Middle East airline brand values nosedive, but banks a source of greater wealth

Qatar Airways witnesses most significant decline in brand value, dropping by 38 per cent to almost $2.17 billion.

Emirates NBD is currently the UAE’s most valuable bank brand, and the fifth-most valuable brand overall with a value of $3.41 billion. Reem Mohammed / The National

The value of many of the UAE’s bank brands increased substantially in 2016 but airline brand values ran into headwinds as a result of worsening revenue forecasts, according to the consultancy Brand Finance.

In the company’s annual Middle East 50 report Emirates was deposed from its top spot for the first time since the ranking began in 2010. Its brand was valued at US$6.08 billion, placing it second behind the Saudi Arabian telecoms operator STC, whose brand was valued at $6.22bn.

Qatar Airways was the company within the ranking that experienced the steepest decline in brand value – dropping by 38 per cent to almost $2.17bn.

Andrew Campbell, the managing director of Brand Finance Middle East, said the decline in brand values at both airlines was a result of the macroeconomic climate, rather than a change in the inherent strength of the brands.

“Because of the recession and oil prices and so on, the revenue outlook for both of those brands took a hit,” Mr Campbell said.

He also said wider regional poli­tical uncertainty had affected both brands.

Qatar Airways dropped to 11th in the rankings, from fourth place last year. Etihad Airways slipped two places to 20th with a brand value of $1.56bn.

The biggest climbers in the rankings were mainly banks. Dubai Islamic Bank’s brand value increased by 136 per cent to $1.88bn, moving it up nine places to 17th.

Abu Dhabi Commercial Bank’s value increased by 77 per cent to $2.19bn, moving it up 10 places to 10th overall. DIB’s increase was based on a revaluation due to better information and efforts to improve its brand, Mr Campbell said.

“The UAE banks generally did well, although the same can’t be said for the Saudi banks,” he said. Saudi banks had been hit by declining government deposits, among other factors, meaning National Commercial Bank dropped seven places to 15th as its brand value fell by 12 per cent to $1.97bn, while Samba Financial fell three places to 25th as its brand declined in value by 24 per cent to $841 million.

“I’m looking to see Saudi companies in general, and the banks, invest a lot more aggressively in their brands as they fall into line with Vision 2030,” Mr Campbell said.

He said that privatisation efforts being undertaken will mean that companies will have to develop much more robust brands as part of their commercialisation efforts. “This happened in the UAE probably over the past 10 years and we’ve seen similar interest and investment coming through in Saudi.”

A report published last month by Boston Consulting Group stated that the combined profits of GCC banks was 3.2 per cent lower in 2016 – the first time that a decline was reported since 2008.

Retail profits of UAE banks dropped by 13 per cent on average last year, while in Saudi Arabia retail profit grew by 28 per cent. However, corporate banking profit increased by 16 per cent in the UAE and declined by 21 per cent in Saudi Arabia.

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