Dubai, United Arab Emirates - February 8th, 2018: General Views of Abu Dhabi Investment Bank. Thursday, February 8th, 2018. Jumeirah Beach Road, Dubai. Chris Whiteoak / The National
Abu Dhabi Islamic Bank, the emirate’s largest Sharia-compliant lender has seen its shares gain 3.7 per cent year-to-date on the index. Chris Whiteoak / The National

UAE banks seen turning the corner in 2018 as loan demand strengthens



UAE banks are set to see higher loan growth and profitability in 2018 as the local economy turns the corner, non-performing loans decline and rising interest rates give a boost to net interest margins.

Rising oil prices and stronger support from governments are also supporting deposits while greater adoption of technology by banks has made them more efficient.

"Banks closed out the year pretty well last year," said Saeeda Jaffar, a managing director at the Financial Institutions Advisory Services practice of the global consultants Alvarez & Marsal.

"Overall, we expect this year to be a better year than last year and we are starting at a much better place than we were starting last year," Ms Jaffar said. "Consistently we saw improvements across the board last year. We saw increases in net interest margin, decreases in cost income ratios, decreases in cost of risk. We saw positive trends that will continue this year. Net-net, the banks will do better this year."

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The latest quarterly results from banks are already showing signs of improvement. Emirates NBD, Dubai's biggest lender, said its fourth quarter profit rose 17 per cent, in part aided by higher interest rates.

Profits at Abu Dhabi Islamic Bank, the Emirate's biggest Sharia-compliant lender, rose 33.4 per cent in the fourth quarter of 2017, beating analysts' estimates, as fees and commissions income rose and impairments dipped.

The positive results come after UAE banks saw demand for debt dry up and non-performing loans rise in the aftermath of the 2014 oil crash. As oil prices have increased over the past year and the country's economic fortunes improved, lenders have seen a resurgence in appetite for loans for individuals and corporations. Banks have at the same time also become more efficient; investing more on digitization and artificial intelligence, reducing branches and trimming the workforce.

As a result, Ms Jaffar said she was expecting loan growth this year to be in the high single digits to low double digits.  Mark Robinson, the chief executive officer of Dubai-based Commercial Bank International (CBI), told The National last week he expects 5 per cent loan growth for CBI and a similar amount for the banking market as a whole. Egyptian investment bank EFG-Hermes is also expecting an uptick in loan growth.

"We expect a moderate recovery in loan growth after a weak 2017," said Shabbir Malik, a Dubai-based analyst at EFG-Hermes. "UAE banks are positive on the 2018 economic and loan growth outlook. We believe a firm oil price, expansionary Dubai and Federal budgets bode well for the credit outlook."

Paving the way for higher borrowing costs in 2018, the Central Bank of the UAE raised interest rates by 25 basis points on December 14 after the announcement of a similar rate rise by the US Federal Reserve. The bank said it raised the interest rate on the certificate of deposits by 25 basis points to 1.75 per cent. (The UAE uses certificates of deposit as a monetary policy instrument through which rates are transmitted in the absence of an independent monetary policy.)

UAE banks may get a boost from rising interest rates. However much will depend on whether lenders will choose to pass on costs to customers at a time when many are coping with rising costs and a more competitive job market, analysts say.

Banks in theory benefit from rising interest rates. The UAE however aligns its monetary policy to the US Federal Reserve because of the dirham's peg to the greenback. The US economy is growing at a faster pace than the UAE economy and banks in the US are in a better shape than their UAE counterparts.

"Unfortunately for banks there are at least two challenges," said Sanyalaksna Manibhandu, head of research at FAB Securities." First, where there is low demand for credit, borrowers have bargaining power. Banks that do underwrite credit are forced to offer lower rates than they would like; second, term deposit rates also rise, as policy interest rates increase, lifting the cost of funding for banks."

ROUTE TO TITLE

Round 1: Beat Leolia Jeanjean 6-1, 6-2
Round 2: Beat Naomi Osaka 7-6, 1-6, 7-5
Round 3: Beat Marie Bouzkova 6-4, 6-2
Round 4: Beat Anastasia Potapova 6-0, 6-0
Quarter-final: Beat Marketa Vondrousova 6-0, 6-2
Semi-final: Beat Coco Gauff 6-2, 6-4
Final: Beat Jasmine Paolini 6-2, 6-2

COMPANY PROFILE

Name: SmartCrowd
Started: 2018
Founder: Siddiq Farid and Musfique Ahmed
Based: Dubai
Sector: FinTech / PropTech
Initial investment: $650,000
Current number of staff: 35
Investment stage: Series A
Investors: Various institutional investors and notable angel investors (500 MENA, Shurooq, Mada, Seedstar, Tricap)

if you go
EVIL DEAD RISE

Director: Lee Cronin
Stars: Alyssa Sutherland, Morgan Davies, Lily Sullivan
Rating: 5/5

Milestones on the road to union

1970

October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar. 

December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.

1971

March 1:  Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.

July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.

July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.

August 6:  The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.

August 15: Bahrain becomes independent.

September 3: Qatar becomes independent.

November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.

November 29:  At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.

November 30: Despite  a power sharing agreement, Tehran takes full control of Abu Musa. 

November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties

December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.

December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.

December 9: UAE joins the United Nations.

Explainer: Tanween Design Programme

Non-profit arts studio Tashkeel launched this annual initiative with the intention of supporting budding designers in the UAE. This year, three talents were chosen from hundreds of applicants to be a part of the sixth creative development programme. These are architect Abdulla Al Mulla, interior designer Lana El Samman and graphic designer Yara Habib.

The trio have been guided by experts from the industry over the course of nine months, as they developed their own products that merge their unique styles with traditional elements of Emirati design. This includes laboratory sessions, experimental and collaborative practice, investigation of new business models and evaluation.

It is led by British contemporary design project specialist Helen Voce and mentor Kevin Badni, and offers participants access to experts from across the world, including the likes of UK designer Gareth Neal and multidisciplinary designer and entrepreneur, Sheikh Salem Al Qassimi.

The final pieces are being revealed in a worldwide limited-edition release on the first day of Downtown Designs at Dubai Design Week 2019. Tashkeel will be at stand E31 at the exhibition.

Lisa Ball-Lechgar, deputy director of Tashkeel, said: “The diversity and calibre of the applicants this year … is reflective of the dynamic change that the UAE art and design industry is witnessing, with young creators resolute in making their bold design ideas a reality.”

UAE v Gibraltar

What: International friendly

When: 7pm kick off

Where: Rugby Park, Dubai Sports City

Admission: Free

Online: The match will be broadcast live on Dubai Exiles’ Facebook page

UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)

Secret Pigeon Service: Operation Colomba, Resistance and the Struggle to Liberate Europe
Gordon Corera, Harper Collins

The specs

Engine: 3.8-litre, twin-turbo V8

Transmission: eight-speed automatic

Power: 582bhp

Torque: 730Nm

Price: Dh649,000

On sale: now 

Frankenstein in Baghdad
Ahmed Saadawi
​​​​​​​Penguin Press

Pupils in Abu Dhabi are learning the importance of being active, eating well and leading a healthy lifestyle now and throughout adulthood, thanks to a newly launched programme 'Healthy Lifestyle'.

As part of the Healthy Lifestyle programme, specially trained coaches from City Football Schools, along with Healthpoint physicians have visited schools throughout Abu Dhabi to give fun and interactive lessons on working out regularly, making the right food choices, getting enough sleep and staying hydrated, just like their favourite footballers.

Organised by Manchester City FC and Healthpoint, Manchester City FC’s regional healthcare partner and part of Mubadala’s healthcare network, the ‘Healthy Lifestyle’ programme will visit 15 schools, meeting around 1,000 youngsters over the next five months.

Designed to give pupils all the information they need to improve their diet and fitness habits at home, at school and as they grow up, coaches from City Football Schools will work alongside teachers to lead the youngsters through a series of fun, creative and educational classes as well as activities, including playing football and other games.

Dr Mai Ahmed Al Jaber, head of public health at Healthpoint, said: “The programme has different aspects - diet, exercise, sleep and mental well-being. By having a focus on each of those and delivering information in a way that children can absorb easily it can help to address childhood obesity."

SPECS

Engine: 1.5-litre turbo

Power: 181hp

Torque: 230Nm

Transmission: 6-speed automatic

Starting price: Dh79,000

On sale: Now

Company profile

Name:+Thndr

Started:+October 2020

Founders:+Ahmad Hammouda and Seif Amr

Based: Cairo, Egypt

Sector: FinTech

Initial investment: pre-seed of+$800,000

Funding stage: series A;+$20 million

Investors: Tiger Global, Beco Capital, Prosus Ventures, Y Combinator, Global Ventures, Abdul Latif Jameel, Endure Capital, 4DX Ventures, Plus VC, Rabacap and MSA Capital

Politics in the West
TWISTERS

Director:+Lee+Isaac+Chung

Starring:+Glen+Powell,+Daisy+Edgar-Jones,+Anthony+Ramos

Rating:+2.5/5

Emergency phone numbers in the UAE

Estijaba – 8001717 –  number to call to request coronavirus testing

Ministry of Health and Prevention – 80011111

Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre

Emirates airline – 600555555

Etihad Airways – 600555666

Ambulance – 998

Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.

Company Profile

Name: HyveGeo
Started: 2023
Founders: Abdulaziz bin Redha, Dr Samsurin Welch, Eva Morales and Dr Harjit Singh
Based: Cambridge and Dubai
Number of employees: 8
Industry: Sustainability & Environment
Funding: $200,000 plus undisclosed grant
Investors: Venture capital and government

UAE currency: the story behind the money in your pockets
THE BIO

Favourite car: Koenigsegg Agera RS or Renault Trezor concept car.

Favourite book: I Am Pilgrim by Terry Hayes or Red Notice by Bill Browder.

Biggest inspiration: My husband Nik. He really got me through a lot with his positivity.

Favourite holiday destination: Being at home in Australia, as I travel all over the world for work. It’s great to just hang out with my husband and family.

 

 

Suggested picnic spots

Abu Dhabi
Umm Al Emarat Park
Yas Gateway Park
Delma Park
Al Bateen beach
Saadiyaat beach
The Corniche
Zayed Sports City
 
Dubai
Kite Beach
Zabeel Park
Al Nahda Pond Park
Mushrif Park
Safa Park
Al Mamzar Beach Park
Al Qudrah Lakes 

Our legal consultant

Name: Dr Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

World ranking (at month’s end)
Jan - 257
Feb - 198
Mar - 159
Apr - 161
May - 159
Jun – 162
Currently: 88

Year-end rank since turning pro
2016 - 279
2015 - 185
2014 - 143
2013 - 63
2012 - 384
2011 - 883

Afro salons

For women:
Sisu Hair Salon, Jumeirah 1, Dubai
Boho Salon, Al Barsha South, Dubai
Moonlight, Al Falah Street, Abu Dhabi
For men:
MK Barbershop, Dar Al Wasl Mall, Dubai
Regency Saloon, Al Zahiyah, Abu Dhabi
Uptown Barbershop, Al Nasseriya, Sharjah

COMPANY PROFILE

Company: Eco Way
Started: December 2023
Founder: Ivan Kroshnyi
Based: Dubai, UAE
Industry: Electric vehicles
Investors: Bootstrapped with undisclosed funding. Looking to raise funds from outside