Banks
Emirates NBD raises its 2026 loan growth target after a 27% jump, while Dubai Islamic Bank's profit slips 3%
Dubai's lenders are growing their balance sheets faster than their earnings, with margins narrowing and provisions rising.
HedgeWeekly News Desk ·
Emirates NBD now expects loan growth in the low 20s per cent for 2026, up from a mid-teens forecast, after gross loans rose 27% in the first nine months to Dh833 billion. Excluding India's RBL Bank, which was consolidated for a full quarter for the first time, the increase was 18%. Third-quarter net profit was flat on the second quarter at Dh6.4 billion.
Nine-month net profit rose 2% to Dh19.3 billion and profit before tax rose 4% to Dh24.3 billion, while total income reached a record Dh42.2 billion. Costs grew faster than income: operating expenses rose 19% and the cost-to-income ratio rose to 31.4% from 30.5%. The net interest margin narrowed to 3.24% from 3.43%. The common equity tier 1 ratio fell to 13.4% from 14.7% a year earlier.
Dubai Islamic Bank reported third-quarter net profit of AED1.8 billion, down 3% from both the previous quarter and a year earlier but 5% above Visible Alpha consensus. Financing grew 15% year on year and deposits 7%, lifting the loan-to-deposit ratio 2.9 points to 91%. Provisions jumped 75% from the second quarter to AED121 million, raising the cost of risk to 17 basis points from 10, while the non-performing financing ratio held at 2.4%.
Why it matters: both banks show the same pattern. Lending is booming, but margins, funding and capital ratios are tighter than a year ago. On its earnings call, Emirates NBD said its year-to-date cost of risk of 37 basis points is within its 30 to 50 basis point guidance and that it expects the full year near the top of that range, possibly slightly above. The deeper RBL Bank integration is also set to push group cost-to-income towards about 33%. Investors in Gulf bank equities and credit should watch whether deposit growth keeps pace with lending as the rest of the UAE's third-quarter results come in.