Factors determining the profitability of Banks in UAE

The objective of this study is to examine and evaluate the micro and macro factors that affect the profitability of the banks operating on the domestic outskirts of UAE during the post-crisis period. An analysis is done to evaluate the relationship between the financial ratios of few of the local banks in the UAE using the data of the past nine years, i.e. 2009 to 2017 (the post-crisis period). The study showed the results that the factor most adversely impacting the profitability in banks like Abu Dhabi Commercial Bank, Commercial Bank of Dubai, Dubai Islamic Bank and Emirates Islamic Bank, is Interest Income whereas that in banks like Emirates National Bank of Dubai, Mashreq Bank.

“Profitability in banking is not merely shaped by capital flows but by the silent forces of macro shifts and micro decisions across time.”

This study provides critical insights into the profitability dynamics of banks operating on the domestic outskirts of the UAE during the post-financial crisis period (2009–2017). By analyzing financial ratios of prominent local banks, the research highlights that interest income remains a key factor negatively affecting profitability, particularly in institutions like Abu Dhabi Commercial Bank, Commercial Bank of Dubai, Dubai Islamic Bank, and Emirates Islamic Bank. These findings suggest that both macroeconomic pressures and institution-specific income structures require closer management. The results offer valuable guidance for policymakers and bank administrators aiming to optimize profitability amidst shifting economic conditions.