By: Amr Adel
Dubai - Mubasher: Senior partner and managing director of the Boston Consulting Group in the Middle East, Reinhold Leichtfuss, expects UAE banks to achieve a 5% increase in revenues in 2017, with a similar growth rate in bank credit.
Leichtfuss said in a press conference held at the group's headquarters in Dubai that he is expecting the situation of small- and medium-sized enterprises’ (SME) loans to improve this year, after affording banks huge losses due to the stumbling of some, with some owners fleeing the country.
Leichtfuss added that loans are more likely to restore their previous volumes in 2015.
Emirati banks achieved the biggest operational income compared to its peers in the Gulf region in 2016, and came in second in terms of operational profit, according to a study by the Boston Consulting Group.
UAE banks recorded revenues of $20.2 billion, followed by Saudi banks with $18.8 billion, Qatari banks with $10.4 billion, Kuwaiti banks with $6.3 billion, Bahraini banks with $4.2 billion, and Omani banks with $2 billion.
When asked by Mubasher regarding the effects of the merger between the National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB), Leichtfuss said that he sees the deal as an important step as the number of banks in the UAE exceeds the country’s actual need.
The merger will help achieve positive results, including reducing operational costs.
Leichtfuss also commented on continuous rumours about similar mergers between Emirati banks, noting that the evaluation of both parties plays a major role in completing such deals, adding that he considers one acquisition per year a reasonable rate.
As for the recent decision by the US Federal Reserve to raise interest rates, and its effects on the Emirati banking sector, Leichtfuss said that increasing interest has always had positive implications on the banks’ revenues and profitability on the long-term.
The managing director ruled out the possibility of a drop in credit volumes after the increase in interest rates in the UAE, as clients do not always consider interest rates as the deciding volume when it comes to loans.
Boston Consulting revealed that the profits of GCC banks decreased by 3.2% to $28.5 billion compared to $29.4 billion in 2015.
Meanwhile, revenues grew by 5.2% to $61.9 billion in 2016 up from $58.8 billion in 2015, as shown by the Boston Consulting Group analysis.
These numbers are based on the annual financial results of 46 banks in the member countries of the GCC, which dominate 80% of the regional banking sector.
Translated by: Moslem Ali
