UAE Banking Sector

Group 7

Banking establishments are more dangerous than standing armies

- Thomas Jefferson

UAE Banking Sector - Overview

The sector is governed by UAE central Bank established in 1980

48 Licensed Banks 21 National Banks 27 foreign Banks

S W O T SWOT Analysis of UAE Banking Sector

Strengths Banking sector growth is fueled by UAE’s economic growth

Banks benefit from favorable demographics Majority government ownership provides an advantage to national banks Healthy competition

Strong profitability and high credit ratings

Weaknesses Fragmented sector

No credit history of expatriate population 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 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

Opportunities Tremendous potential in segments such as retail, mortgage, SME, Islamic lending

The corporate sector is yet to benefit from infrastructure, housing, tourism and manufacturing projects, along with the growth in other sectors

Risks and Challenges Lack of experienced banking executives

Credit concentration in certain sectors Competition will intensify, leading to pressure on spreads, margins and market shares Rising cost of funding

SWOT Analysis of UAE Banking Sector

Strengths Banking sector growth is fueled by UAE’s economic growth

Banks benefit from favorable demographics Majority government ownership provides an advantage to national banks Healthy competition

Strong profitability and high credit ratings

Weaknesses Fragmented sector

No credit history of expatriate population 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 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

Opportunities Tremendous potential in segments such as retail, mortgage, SME, Islamic lending

The corporate sector is yet to benefit from infrastructure, housing, tourism and manufacturing projects, along with the growth in other sectors

Risks and Challenges Lack of experienced banking executives

Credit concentration in certain sectors Competition will intensify, leading to pressure on spreads, margins and market shares Rising cost of funding

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%)

Loans growth in UAE