UAE and other Gulf Cooperation Council (GCC) banks are demonstrating a keen interest in expanding their presence in key regional markets, particularly Turkey, Egypt, and India, due to enhanced economic conditions and superior growth prospects compared to their local markets, according to Fitch Ratings. The global rating agency reports that multiple GCC banks are considering acquisitions of banks in Turkey, Egypt, and India.

"We believe that external growth is part of the strategy for some GCC banks to diversify their business models and enhance profitability. By investing capital in high-growth markets, they could offset weaker growth in their home markets," stated Fitch analysts. UAE and other GCC banks aim to leverage the large, untapped populations in Turkey, Egypt, and India, where banking system assets-to-GDP ratios are below 100 percent, in contrast to over 200 percent in the major GCC markets.

UAE banks have been actively expanding into other countries as UAE businesses extend their reach into these markets. Recently, Abu Dhabi Commercial Bank (ADCB) announced an expansion into Central Asia, a $1.75 trillion economy, by setting up a hub in Kazakhstan for its Shari’ah-compliant corporate banking services. The bank will aid the growth aspirations of companies involved in Central Asia’s rapid economic development.

"Through our renewed presence in Kazakhstan, combined with our network in the UAE and the broader Middle East region, ADCB is uniquely positioned to support companies operating along key regional economic corridors," said Ala’a Eraiqat, CEO of ADCB Group. Fitch Ratings noted that GCC banks' primary exposure outside the GCC region is through subsidiaries in Turkey and Egypt, where they held approximately $150 billion in assets at the end of the first quarter of 2024. There is growing interest in India, especially from UAE banks, given the strong and expanding financial and trade ties with India.

Among UAE banks, Emirates NBD has exposure in Turkey, while Abu Dhabi Islamic Bank and First Abu Dhabi Bank have exposure in Egypt. GCC banks' interest in expanding in Turkey has risen following the country's policy changes after the recent presidential election, which has alleviated external financing pressures and macro and financial stability risks, prompting Fitch to upgrade its banking sector outlook. Interest from GCC banks in Egypt is also on the rise.

"We believe this is due to Egypt’s improved macroeconomic environment, opportunities from the government’s privatization program, and the expansion of some GCC corporates in the country," Fitch stated. However, Fitch warned that the rising costs of acquiring banks in Turkey, Egypt, and India could impact GCC banks’ acquisition plans.