‘UAE’s robust banking sector gives investors reason to cheer as interest rates begin to fall’

The UAE banking sector’s 2024 performance continues to show well-defined gains across key parameters, including both top-line and bottom-line results as well as net interest margin. Leading banks continue to maintain optimum financial stability indicators and solid appetite for loans and advances. 

This strength is evident in the quality of assets, high value financing activities, and robust capital adequacy ratios, underscoring the resilience and adaptability of UAE banks amid global shifts. The sector’s sound management also supports the UAE’s broader economic and social development goals.

“Over the past two years, interest rates have risen to levels unseen in more than two decades,” said Khaled Al Hammadi, General Manager of Personal Banking Group at Commercial Bank of Dubai.

“However, as US inflation approaches the Federal Reserve’s target, interest rates are expected to gradually decrease.”

Interest cut to help investors

The Fed has already enacted a significant rate cut of 50 basis points in September and another by 25 bp last week. It is anticipated that the approach will become more gradual in the coming months, based on the data.

“Despite the high interest rates, the UAE economy has continued its strong growth, driven by robust activity in sectors such as real estate, tourism, financial services, logistics, and trade,” he said.

“With the prospect of lower interest rates, the UAE’s investment climate will become even more attractive,” said Al Hammadi.

On his bank’s role in promoting investments, Al Hammadi said, “[The bank] offers a comprehensive range of products and services to help clients capitalise on opportunities across asset classes — whether they wish to invest their savings or borrow funds. ”

CBD is among the top mortgage providers in the UAE, he said, adding that it provides instant initial mortgage approvals through the digital space while real estate finance advisers guide clients through each step towards acquiring a property.

The Dubai bank is also supporting clients looking to invest their long-term savings in local or international markets, through a specialised investment solutions team.

CBD’s investment products

Al Hammadi said: “CBD offers a wide variety of investment products — local and international bonds, sukuk, international equities, approved mutual funds, and local IPOs. We were the first bank in the region to launch robo-advisory services in 2021, which provide algorithm-based investment portfolios comprising global exchange-traded funds at low entry prices.

“As interest rates begin to decrease, the UAE’s thriving economy and CBD’s comprehensive financial services create an exceptionally favourable environment for investors.” Despite the high interest rates, the UAE economy has continued its strong growth, driven by robust activity in sectors such as real estate, tourism, financial services, logistics, and trade.