March 11th, 2014
Good morning Ladies and Gentlemen,
Welcome to Dubai to this IIF MENA CEO’s meeting. Due to the Arab spring effect, when you look at our region as an outsider, it looks risky but once you live in the region, the prospects look good provided there is a functioning government.
The political turmoil in countries like Syria and Libya has adversely affected people’s perception of the region. However, UAE has set up a great example of how political stability, good governance, and visionary leadership can build a country.
Our leaders worked on multiple fronts to create a world-class infrastructure, to establish excellent travel connectivity, to develop vibrant logistics and transportation industry, to develop the top class leisure and hospitality facilities and all that is supported by a sound and well-regulated banking and financial services sector.
Dubai and UAE is the most appropriate choice for this meeting as it is not only the commercial and financial capital of the MENA region, it is also the most preferred tourist destination in the region.
Political stability, wise leadership and good governance helped UAE to become the second largest economy in the Arab world in a short span of time.
Of course, oil has contributed to this growth but still its contribution to GDP is only 40%. It is the vision and determination of our leaders, entrepreneurial spirit of the people, and good governance which has enabled UAE to become AED 1.4 Trillion economic powerhouse. Today UAE is recognized as the most attractive destination in the MENA region for business, leisure and tourism.
The global economic crisis of 2008 did impact our growth plans momentarily but UAE and Dubai bounced back in no time. We tripped, but did not fall, and were back on our feet much before the rest of the world. 2012 was the turnaround year for the UAE economy, and 2013 saw the economy pick up the steam.
In 2013, GDP grew close to 5%, stock market went up by over 100%. Dubai airport handled more than 65 Million passengers and became the 2nd busiest airport in the world. Dubai foreign trade volumes reached a new height of AED 1.3 Trillion during 2013.
Real estate prices improved by over 25%.Tourism, retail trade, financial services, logistics and transportation sector also contributed handsomely to this economic turnaround.
The prospects for UAE economy for 2014 and beyond are equally promising. The multiple free zones for specific industry clusters like technology, healthcare, outsourcing, commodity trading, manufacturing and financial services will continue to attract investments from local and foreign investors contributing to the economic growth.
The infrastructure spending by Dubai and Abu Dhabi will further fuel the growth.
As preparations for World Expo 2020 will start, it will further boost the economic activityin the coming years. Now I would like to spend few minutes talking about the UAE Banking sector -
The UAE banking sector is at AED 2.02 Trillion which is the largest in the MENA region and a major contributor to its GDP.
We have the most competitive banking landscape with 51 banks operating in the country and out of that 28 are foreign banks. Although events of 2008 liquidity crisis slowed down the growth of our financial sector but it did not have any material impact on its strength and long-term competitiveness.
From 2008 to 2012 the banking sector assets have been growing at a compounded annual growth rate of 5.5%.
However, in 2013 with the turnaround of the economy the Banking sector’s growth rate jumped to 13%.
During 2013, the banking sector Advances grew by 7% and Deposits grew by 9.5%.
Revenue went up by over 10% and since credit cost started normalizing across most of the banks, the Net Profit of the sector improved significantly.
I would like to thank the UAE Central Bank for prompt and effective decisions taken by them in the wake of 2008 crisis which helped to calm the markets and ensured a quick turnaround of the banking system.
Their effective implementation and monitoring of prudential regulations helped the banking system to maintain high liquidity and capital adequacy.
The Tier-1 capital adequacy ratio of the banking system went up from 15.4% in 2009 to 17% in 2013, and Advances to Deposits ratio came down from 108% in 2008 to 92% in 2013 leading to a very comfortable liquidity. The regulatory regime enacted by the Central Bank ensures stability of the system, protects the consumer, and is conducive for the growth of business. The consultative approach followed by them has helped in creating a balance between sustainable economic growth and protecting the banking system.
UAE being an established international financial centre of the region has a responsibility to adherent only to the local regulations but also to respect global financial regulation affecting international trade and commerce.
The banking sector in the UAE has been cognizant to its responsibility and has been compliant to all such regulations. During the course of the day we will have opportunities to listen to eminent economists and industry leaders on the issues and challenges being faced by the financial industry in the MENA region.
I am sure you will find the discussions enriching and enjoyable.
Thank you.
