UAE most competitive banking market: Study

12/01/2012 12:02 AST

Abu Dhabi Islamic Bank (ADIB) reports today that the UAE remains the most competitive banking market in the GCC, a key finding from its proprietary “GCC Banking Competitiveness Report.”

The recent issue of the report confirms that the UAE remains the most competitive banking market in the region.

The country’s population of approximately 8 million is served by 51 banks with more than 840 branches and over 4,000 ATMs, delivering high levels of service, yet lower profitability than its GCC counterparts.

ADIB further notes that UAE banks’ net interest margin, which is the spread between what banks pay for deposits and what they charge for financing and loans remains the lowest among the GCC, at an average of 2.9%.

Saudi banking spreads are currently closer to 3.5%, Qatar at 3.4% those of Kuwait banks are at around 3.2%.

Nevertheless, ADIB urges banks across the region to improve their levels of competitive analysis while at the same time raising the level of industry debate.

ADIB’s decision to start releasing extracts from its proprietary competitive analysis, via quarterly briefings with selected audiences, is a demonstration of its own commitment to improve regional competitive insight.

Comparing the number one and two banking markets by size in the GCC, the UAE and Saudi Arabia, Andrew Moir, Global Head of Strategy and Finance at ADIB, says: “Despite the fact that the UAE is a bigger banking market in terms of assets, it remains less profitable than that of Saudi Arabia. In the UAE, the mix of deposits, low customer charges, the presence of high levels of non-performing assets and competitive dynamics have negatively impacted banking profitability and capital ratios. However, lower net interest margin spreads means that consumers in the UAE are getting better rates overall but shareholders are getting lower returns as compared to those in other GCC markets.”

The “GCC Banking Competitiveness Report” is one of the tools with which ADIB has built its award-winning strategy and consolidated its position as a top-tier Islamic financial services institution.

Agencies