Allah praises Himself;
1) To inform us who He really is. What would be the point of informing mankind about Himself when He doesn't tell them who He is? He is Al-Rahman because He is the Most Merciful, and He is Al-Aleem because He is the All Knowing. Many have disputed about these Attributes of Allah - so He informs us so we can unite on understanding who Allah really is.
2) It is NOT arrogance if Allah informs us about His Perfection. When would someone be blameworthy if they boasted? It's when they have errors and a lack of abilities. But Allah is Perfect, so He has the right to inform us of His Perfection in whatever way He wills. It is only looked down upon when people boast because they have imperfections, so it seems hypocritical for themselves to boast about themselves, whereas this isn't the case with Allah, the Lord of the Worlds.
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