13
ANNUAL REPORT 2015
BANKING & MONETARY DEVELOPMENTS
I
n accordance with global banking standards
the UAE banking sector is well capitalised
and maintain comfortable capital adequacy
ratios. As per the UAE Central Bank regulations,
banks have to maintain a minimum of 12 per
cent Total Capital Adequacy ratio and eight per
cent Tier 1 Capital Adequacy ratio.
Banking sector assets reached AED 2,474.4
billion in 2015 while loans as a percentage
of GDP stabilised at around 80 per cent in
2014 and is expected to be around 95 per
cent in 2015. Loan to Deposit ratio (LTD)
has bounced to around 92 per cent in 2015,
up from a historical low in 2014 of around
87 per cent.
The value of banking sector assets as a
percentage of the country’s GDP is expected to
reach around 170 per cent at the end of 2015.
Banking sector assets growth is much faster
than the growth of GDP. Indeed the sector is by
far the most profitable sector of the economy.
Therefore, the financial services sector has
made a significant contribution to the UAE’s GDP
UAE BANKING
SECTOR IN
ROBUST SHAPE
of eight per cent in 2014 and plays a dynamic
role in economic development through the
mobilisation of financial resources and providing
the required financing to support the national
economy and create investment opportunities.
Furthermore, the International Monetary
Fund’s (IMF) 2015
Staff
Report
on the UAE
economy lauds the country’s banking sector
as well-capitalised, liquid, profitable, and
with low non-performing loans (NPLs). The
IMF also welcomed plans by the Central Bank
to strengthen the banking regulatory and
supervisory framework, including the phasing
in Basel III capital and liquidity standards
over 2015–19.
While uncertainty about the oil price affected
the overall economy, the country’s banking
sector remained robust with sufficient liquidity
and buffers in place to absorb oil price shocks.
Ratings agency, Moody's Investors Service,
maintained its stable outlook on the UAE banking
system in its December 2015 report entitled
Resilient Capital and Liquidity Buffers Drive Our
“
Return on assets is likely to remain at around
two per cent, while profitability will remain stable,
supported by solid margins, stable operating costs
and provisioning charges.
”
