National banks control 84% of total assets

National banks in the UAE controlled more than two-thirds of the country's overall banking operations in 2009, although they are outnumbered by foreign financial units, according to a new banking report.

At the end of 2009, the country's 24 national banks possessed about $355.5 billion (Dh1,305bn) in assets and nearly a fifth of them were controlled by Dubai's Emirates NBD, showed the report by the Beirut-based Union of Arab Banks (UAB).

The combined assets of national banks accounted for nearly 84.2 per cent of the total assets of Dh1,519bn controlled by the UAE's banking sector, which also includes 28 foreign institutions, the figures showed.

National banks dominated lending activity in the country, the second-largest Arab economy, with total credit standing at about $231.9bn at the end of 2009, nearly 83.6 per cent of the banking sector's total loans of Dh1,017bn.

The "special report" on the UAE banking sector, published in the UAB's monthly magazine, showed national banks sat atop nearly $229.8bn in deposits, accounting for about 85.8 per cent of the total deposits with the baking sector of nearly Dh982bn.

At the end of last year, shareholders equity of national banks, comprising their capital and reserves, peaked at about $45.7bn, nearly 72 per cent of the sector's total equity.

A breakdown showed Emirates NBD, created from the merger of National Bank of Dubai and Emirates Bank International, was by far the largest bank in the UAE and one of the largest units in the Middle East in terms of assets, which stood at about $76.7bn at the end of 2009, almost unchanged from the previous year. The assets at the end of 2009 accounted for just over 18 per cent of the banking sector's consolidated assets of Dh1,519bn at the end of 2009.

The government-controlled National Bank of Abu Dhabi (NBAD) came second in assets, with about $53.6bn. The Abu Dhabi Commercial Bank (ADCB), another government-held major bank, had the third largest assets of about $43.6bn followed by First Gulf Bank (FGB), also a government-controlled institution, with about $34.1bn.

Mashreq came fifth in the ranking, with assets of about $25.7bn, followed by Dubai Islamic Bank (DIB), Union National Bank (UNB), Abu Dhabi Islamic Bank (Adib), Dubai Commercial Bank (DCB) and Emirates Islamic Bank (EIB).

The report showed total assets of national banks grew by about 7.5 per cent in 2009 while there was an increase of about five per cent in credit, 9.5 per cent in deposits and 23 per cent in shareholders equity. In contrast, their net profits slumped by nearly 16 per cent from $5.701bn to $4.797bn.

Analysts attributed the decline to a surge in the banks' non-performing loans provisions through 2009 following the eruption of the global fiscal crisis and their exposure to two ailing Saudi business conglomerates.

A breakdown showed Emirates NBD achieved the highest earnings of $911 million, followed by FGB, which netted $901m and NBAD with $823m. ADCB suffered from a loss of $140m.

The figures showed the five largest banks in the UAE – Emirates NBD, NBAD, ADCB, FGB and Mashreq – controlled nearly 65 per cent of the total assets of national banks and about 56 per cent of the overall assets of the country's banking sector, the largest in the Arab world.

Follow Emirates 24|7 on Google News.