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UAE most competitive banking market in Gulf
Saturday January 14, 2012 12:48:54 PM,
WAM
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Abu Dhabi:
The United Arab Emirates (UAE) remains the most competitive
banking market in the Gulf region, a report by the Abu Dhabi
Islamic Bank (ADIB) has said.
The "Gulf Cooperation Council Banking Competitiveness Report" said
the UAE's population of approximately eight million is served by
51 banks with more than 840 branches and over 4,000 ATMs, which
deliver high levels of service yet lower profitability than their
GCC counterparts.
The ADIB report said the UAE banks' net interest margin -- which
is the difference between what banks pay for deposits and what
they charge for financing and loans -- remains the lowest among
the GCC, at an average of 2.9 percent.
In Saudi Arabia, the net interest margin is currently 3.5 percent,
in Qatar 3.4 percent and in Kuwait banks 3.2 percent.
The ADIB has urged banks across the region to improve their levels
of competitiveness if they are to ensure their continued strength
in the challenging global economic environment and meet the needs
of customers in a better way.
Comparing the No.1 and No.2 banking markets by size in the GCC --
the UAE and Saudi Arabia -- the global head of strategy and
finance at the ADIB, Andrew Moir, said: "Despite the fact that the
UAE is a bigger banking market in terms of assets, it remains less
profitable than that of Saudi Arabia."
"In the UAE, the mix of deposits, low customer charges, the
presence of high levels of non-performing assets and competitive
dynamics have negatively impacted banking profitability and
capital ratios. However, lower net interest margin means consumers
in the UAE are getting better rates overall but shareholders are
getting lower returns as compared to those in other GCC markets,"
he said.
The "GCC Banking Competitiveness Report" of the ADIB is updated on
a quarterly basis by the bank's strategic planning department.
The report focuses on various points that reflect both Islamic and
conventional banks' structures and performance, ranging from
customer growth, staff and service to product trends and
performance, financial indicators, investor insights, capital
trends, liquidity, cost of funds and overall price dynamics.
Financial performance and profitability are key components of the
report.
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