Emirates Islamic to lay off staff

Emirates Islamic is the latest lender to reduced headcount. Pawan Singh / The National

Emirates Islamic, the Dubai-based Sharia-compliant financing arm of Emirates NBD, is laying off 200 staff to cut costs as the finance sector's retrenchment continues, banking sources said yesterday.

Emirates Islamic is the latest lender to reduce headcount. Other banks in the country have also shed jobs amid low oil prices.

A spokesman for Emirates NBD declined to comment.

Emirates Islamic reported a net profit of Dh641 million last year, up 76 per cent from 2014.

Emirates NBD, Dubai’s biggest bank by assets, posted a 74 per cent jump in fourth-quarter profit to Dh2.13 billion, beating analysts’ expectations, thanks to higher income from fee-generating businesses, as well as a drop in provisions for bad loans.

UAE banks are suffering from tighter liquidity as the Government withdraws deposits to plug the fiscal deficit resulting from lower oil revenue.

Deposit growth at UAE banks is likely to slow this year to 3 per cent from 10 per cent annually between 2012 and 2014, according to the ratings agency Moody’s.

In the UAE, monthly central bank data showed that government deposits have fallen by 15 per cent year-on-year.

The Government and government companies held Dh158bn in deposits at the UAE’s Central Bank in February.

Banks and other financial services firms are starting to show signs of strain as the price of oil, a key catalyst for the country's economic growth, flounders below US$40 per barrel.

Profit growth at UAE banks is set to slow as deposits decline, the ratings agency Standard & Poor’s said in January.

That is likely to prompt less lending and more defaults as the cost of borrowing rises, putting pressure on earnings. S&P expects lending to slow to 5 or 6 per cent growth this year from 8 per cent last year.

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