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UAE Banking Sector

download (23)The UAE banking industry is still in restoration stage, post the 2008-09 real estate problems in Dubai. However, the financial performance of the financial institutions has stabilised especially over the last few years. The UAE banks, particularly Dubai centered financial institutions, are experiencing asset quality difficulties, as shown in their great percentage of non-performing financial loans and low level of conditions. On the other hand, Abu Dhabi centered financial institutions appear relatively less pushed from these issues due to their relatively lower contact with real estate and higher contact with oil centered sectors, which did well among the oil price environment.

The key concerns relevant to the UAE bank institutions include i) focus in financial loans and deposits, ii) great percentage of relevant party exposures, iii) heavy industry competition, and iv) limited data transparency/availability. Moreover, the performance of the UAE financial institutions has been restricted by the still recuperating real estate and construction areas. Although the financial institutions maintain a powerful presence in their regional markets, loan agencies has restricted variation and shows focus in terms of geographies, products, and customers. That said, most of the UAE centered banks benefit from powerful possession structure supported by regional government authorities. In addition, most of these financial institutions are in the process of re-orientating their problem loans. The economic system of Dubai has proven motivating growth in the last two years. All key areas of the economic system such as property, trade, travel and leisure, and services have proven a significant improvement. The improved performance of the primary areas would result in re-classification of some of non-performing financial loans as performing financial loans, which would reduce stress on loan agencies in the medium term. Latest governmental anxiety in some nations in the MENA area has helped UAE, due to its safe home place in the area. Dubai has increased its place as a local financial hub and has become a key route for financial commitment across the MENA area. This has helped local banking sector.

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