UAE banks grow deposits by 8% in 2018 to Dh1.76tn

Assets at conventional banks grow faster than at Islamic lenders

National banks attracted more deposits in the UAE in 2018 than foreign banks. Chris Whiteoak / The National

UAE bank deposits increased 8 per cent to Dh1.76 trillion last year, according to the UAE Banks Federation.

Deposits of residents grew 7 per cent to Dh1.54tn, and government deposits climbed 16 per cent to Dh290 billion, according to the entity's new annual report. The figures also showed deposits from government-related entities increased 8 per cent to Dh207bn, but private sector growth only edged up by 1 per cent to Dh1.01tn.

Growth in conventional banks' assets outstripped those within Islamic banks, with conventional bank deposits increasing 9 per cent to Dh1.35tn, while conventional bank assets grew 5 per cent to Dh402bn.

The total amount of assets within UAE banks grew 6.5 per cent to Dh2.87tn, as the amount of credit extended increased 5 per cent to Dh1.66tn.

The UAE Banks Federation is made up of 52 member organisations, including 22 national banks, 28 foreign banks and two special status banks regulated by the UAE Central Bank. National banks took a greater share of the market last year, with deposits growing 10 per cent to Dh1.56tn, while the amount of money in foreign banks fell 5 per cent to Dh197bn. Overall, the number of foreign banks in the UAE declined by 1 to 38, and the number of (both foreign and domestic) branches fell by 31 to 823.

Despite this, the overall number of people employed by banks edged up 1 per cent to 36,629 on the back of domestic bank hires, "with most new hires being highly qualified in using [the] latest financial technology services", according to the report.

Abdulaziz Al Ghurair, chairman of the UAE Banks Federation and of Mashreq Bank, described 2018 as "a productive year" for the industry.

"The UAE banking and financial sector has maintained its robustness and high performance with a strong and diversified national economy, a safe and stable political and economic climate at the national level, and the optimal use of financial and human resources,” he said.

The report said that banks remained profitable and well-capitalised, with total net profit for 20 of the national banks growing 9 per cent to Dh41.6bn and capital adequacy ratios standing at 17.5 per cent.

It highlighted efforts made within the past year on developing an intelligence-sharing platform banks can use for cyber security to allow for live aggregation and analysis of threat data known as Tasharuk.

For the year ahead, the Federation warned that "new regulations and growing demands for digital products and services will create pressure on banks to invest in key areas of the industry, including, in particular, innovation and technology, risk culture and sustainability."