0% of their loan books, with ADCB reaching a record low in the period covered.
Capital buffers remain above regulatory minimums
Hassan also said that where bad-loan charges rose, the causes were more bank-specific rather than industry-wide. Problem-loan ratios, the commentary added, still improved overall.
The analyst reported that core capital, described as the buffer that absorbs losses, sat between 12.7% and 13.8% of risk-weighted assets across the four lenders, which Hassan said remains comfortably above regulatory requirements. ADCB, according to the commentary, now expects lower loan losses this year, while Emirates NBD lifted its lending growth forecast to the low 20s.
Deposits lag loan growth as banks adjust funding strategies
Beyond loan performance, eToro said deposit gathering is likely to be a decisive factor for Q4 earnings. Hassan said loans grew faster than deposits at all four banks, with CBD’s lending up 7.7% compared with deposit growth of 0.7%, and DIB’s lending up 10% against 1% deposit growth.
The analyst said banks are shifting toward fixed-term deposits that pay an agreed rate, while current and savings accounts pay little or nothing. Hassan added that eToro’s analysis indicated two of the four banks said this shift increases their funding costs.
Central Bank support and a credit-card signal
Hassan cited a Central Bank support package that allows borrowers to defer repayments, which runs until 15 January 2027.
In ADCB’s data referenced by eToro, Hassan said credit-card delinquencies, defined as cards more than 30 days overdue, rose to 3.6% from 2.7% in one quarter. The analyst said this level remained below the market’s 4.7% and noted it as an early sign to monitor as the support period runs down.
The next set of results, Hassan said, will include First Abu Dhabi Bank (FAB) as well as Islamic lenders Abu Dhabi Islamic Bank (ADIB) and Ajman Bank. Those reports, the commentary suggested, will indicate whether lending momentum and falling bad-loan charges extend to the sector’s largest balance sheet, and how Islamic banks are managing funding costs amid intensifying deposit competition.
