UAE banking sector can put in higher growth even with interest rate cuts: CBD's Al Hammadi
Sufficient demand exits for loans, investment opportunities in UAE, says CBD official
The UAE banking sector’s 2024 performance continues to resonate with more well-defined gains on key parameters, whether that’s on the top- and bottom-line showing as well on net interest margin. Leading banks continue to maintain optimum financial stability indicators and solid appetite for loans and advances.
This is evident in the quality of banking assets, the sort of big-ticket financing, and capital adequacy ratios, showcasing UAE banking sector’s resilience and adaptability to global changes. As well as an innate ability to create favorable conditions to achieve economic and social development goals in the UAE.
“Over the past two years, interest rates have risen to levels unseen in more than two decades,” said Khaled Al Hammadi, General Manager of Retail Banking at Commercial Bank of Dubai. “However, as US inflation approaches the Federal Reserve’s target, interest rates are expected to gradually decrease.
“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. The current Purchasing Managers’ Index (PMI) reflects sustained expansion in non-oil sectors, highlighting the resilience of a diversified economy.”
Indeed, the financial services and real estate sectors have benefited from the many government policies, which have succeeded in attracting more higher networth individuals, family offices, and companies.
“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: “Commercial Bank of Dubai (CBD) offers a comprehensive range of products and services to help clients capitalize on opportunities across asset classes. Whether they wish to invest their savings or borrow funds.”
CBD’s private banking clients ‘benefit from the expertise of specialized relationship and product managers who provide guidance on real estate financing, investment portfolios, insurance products, and business financing solutions’.
“CBD plays a significant role in the economic activity of the real estate sector, where transaction levels have reached an all-time high this year, driven by strong demand from end-users and investors. “
CBD is among the top mortgage providers in the UAE. Through the digital space, the bank provides instant initial mortgage approvals while real estate finance advisors 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 specialized investment solutions team.
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 favorable environment for investors.”