Center for Tomorrow



Center for Tomorrow

THE LOCAL BANKS The local banking sector is comprised of commercial outfits and sharia-compliant counterparts, some being the divisions of regular banks. Emirates NBD claims the lion’s share among the […]


The local banking sector is comprised of commercial outfits and sharia-compliant counterparts, some being the divisions of regular banks. Emirates NBD claims the lion’s share among the Dubai-based banks, and is also the largest banking group by assets in the UAE overall. With a universal presence, it delivers its sharia-compliant offerings through its subsidiary Emirates Islamic Bank. Primed for expansion, and having taken over Dubai Bank in 2011, in June 2013, Emirates NBD acquired a 95.2% stake in BNP Paribas Egypt, opening a window on the most-populous Arab nation. It seeks a larger presence in the Middle East, North Africa, Turkey, and Islamic nations in south and Southeast Asia.

Emirates NBD, 56% state-owned, may see annual profits climb 15% to AED2.95 billion in 2013, according to Bloomberg. The bank posted a robust second-quarter profit having ramped up fee income, indicative of the Emirate’s economic recovery. Total assets were 9% up for 1H2013 at AED334.8 billion compared with AED308.3 billion at end-2012. Total income for 1H2013 of AED5.2 billion rose 7% to AED5.5 million year on year. Operating profit before impairment was up 10% year on year from AED3.3 billion to AED3.64 billion. Customer deposits of AED230.4 billion were up 8% compared with AED213.9 billion at the end of 2012, while loans of AED231.8 billion rose 6% from AED218.2 billion for 1H2013. The loan-to-deposit ratio was slightly improved year on year for 1H2013 from 102% to 100.6%. Net impairment loss on financial assets of AED1.88 billion improved by 8% in 1H2012. Meanwhile, the capital adequacy ratio fell 2.1% year on year for 1H2013 to 18.5% from 20.6%. In 2012, the ratio of non-performing loans (NPLs) in the UAE overall stood at 7.6%, up 22.6% year on year. The ratio had soared 87% in 2009 as the global crisis made landfall.

Emirates NBD has a UAE branch network of 141 units, with 86 in Dubai, an ATM network of 369, with 256 in Dubai, and over 740 ATMs and CDMs nationwide. The bank caters to the sharia-compliant market through its subsidiary Emirates Islamic Bank. This division targets a branch network of 66 by 2014, with nine in Dubai as part of a vigorous expansion program.

Another key local player on a keen growth path is Dubai Islamic Bank (DIB), which reported 41% year-on-year growth in 2Q2013 with a net profit of AED437 million. Styling itself as the world’s first Islamic bank, with operations launched in 1975, it was voted the region’s Best Islamic Retail Bank at the Banker Middle East Industry Awards 2013.

In addition to the 74 branches DIB has across the UAE (up by four over 1Q2012), it boasts 75 branches via its Pakistani subsidiary and a presence in Jordan and Turkey. It is the third largest sharia-compliant bank in the world, and the UAE’s clear leader. The first half of 2013 saw the continued expansion of the retail franchise, with three branches and 23 ATMs being added to the network. As of June 30, 2013, total assets stood at AED111.1 billion compared to AED98.7 billion as at December 31, 2012, up 13%. Current and savings account deposits soared 16% over the six months to June 30 to AED33.7 billion. Through the period under review, DIB sustained a strong capital adequacy ratio of 18.1%, compared to 17.4% reported on December 31, 2012. In 2013, DIB completed its acquisition of Tamweel, the UAE’s largest home finance provider, to tap into the future growth of the UAE’s real estate sector.

In business since 1967, Mashreq, with 1H2013 assets of AED81.2 billion, is enjoying a growing retail presence in the region, including Egypt, Qatar, Kuwait, and Bahrain. According to the bank, its branch network, at 73 in the UAE, and 66 in Dubai, means that one in two households throughout the UAE banks with it. And, with 259 ATMs, it has the sixth-largest network in the country.

Another key player, Mashreq is known as a banking innovator. In 1H2013, in a first for the UAE, it implemented its “E Cube Retail Concept,” an electronic platform providing enhanced interactivity and smart banking. Mashreq reported a 6.3% rise in total assets to AED81.2 billion, up from AED76.4 billion at the end of December 2012. It saw a 40% rise in net profit in 1H2013 to AED828 million following a 57% leap in 1Q2013 net profit year on year. Customer deposits increased by 7.4% for the period to AED51 billion as of 30 June, 2013. The bank’s loan-to-deposit ratio rose to 93% in June 2013 from 87% in December 2012. The Corporate Banking Group is sharpening its focus on the government sector in support of the country’s march to sustained growth. Mashreq Al Islami, the Islamic banking arm of Mashreq Group, offers a full spectrum of Islamic business solutions. In 2013, Banker Middle East named Mashreq Al Islami Best Islamic Window 2013, while Mashreq was voted the Best in Banking Innovation in the Region.

Established in 2008, Noor Islamic Bank is also a local innovator. It was the first to introduce internet and phone banking in Arabic compatible with any mobile unit. It has 48 ATMs and CCDMs in the UAE, and 13 branches. It plans to open a second branch of its SME offering, Noor Trade, in the third quarter. Yet talking to TBY about the future of online banking, Hussain Al Qemzi, CEO of Noor Islamic Bank observed that, “Social and digital media have opened up so many horizons that need to be explored, and that is how I see the next generation of customers. They don’t come to the banks anymore, so what is the use of all your branches?” Noor claimed a 10.4% market share in Islamic loans for the first half, with mandates in Turkey amounting to AED4.18 billion in June 2013.


Foreign banks operating in the UAE fall into one of two camps; those that operate within the regular UAE economy, and those that opt for free zone representation. Of a total of 28, 20 are headquartered in Dubai, while the remaining eight banks are resident in the capital, Abu Dhabi. Among the larger banks in terms of penetration and branch network are Standard Chartered, Citibank, and Habib Bank AG Zurich. Standard Chartered, offering both conventional and sharia-compliant products, leads the foreign banks in terms of branch network across the UAE with 17, operating over 130 ATMs and CDMs nationwide. Euromoney has voted the bank Best Private Bank for Super Affluent Clients in the UAE for 2013. Citibank has 12 branches and 84 ATMs. Habib Bank AG Zurich has 11 branches, and in 2013 overhauled its online platform.


Launched in 2004, the DIFC had total assets under management at the end of September 2012 of AED31.59 billion. The 100% foreign-owned companies domiciled there are overseen by an independent regulator, the Dubai Financial Services Authority (DFSA). Companies enjoy unhindered foreign exchange, capital, and profit repatriation. Currently, 37% are from Europe, 26% from the Middle East, 18% from North America, 11% from Asia, and 8% from the rest of the world. The combined workforce of DIFC-registered companies is presently at around 14,000. DIFC’s client base comprises over 900 active registered firms including 19 of the world’s top 25 banks, 11 of the world’s top 20 largest money managers, and eight of the world’s 10 largest insurance companies. Banks at the DIFC cannot provide retail services, so as not to conflict with those offered in the regular UAE economy. Notable arrivals in 2013 include Agricultural Bank of China (ABC), which downed sticks in Dubai to pursue Sino-MENA economic and trade investment. Meanwhile, global index provider FTSE Group (FTSE) opened an office to act as a springboard for its growing business in the MENA region. Since 2010, the FTSE has classified the UAE as Secondary Emerging in its FTSE Global Equity Index Series. This year’s MSCI uptick of the UAE to Emerging Market status should herald greater interest in the free zone in the future.