The delay in interest rate cuts by the US Federal Reserve is good news for Gulf Cooperation Council (GCC) banks. S&P Global Ratings predicts that GCC banks’ profitability will remain robust in 2024 due to the deferred rate cuts. The rating agency foresees that asset quality will stay resilient, supported by strong economies, controlled leverage and significant precautionary reserves.
Industry experts anticipate stable key metrics across Gulf Cooperative Council (GCC) banks and banking systems in 2024. While credit growth and profitability are expected to remain strong for most banks, there may be a slight softening from 2023 levels. Overall, the region’s banks are projected to maintain their reputation of being well-capitalised, profitable, well-provisioned and predominantly liquid. Notably, the banking systems of the UAE and Saudi Arabia are likely to sustain their growth momentum, outpacing the rest of the region. This growth is expected to be driven by strong credit demand from a vibrant non-oil sector and ongoing economic diversification initiatives.
Against this backdrop of optimism and heightened sector momentum, we examine the leading UAE banks offering high dividend yields.
Mashreq
· Dividend yield: 9.6%
· Dividend per share: Dh18.50
· Market cap: Dh38.5 billion
In Q1 of 2024, Mashreq Bank witnessed a significant 25% year-on-year surge in net profit, reaching Dh2.0 billion. This growth was primarily fueled by a remarkable 23% increase in net interest income, attributed to outstanding business expansion, healthy client margins, the prevailing interest rate environment and minimal risk costs. The bank’s operating profit soared by 31% to Dh2.3 billion compared to the same period in 2023.
Dubai Islamic Bank
· Dividend yield: 7.9%
· Dividend per share: Dh0.45
· Market cap: Dh41.0 billion
Dubai Islamic Bank reported a substantial 22% year-on-year growth in net profit for Q1 of 2024, driven by higher total income and reduced impairment charges. Notably, the bank experienced positive growth across its net financing, sukuk investments, total income, net operating revenues and net operating profit.
Emirates NBD
· Dividend yield: 7.2%
· Dividend per share: Dh1.2
· Market Cap: Dh105.5 billion
Emirates NBD achieved a record-breaking net profit of Dh6.7 billion in Q1 of 2024, marking a substantial 67% increase compared to the previous year. The bank’s strong performance was supported by regional growth, increased transaction volumes, a low-cost funding base and significantly impaired loan recoveries. Total operating income, deposits, gross loans, net interest income and cost management contributed to the bank’s impressive results.
National Bank of Umm Al-Quwain
· Dividend yield: 7.1%
· Dividend per share: Dh0.15
· Market cap: Dh4.2 billion
National Bank of Umm Al-Quwain reported notable growth in net interest income and net income for the first quarter of the year, showcasing a positive trend in financial performance.
Commercial Bank of Dubai
· Dividend yield: 6.9%
· Dividend per share: Dh0.44
· Market cap: Dh19.4 billion
The Commercial Bank of Dubai recorded a substantial increase in net profit after tax for Q1 of 2024, demonstrating notable growth in operating income, operating profit and net interest income.
Abu Dhabi Commercial Bank
· Dividend yield: 6.7%
· Dividend per share: Dh0.56
· Market cap: Dh61.6 billion
ADCB continued its growth trajectory into 2024 with a solid first-quarter net profit, showcasing strong earnings growth driven by robust loan growth and impressive financial performance indicators.
RAKBank
· Dividend yield: 6.1%
· Dividend per share: Dh0.31
· Market cap: Dh10.3 billion
RAKBank delivered an impressive quarterly net profit after tax, demonstrating substantial growth in net interest income and fee income, accompanied by notable advancements in loans and advances.
Abu Dhabi Islamic Bank
· Dividend yield: 6.0%
· Dividend per share: Dh0.71
· Market cap: Dh43.9 billion
ADIB reported a significant growth in net profit after tax for Q1 of 2024, supported by a substantial revenue increase, asset growth and a growing loan portfolio.
First Abu Dhabi Bank
· Dividend yield: 5.8%
· Dividend per share: Dh0.71
· Market cap: Dh137.8 billion
FAB showcased a solid performance in the first quarter of 2024, with notable revenue growth, balance sheet expansion, enhanced net interest margin and robust non-funded income, positioning the bank as a frontrunner in the UAE banking sector.
Sharjah Islamic Bank
· Dividend yield: 4.3%
· Dividend per share: Dh0.10
· Market cap: Dh7.4 billion
Sharjah Islamic Bank reported positive growth in net profit for Q1 of 2024, supported by an increase in total income and sound financial performance across financing and investment products.
*Numbers as of May 14, 2024
