Dubai – Decypha: As one of the most promising markets in the region in terms of investment, the United Arab Emirates (UAE) has proven its ability to adjust well to the current reality of the crude market, which still represents 40% of the country’s Gross Domestic Product (GDP).
Most experts agree that different industries within the Emirates have responded well in terms of growth. The International Monetary Fund (IMF), for example, concluded their visit to the UAE on the 14th of May, where they praised how well the state responded to oil fueled challenges, projecting a 3.3% growth in the non-oil sector in 2017.
Given the positive outlook, financial results of the banking sector should match the upwards trajectory the country’s macroeconomic growth has.
The Emirates currently has a total of 51 banks, 23 of which are local, as of October 2016.
Figures and Highlights
Beginning with Emirates NBD, the bank’s net profit for 2016 recorded AED 7.239 billion one of the highest levels in the industry. Net earnings slightly improved from that of 2015, recording a growth of 1.6%. In terms of Quarter performances, the bank recorded a net profit of AED 1.87 billion in the first quarter of 2017 (Q1-17), showing an increase of 3.8% from the previous quarter, where net profit amounted to AED 1.8 billion.
The National Bank of Abu Dhabi (NBAD) recorded a net profit of AED 5.296 billion for the year 2016, growing by 1.2% from the previous year’s net profit of AED 5.23 billion. For Q1-17 the bank reported a net profit of AED 2.93 billion, an estimated 12.9% increase in comparison to Q1-16.
Abu Dhabi Islamic Bank, also saw a slight growth of 1%, reaching a net income of AED 1.953 in 2016, up from AED 1.934 in 2015. The bank however, reported a significant jump of 19.8% in terms of year on year profit during Q-17, where it recorded AED 577.5 million.
The Abu Dhabi Commercial Bank’s net profit for 2016 stood at AED 4.157 billion, falling by 15.6% from 2015’s figures. However, in terms of quarter results, the bank showed significant improvement during Q1-17, where it achieved a growth of 8.3% in comparison from the previous quarter. The bank had been experiencing a fall during the last two quarters in 2016, where Q4-16 declined by 16% in comparison to Q4-15, similarly Q3-16 recorded a decline of 12.5% in comparison to the same quarter in 2015.
Dubai Islamic Bank saw a 5% growth in its net earnings in 2016, recording AED 4.05 billion. In terms of Q1-17 performance, the bank also saw a 4.1% increase, recording a AED 1.04 billion compared to AED 1 billion in Q1-15.
In terms of significant recoveries, Commercial Bank International tops the list with earnings of AED 125 million, against losses of AED -466 million the previous year. On the other hand, the United Arab Bank’s losses further deepened in 2016 to reach AED -522.6; the bank also saw losses in 2015 recording AED -166.
Amlak Finance and National Bank of Ras Al Khaimah both saw significant falls, recording a decline of 54.7% and 52%, respectively. Emirates Islamic Bank saw a fall in earnings, falling from AED 640 million in 2015 to AED 105 million in 2016.
Reading the Figures
With the exception of the United Arab Bank, all banks in UAE have turned a net profit for the year, indicating a general state of health for the industry. However, 52% of banks have reported a fall in annual net profit in comparison to the previous year. Despite this fact, many experts anticipate that the banking sector will continue to rebound in 2017. Beginning with Alvarez & Marsal consultancy house, who latest quarterly report highlighted that the performance of UAE banks, while declining in comparison to previous years, is still in better standing in comparison to other global economies.
"The good news is we are seeing signs of this downward cycle bottoming out," Managing Director of the global consultancy, Saeeda Jaffar, told the National. He further added that “Capital adequacy ratios and coverage ratios, a sure sign of a bank’s health, have also been increasing."
Speaking on a similar note was Bernd van Linder, Head of Commercial Bank of Dubai (CBD), he told Gulf News that profitability of the banking sector is expected to see better levels than that of 2016.
By Decypha Editorial Team
