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UAE Banks See Significant Jump in H1 Deposits

United Arab Emirates : 04 August 2010

Considerable spike of 12.7 per cent in customer deposits at the close of June

Eight major UAE banks reported a significant jump in H1 deposits over the fix six months of 2010 on their balance sheets.  That jump, however, did not cause banks to get soft on the stringent lending guidelines in place since the global economic crisis of 2008.

In comparison, the amount of customer deposits rose by approximately 12.7 per cent at June 30 over stats from the end of 2009, but funds advanced by those same banks went up only 0.6 per cent over that time.

Collectively the deposits at the close of 2009 hit Dh571 billion, while the combined amount at the end of June 2010 reached almost Dh644 billion.  Over that same period of time the collective loaned and advanced amounts went from Dh694.2 billion to Dh698.6 billion.

Financial statements showed that the sharp increase in deposits caused their loan-to-deposit ratio to drop from 1.21 in December 2009 to 1.08 at the close of June 2010.

A survey was completed with information gathered from the eight major banks in the UAE including Abu Dhabi Commercial Bank (ADCB), Abu Dhabi Islamic Bank (ADIB), Emirates NBD, First Gulf Bank (FGB), National Bank of Abu Dhabi (NBAD) and the Union National Bank (UNB), all under control by the local government, as well as the Commercial Bank of Dubai (CBD) and Mashreq Bank.

Data put the customer base of Emirates NBD at the top with Dh281.6 billion at June 30, a jump of over Dh13 billion above that institution’s Dh157.9 billion in deposits at December 31, 2009.

That same survey reported that Emirates NBD is still being conservative with credit, seeing their amount of advances shrink from Dh194.7 billion at the close of 2009 to only Dh184 billion at the close of June 2010.  The bank’s total assets increased to Dh282.3 billion, up from Dh281.6 billion over that same stretch of time, meaning Emirates NBD remains at the top with the highest asset base in the UAE.

Company profits fell heavily in the first six months of 2009 from Dh2.111 billion to Dh1.513 billion, mostly due to defaulted regional loans at Emirates NBD and their quick response that slowed down lending.

NBAD had Dh121.1 billion in deposits at the close of 2009, yet still remains the second largest area bank even with a decrease in deposits to Dh112.1 billion.  NBAD increased lending from Dh132.2 billion to Dh135 billion over that six month period.

ADCB placed as the third largest in assets, with an increase from Dh86.2 billion at the close of 2009 to land at Dh96.8 billion in June 2010.

Advances at ADCB grew from Dh116.6 billion to Dh118.7 billion, but this increase could not pull the bank’s profits out of a slump.  ADCB’s Dh306 million loss over the first six months of 2010 were mainly due to their involvement with Dubai World.

Deposits at UNB fell slightly from Dh51.2 billion to Dh50.7 billion, although loans there increased from Dh50.7 billion to Dh53.5 billion.

FGB had reported deposits of Dh88.4 billion, up from Dh86.4 billion in 2009, and reported advances of Dh94.2 billion, up from Dh90.3 billion in 2009.

At Mashreq Bank the deposit amount fell from Dh50.7 billion to Dh44.1 billion and advances dropped from Dh42.1 billion to Dh38 billion.

ADIB recorded a drop in deposits from Dh52 billion to Dh41.6 billion but saw advances climb from Dh39.3 billion to Dh47.1 billion.

CBD had deposits rise slightly from Dh27.9 billion to Dh28 billion but advances fell a little from Dh28.3 billion to Dh28.1 billion.

Almost 65 per cent of the nation’s total deposits in the banking sector of approximately Dh985 billion were found on the combined balance sheets of these eight major UAE banks.  The credit extended by this group made up almost 68 per cent of the banking sector’s collected loans and advances.

Approximately Dh1.047 trillion in combined assets at the close of June was an increase from the Dh1.022 trillion recorded at the close of 2009 and made up almost 68 per cent of the banking sector’s total of Dh1.538 trillion in assets.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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