77.7 billion dirhams in interest income from banks in 9 months

The profit margin collected by banks from the interest charged on various financing, during the first nine months of this year, amounted to 77.7 billion dirhams, compared to 71.9 billion dirhams at the end of the same period last year, an increase of 5.8 billion dirhams, equivalent to a growth of 8%, according to The financial safety report recently issued by the Central Bank, which showed that the value of the interest margin obtained during the monitoring period is the largest during the past six years.

The successive interest rate hike over four years, from 2020 to the third quarter of 2023, contributed to an increase in banks’ income from this item, which reached 70.7% of the banks’ total operating income, while the remaining percentage came from fees, commissions, and investments.

The expansion of banks in granting loans, supported by the abundance of liquidity and increased demand, contributes to raising their interest income. The total liquid assets owned by the banks at the end of the third quarter amounted to 777.5 billion dirhams, compared to 623.8 billion dirhams at the end of the same period last year, an increase of 153.7 billion dirhams. AED, equivalent to a growth of 24.6%.

Banks’ liquid assets constitute a 17.9% share of the total banking assets of 4.34 trillion dirhams.

For her part, banking expert Sheikha Al-Ali said: “Over the past years, banks have succeeded in attracting large amounts of liquidity, whether from residents inside or outside the country, which raised the financial solvency of the banks and helped them expand strongly in granting financing, and thus increased the income generated. Of the benefits, and at the same time, economic activity, the stability of various sectors, and the return of their growth to significant levels contributed to increasing the demand for financing of all kinds.” She pointed out that the large boom in real estate also contributes to increasing the demand for real estate financing, and all of this explains the high margin of interest collection in state banks.

Al-Ali pointed out that the largest percentage of banks’ operating revenues comes from interest, since granting loans and credit facilities is the primary activity of banks, so it is natural that it constitutes the largest share of income.

She pointed out that the UAE market is competitive and based on supply and demand and has a large number of banks that the customer can easily move between to choose what suits him, whether in terms of interest rates or other services.

. The expansion of banks in granting loans contributes to raising their interest collection.

. The largest percentage of banks’ operating revenues comes from interest.