The banking sector has been in a state of upheaval over the past 12 months after 3,000 jobs were slashed in the UAE’s two main cities, Abu Dhabi and Dubai.
Nearly 900 jobs were cut across the banking sector in Abu Dhabi over the past year, with the number of employees in the sector dropping to 12,500 in the first quarter of 2017.
According to a report from the Statistics Centre Abu Dhabi (SCAD) on Tuesday, the sector saw a 6.9 per cent year-on-year decline in the number of employees compared to the 13,400 employees in Q1 2016. SCAD said the figures were for all commercial and Islamic banks it studied in Abu Dhabi.
In its analysis, the Statistics Centre also said that banks in Abu Dhabi collectively recorded AED7.7 billion in net income in the first quarter of 2017. Nearly 82.6 per cent of that income was earned by commercial banks, while the remaining 17.4 per cent went to Islamic banks.
The economic slowdown in the past two years, triggered by lower oil prices, has emphasised the need for consolidation, with several publicly listed banks reporting lower year-on-year profit growth and some reporting a decline in profitability, especially during 2016.
This is propelled by slower economic growth in the UAE, with data from the International Monetary Fund (IMF) predicting a 1.3 per cent growth rate in the country’s Gross Domestic Product (GDP) in 2017 compared to 2.7 per cent in 2016.
BMI Research warned in January that GCC banks are facing their toughest conditions since the global financial crisis this year, with the combination of lower oil prices, reduction in capital expenditure and increased drawdowns in government deposits squeezing liquidity and weighing on lending opportunities.
Meanwhile, the possibility of a banking crisis would have a massive impact on the economy because of the sheer volume of the sector.
The UAE’s banks top the list of the banking sectors in terms of asset volume in the GCC region, with a total value of approximately $711 billion (AED2. 61 trillion) in 2016, according to statistics from the Central Bank of the UAE.
This reflects the extent of the sector’s importance in terms of supporting the UAE’s economy, according the UAE’s official news agency WAM.
The Saudi Arabia banking sector came second, with a total asset value of $602bn, while the banking sector of Qatar came in third place with $349bn, followed by Kuwait with $198bn, Bahrain with $193bn and finally Oman with around $70bn.
According to BMI Research, the slowdown in the banking sector would likely be sustained over the next five years.
Full article: http://ameinfo.com/money/banking-finance/uae-banking-sector-crisis-3000-jobs-cut/