UAE banks’ capital up by over $1bn

UAE banks boosted their shareholders equity by more than $1billion in 18 months to maintain their position as having the largest capital base in the Arab region, according to Arab banking data.

From around $63bn at the end of 2009, the combined capital of the UAE’s 23 national banks and 28 foreign units swelled to nearly $73.2bn at the end of the first half of 2011, showed the figures by the Union of Arab Banks (UAB).

The increase meant that UAE banks retained their status as having the largest capital in the region, controlling nearly 28 per cent of the total shareholders equity of the Arab banking sector, the Beirut-based UAB said in a report. The rise followed a record annual increase of nearly Dh78bn in the banks’ combined capital through 2009, which is regarded by analyst as one of the most difficult financial periods for banks in the UAE and nearby Gulf nations.

The increase is in line with central bank instructions to banks to bolster their financial position following the 2008 global financial distress and regional debt default problems in 2009. Most of the increase came from part of the profits to the shareholders and almost all of it was through 2010.

“This increase in the UAE banks’ capital is a very good development along with the sharp rise in provisions…it strengthens confidence in the banking sector by investors, deposits and shareholders,” said Ziad Dabbas, financial adviser at the government-controlled National Bank of Abu Dhabi.

The capital expansion runs parallel to a drive by banks to build up loan loss provisions to guard against fresh crisis, with NPL allocations soaring by nearly Dh15bn between the end of 2009 and June 2011. Provisions stood at Dh47.3bn at the end of June and peaked at Dh50.4 billion at the end of September.

UAB figures showed Saudi banks had the second largest capital in the Arab region, standing at around Dh56bn at the end of May 2011.

Qatari banks came third after overtaking Bahrain’s banks, with their combined capital rocketing from around $17.3bn at the end of 2009 to nearly $26.7bn at the end of May, the highest capital growth in the region.

The bank capital was put at $25.8bn in Bahrain, around $21.9bn in Kuwait, $13.5bn in Egypt, $9.7bn in Morocco, $9.5bn in Lebanon, $7.2bn in Jordan and about $7.19bn in Algeria.

The capital stood at $5.5bn in Tunisia, $5.06bn in Syria, $5bn in Iraq, $3.3bn in Libya, $3.1bn in Sudan, $1.1bn in Palestine, $894m in Yemen and around $517m in Mauritania.

Follow Emirates 24|7 on Google News.