282.4 billion investments 9 major local banksTruth Consultancy
She AED 22.2 billion in 2016 annual growth of 8.5%
Abdul Fattah Abu Dhabi victor
Date: March 19, 2017
Local financial report revealed high total investment of nine major banks in the banking sector of the UAE to 282.4 billion dirhams at the end of 2016, annual growth reached a record rate of 8.5%, compared to 260.2 billion dirhams, indicating that the nine banks added new investments amounted to 22.2 billion dirhams last year.
Reda Mosallam general manager of the company «Truth» Economic Consultancy, which issued the report, said that the report showed that the nine banks added new assets during the last year valued at 148.3 billion dirhams, total assets rose to about two billion dirhams compared to about 1.85 trillion dirhams by the end of 2015 an annual growth of 8.1% .
He explained that the sample banks set to reflect the UAE’s banking sector and included National Bank of Abu Dhabi and Abu Dhabi Commercial Bank and Union National Bank and First Gulf Bank and Abu Dhabi Islamic Bank and National Bank of Umm Al Qaiwain Emirates National Bank of Dubai and Commercial Bank of Dubai, Mashreq Bank, where for the banks sample financial analysis prepared then make Last financial analysis for the total sample banks and then circulate indicators on the UAE banking sector.
He pointed out that, according to the report, total shareholders’ equity nine banks rose from 245.5 billion dirhams at the end of 2015 of 16.1 billion dirhams to reach 261.6 billion dirhams at the end of 2016 a record growth of 16.1%, a reference of this increase to the increase in the volume of retained earnings, pointing out that the total revenue benefits of the sample banks at the end of 2016, nearly 65.7 billion dirhams.
While it was of 60.6 billion dirhams at the end of December 2015 increased its 8% worth 5.1 billion dirhams, bringing net interest income and other operating revenue for banks sample at the end of December 2016 nearly 66.7 billion dirhams, while it was amounting to 66.5 billion dirhams at the end of fiscal year 2015 growth of 0.3%, a reference to an increase in banks’ interest income, fees and commissions, as well as earnings from foreign currency conversion.
The report pointed out that the net nine banks earnings declined during 2016 to 33.63 billion dirhams, down 1.35 billion dirhams, compared with 34.98 billion dirhams at the end of December 2015, a reference drop to the drop height of the financial value of the asset allocations, as well as higher general and administrative expenses and operating expenses associated indirect revenue by more than high revenue.
He explained that the total loans and advances granted by the nine banks rose by 64.8 billion dirhams from 1.13 trillion dirhams by the end of 2015 to 1.2 trillion dirhams by the end of 2016 growth of 5.7%, while customer deposits increased by 7.3% compared with the end of December 2015, which was 1.23 trillion dirhams rose by 89.33 billion dirhams to 1.32 trillion dirhams by the end of December 2016.
While the total direct costs of benefits for banks sample expenses at the end of December 2016 about 19.4 billion dirhams, an increase of 5.2 billion dirhams, compared with the end of 2015, where the total interest expense for the sample banks 14.2 billion dirhams constitute a high proportion of 27%.
The report emphasized the need for the integration of small and medium-sized banks to reduce operating costs and administrative expenses and face great economic challenges, especially economic blocs and giant face of economic fluctuations faced by financial entities at different intervals that lead to confront problems may make it difficult for small and medium-sized banks face it, pointing to the importance of creating a banking entities large in order to enter global markets stronger position to compete.
The report showed that all banks and national banks, the state has made great efforts to achieve the requirements of «Basel 3», exceeding the index «Basel 3» on the level of banks and state banks required a ratio of 10.5%.
He pointed out that following the global financial crisis that hit the international economic business rules, which forced those in charge of the Basel Committee on Banking Supervision to take a set of new rules that will work on a capital increase by more than 3-fold capital, which is imperative for banks to retain its size as a reserve in the midst of efforts to push banks toward more conservative positions and force them to take cover behind the greatest bulwark against potential losses.
It came the new rules, two years after the collapse of «Lehman Brothers» who was a spark global banking crisis necessitated overcome billions of dollars in government subsidies, so it embarked Basel Committee to take caution to cope with fluctuations and financial challenges associated with economic cycles and reached to the need to increase the capital adequacy ratio banks all kinds of money to the level of 10.5% to be a new indicator called the «Basel 3» instead of 8% in the «Basel 2 index.»
He explained that the ways of modern banking risk measurement «any rules precautionary» stipulated by the Basel Committee is among the most important methods used to measure the degree of risk, especially in the banking world, adding that in any case, the index «Basel 3» rate has given the opportunity to all banks global period of time for the application of this index at the end of fiscal year 2018.