The UAE Central Bank will maintain a net profit of Dh3.5 billion, the same compared to the last year, despite revenues falling from Dh7.93bn in 2007 to Dh7.195bn, according to a bank statement.
Total expected expenses of the bank will come down to Dh3.69bn in 2008 from Dh4.43bn due to lower interest expense on certificates of deposit.
In November, the Central Bank lowered interest rates on certificates of deposit by 20 basis points in line with the new rate cuts announced by the US Federal Reserve.
According to experts, a CD rate cut is a short-term measure to drain away liquidity from the market. The cut certainly makes CD less attractive, making people think twice before buying dirhams.
The Central Bank also reviewed applications submitted by banks operating in the UAE to expand their businesses and open new branches at the board of directors meeting, which was attended by Governor Sultan bin Nasser Al Suwaidi.
The board approved the applications, which fulfil the terms as per the law and regulations, as applied to each business activity. The board expects net profits of banks for 2007 to be higher than that of 2006, the statement said.
The banks are also pressing ahead with plans to boost their capital in line with the Central Bank instructions to strengthen their financial base. An analysis done by Emirates Business on the nine-month results of UAE banks showed a positive trend, with third-quarter results showing an overall growth of 10 to 12 per cent.
Central Bank profit to stay at Dh3.5bn