By: Mahmoud Gamal
Dubai – Mubasher:
The UAE banks sector is expected to continue its growth during the third quarter of 2017, in line with the recovery in oil prices, which have neared $60 per barrel (pb), along with the increase in loans for large projects, analysts told Mubasher.
The profits of listed banks in the UAE’s stock markets rose 4% to AED 19.2 billion during H1-17, from AED 18.5 billion in the year-ago period.
The rise in banks’ operations and loans will enhance the banking sector during Q3-17, Tariq Qaqish, managing director of asset management at Menacorp, said.
This growth will continue at a regular pace until the end of 2017 backed by leading banks namely First Abu Dhabi Bank (FAB), Dubai Islamic Bank (DIB), and Emirates NBD, Qaqish added.
The UAE banking sector’s profits increased in H1-17 on the back of stronger results from Abu Dhabi Islamic Bank (ADIB), DIB, Emirates NBD, FAB, and Mashreq Bank, whose profits grew 14.1%, 6.93%, 4.73%, 3.67%, and 2.69%, respectively.
Meanwhile, CEO of MindCraft Consultants Fadi El-Ghattis noted that the increase in the real estate sector’s activities as well as the rise in cars sales will positively impact the financial results of the UAE’s leading banks, which have already issued additional loans and will therefore see better results in the third and fourth quarters.
Loans to the real estate and construction sector surged 6.2% to AED 16.5 billion during H1-17, according to official statistics.
Credit offered to the real estate and construction sector represented about 19.3% of the total value of loans provided to all sectors in the UAE, data by the Central Bank of the UAE revealed.
Banks operating in the UAE pumped personal loans worth AED 6.2 billion, the Central Bank’s most recent statistics showed.
Small banks continue to suffer pressures in their operations, which will likely result in lower profits or losses in the coming period, the CEO of MindCraft Consultants noted.
The majority of UAE banks will not take provisions during H2-17, especially as the banking sector is somewhat stable, he added.
UAE banks’ provisions reached around AED 7.23 billion in H1-17, compared to AED 7.60 billion in the corresponding period in the year earlier, according to statistics compiled by Mubasher.
The provisions are funds set aside by a firm or bank to pay for commitments or for any expected losses.
El-Ghattis forecast that the recent rise in oil prices will boost the banks sector’s profits.
The price of Brent crude surged 20% during Q3-17 reaching $57.54 pb, while US crude increased 12.2% to $51.67 pb.
UAE Banks Federation expects stability
Earlier on Monday, the chairman of the UAE Banks Federation Abdul Aziz Al Ghurair said he expected profits of the country’s domestic banks to remain stable during H2-17.
UAE banks’ financial positions are good compared to those of the international banks, Al Ghurair added, noting that the local banks set aside some provisions to cover defaulting loans.
During Q3-17, the banks sector’s performance was mixed as the majority of banking stocks listed on the Dubai Financial Market (DFM) ended the three-month period on a high note with Emirates Islamic surging 36.7%. Mashreq Bank and DIB increased 7.24% and 6.14%, respectively, while Emirates NBD added 2.94%.
On the other hand, the Abu Dhabi Securities Exchange’s (ADX) top banks ended the quarter down, with Union National Bank (UNB) and FAB falling 9.4% and 3%, respectively.
The UAE’s banking sector comprises 49 banks, of which 23 are domestic and 26 are foreign. Domestic banks have 862 branches spread out across the country, while foreign ones have 86 branches.
Translated by: Mohamed Hesham Azab
