UAE Banking Sector

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Banking Sector

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UAE Banking Sector

  1. 1. UAE Banking Sector Group 7
  2. 2. <ul><li>Banking establishments are more dangerous than standing armies </li></ul><ul><li>- Thomas Jefferson </li></ul>
  3. 3. UAE Banking Sector - Overview <ul><li>The sector is governed by UAE central Bank established in 1980 </li></ul><ul><li>48 Licensed Banks </li></ul><ul><li>21 National Banks </li></ul><ul><li>27 foreign Banks </li></ul>
  4. 4. S W O T <ul><li>SWOT Analysis of UAE Banking Sector </li></ul><ul><li>Strengths </li></ul><ul><ul><li>Banking sector growth is fueled by UAE’s economic growth </li></ul></ul><ul><li>Banks benefit from favorable demographics </li></ul><ul><li>Majority government ownership provides an advantage to national banks </li></ul><ul><li>Healthy competition </li></ul><ul><ul><li>Strong profitability and high credit ratings </li></ul></ul><ul><li>Weaknesses </li></ul><ul><ul><li>Fragmented sector </li></ul></ul><ul><li>No credit history of expatriate population </li></ul><ul><li>High exposure to real estate loans or mortgages. Thus, if a softening takes place in the real estate sector, it will ripple through the system </li></ul><ul><li>Banks have resorted to higher cost sources of funding like EMTNs, syndicated loans, and sukuks; which have raised their funding costs on one side and created a better asset liability management on another </li></ul><ul><li>Opportunities </li></ul><ul><ul><li>Tremendous potential in segments such as retail, mortgage, SME, Islamic lending </li></ul></ul><ul><li>The corporate sector is yet to benefit from infrastructure, housing, tourism and manufacturing projects, along with the growth in other sectors </li></ul><ul><li>Risks and Challenges </li></ul><ul><ul><li>Lack of experienced banking executives </li></ul></ul><ul><li>Credit concentration in certain sectors </li></ul><ul><li>Competition will intensify, leading to pressure on spreads, margins and market shares </li></ul><ul><li>Rising cost of funding </li></ul>
  5. 5. UAE has the highest penetration in GCC in terms of banking assets to GDP (180.20%), loans to GDP (105.30%) and deposits to GDP (105.60%)
  6. 6. Loans growth in UAE

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