Role of Banks in Uae Economy

In: Business and Management

Submitted By prak12kumara
Words 968
Pages 4
Role of banks in Economy • Life line of an economy (transfers money from surplus to deficit)

• Credit provision (Fuels business, growth and Entrepreneurship)

• Liquidity provisioning (Credit in times of urgent need)

• Remittance of money, access to foreign exchanges and commodity markets

• Risk Diversification

Banking sector in UAE • Emirates NBD, Dubai Islamic Bank

• ADCB, NBAD, ADIB

• RAK Bank, FGB, Noor Bank

• Standard Chartered, Barclays, Citibank, HSBC

Sector Status (Healthy) • Most of the country’s biggest banks have transformed their business models in the past couple of years to get more money from services that command fees, such as asset management, brokerage and trade finance, rather than relying exclusively on interest from loans which have been compressed • Lenders have also largely cleaned up bad loans dating back from the financial crash of 2008, making them more resilient to any shocks. Total Debt/GDP is around 100% - 10% rise y-o-y. • Banks again anticipate a robust quarter. The provisioning cycle is fully behind and sector is expected to keep continued growth in commercial momentum. • In the first quarter of the year Emirates NBD led the sector with earnings ofDh1.67 billion, a 60 per cent year-on-year gain • Arqaam expects that the UAE banks that it rates will have a consolidated earnings growth of 15.9 % in the second quarter. Another agency expects the growth to be around 5%. • Banks have also been expanding abroad to bolster their balance sheets and find new ways to make money as the home market becomes crowded.
Positives
• Governments in the region have amassed massive cash reserves and continue to invest in infrastructure. There has also been a sharp improvement in property prices. That makes much of the collateral that banks hold more…...

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