MENA Banks "Q2 preview: UAE to show resilience" Peace

Research evidence excerpt

MENA Banks "Q2 preview: UAE to show resilience" Peace

Global Research

13 July 2026ab

MENA Banks Equities

EMEA EmergingQ2 preview: UAE to show resilience

Banks

Jon Peace

Lower GDP forecasts in 2026 not significantly slowing lending Analyst

In a recent note, our economists updated Saudi and UAE GDP forecasts to refect deeper jon.peace@ubs.com

recessions in 1H26 from long oil production cuts, offset by a sharper rebound in later +44-20-7567 0638

2026 and 2027, particularly for the UAE where OPEC exit likely heralds a higher Luis Schmidt

production trajectory. We now expect 2026/27 real GDP growth of +0.7%/+7.2% in Associate Analyst

Saudi and -0.6%/+7.6% in the UAE, putting us ahead of Bloomberg consensus for luis.schmidt@ubs.com

2027. Despite this slowing near-term GDP, Central bank data for loan and deposit +44-20-7567 0847

growth continue to show resilient trends for Q2 during April and May, especially in the

UAE with loan growth above 20% in April (latest data).

We expect another resilient quarter, especially for UAE banks

We expect the outlook for UAE banks to remain very well supported by both foreign

lending and by government spending, particularly in Abu Dhabi where government

project spending has accelerated, while we expect growth in Saudi to consolidate

around current levels for the year, led by corporate lending. UAE government project

spending reached a record level in 1Q26, while Saudi project lending saw a substantial

rebound in 2Q26 to the second strongest quarter since the record levels of 2024. The Q2

results of QNB, the first MENA bank to report Q2 earnings, confirm that the Iran conflict

is still having a limited impact on bank earnings and FY26 guidance. QNB reported 8%

loan growth YoY in Q2 (deposit growth 4% YoY), with the cost of risk at 71bps (down