So a reliable and strong banking system is considered as a primary pillar of a

So a reliable and strong banking system is considered

This preview shows page 41 - 46 out of 62 pages.

So, a reliable and strong banking system is considered as a primary pillar of a sustainable economic development. 1. Banks and the Economy The banking sector in UAE plays a dynamic role in the economic development through the mobilization of financial resources and providing the required financing for the support of the national economy and creating the required investments for that purpose 41
Image of page 41
Gross Domestic Product (GDP), key indicator of growth, stood around AED 1.3 trillion at current prices in 2016 (-2.6% growth rate). Meanwhile The Real GDP (GDP in fixed prices) increase from 1.35 trillion in 2015 to 1.39 trillion in 2016 with a growth rate of 3%. Domestic Product for non-oil sectors grow by 3.9% to reach about AED 1.060 trillion (83% of GDP). Financial services sector has contributed with around 10% of GDP and 12% of non-oil sector domestic product with a total value of around AED 130 billion, with a growth rate of 3% (%) 20 11 20 12 20 13 20 14 20 15 20 16 Contribution of financial sector of Nominal GDP 6% 6% 7% 9% 9.5 % 10 % Contribution of financial sector of non- oil domestic product 11 % 10 % 12 % 13 % 13 % 12 % Contribution of financial sector of the real GDP 6.7 % 6.5 % 6.7 % 6.9 % 6.7 % 6.4 % The main drivers of growth of the banking sector can be summarized as follows: •The size of assets: 42
Image of page 42
Total assets of the banking sector in the UAE rose by 9 times since 2000, to reach AED 2.6 trillion in 2016, and to realize an increase of 5.5% compared with 2015 constituting around 200% of GDP at current prices and 244% of non-oil Domestic Product and so leading the sector to be the largest in MENA region. As 2016 local banks (includes the local Islamic banks) accounted for 86% of the total assets to reach around 2.23 trillion., while total assets of the Islamic banks accounted 19% of total banks assets to reach AED 505 billion. •Deposits Total deposits increased by 6.2% in 2016 to reached AED 1536 billion compared to AED 1471 billion in 2015. The financial depth, which represents the ratio of deposits to GDP, reached 122% of GDP and 146% of non-oil domestic product, reflecting the importance of the banking sector for the economy •Gross Credit Gross credit increased by 6% in 2016, reaching around AED 1574 billion 43
Image of page 43
compared to AED 1486 billion in 2015. The ratio of lending-to-Stable Resources of banks remained during the whole year of 2015 above 86% and so contributing to financial stability. As regards Islamic banks, their funding increased by 9.4% in 2016 to reach around AED 335 billion from AED306 billion in 2015. •Numbers of branches There was no significant change in the number of branches of banks in UAE in 2016, the number still around 935. Meanwhile, The number of ATMs increased by 3% in 2015, to reach 5243 ATMs, Capital Market Indicators The banking sector in the UAE has contributed the majority towards total market capitalization representing 45% in 2015. Telecommunications has contributed 24% and finally the real estate sector, in third place, contributes 17% in 2015. Total market capitalization as at December 2015 was AED693.8 billion 2. Global Competitiveness indicators 2016/2017: 44
Image of page 44
According to the Global Competitiveness indicators (GCI), The UAE
Image of page 45
Image of page 46

You've reached the end of your free preview.

Want to read all 62 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture