finance AM market analysis — 2026-11-03

Bank profitability remains broadly resilient, but funding costs are becoming the dominant theme. UAE lenders reported continued profit growth in the third quarter, yet loan expansion has outpaced deposit growth, pushing funding costs higher. The effect is uneven across institutions, with balance-sheet mix and funding strategy emerging as the key differentiators between banks that absorb the pressure and those that do not.

In Europe, interest-rate policy remains tied to inflation, growth and labour-market conditions rather than a fixed path, keeping near-term rate expectations open-ended. That data dependence leaves bank margins exposed to shifts in central-bank signalling over the coming months.

Away from rates, open-banking regulation continues to redraw competitive lines between traditional banks, fintech providers and data aggregators. Research from Banco de España points to open banking expanding digital financial services while reinforcing payment-security requirements, a dynamic reshaping partnerships and customer ownership across the sector.