Souq.com expects to double its sales during this year’s annual event, compared with its 2014 editionNovember 25, 2015 9:59
A bankable future?
With the impending job cuts at EmiratesNBD and a less than rosier outlook for Emirates Islamic Bank, you may be persuaded to think the banking sector in the UAE is in for a toss. But you would be wrong.
March 14, 2012 3:53 by Eva Fernandes
It is been a tough week for banking this week and as a rather gloomy forecast in today’s The National predicts, it is not going to get any better. Yesterday the local press was rocked with rumours that the UAE’s largest bank Emirates NBD is looking to cut 15 percent of its workforce to “reduce costs”- the job cuts will affect up to 700 employees. The redundancies are expected to be carried out this month. To date, Emirates NBD has refused to comment on the news, but if the jobs cuts go through it will mark the largest round of banking cuts since HSBC cut more than 500 people last year.
Things, it would seem, aren’t too rosy at the giant’s Islamic banking arm: Emirates Islamic Bank either. Last year, EIB suffered a net loss of Dh448 million, a crashing step down from the Dh59 million profit the bank enjoyed year before last. Of course, matters have been complicated by the acquisition of Dubai Bank-the failed Islamic Bank-which ENBD bought for Dh10.
Oh yeah, don’t forget that just last week Dubai Bank won three Bronze awards at the Las Vegas awards ceremony the International Business Awards: Innovation in Customer Service, Contact Center of the Year and Customer Service Department of the Year. The trophies may be coming in, but with a failed and problematic extra Islamic banking arm on its hands, the future of Emirates Islamic Bank isn’t looking too good.
Shabbir Malik, a banks analyst for EFG-Hermes told The National he expects a poor performance from the bank: “We are expecting the loan book to be lower than the sector average for [EIB’s parent] Emirates NBD and its subsidiaries, which we expect to grow slower than its sector. We expect growth to come from Abu Dhabi banks.”
Yet, it isn’t all doom and gloom for banking here in the Emirates. In fact, at a shareholder meeting last night, National Bank of Abu Dhabi (NBAD) announced rather ambitious plans of a worldwide expansion and even more ambitious plans of quadrupling its annual profits. Michael Tomalin, soon-to-retire NBAD chief said: “We’d like to get up to around number 100 in the world.” NBAD says it hopes to increase annual earnings to a hefty Dh16 billion within nine years in 2021.Until then, the bank is looking to expand its operations in Brazil, China, Malayasia, India and Indonesia.
Perhaps the most sobering predictions we have read of the banking sector come from financial consultancy A.T. Kearney. According to predictions made by Cyril Garbois, head of A.T. Kearney’s financial institution in the Middle East, the profitability of banks here in the GCC has now returned to pre-crisis levels in all markets. Despite the impending doom of the Euro-debt crisis, the tumultuous Arab Spring and potential geographical threats, Garbois predicts a favorable overall growth: “While conditions differ from country to country and from bank to bank, we expect overall sustained growth. The key challenge for GCC banks will be balancing growth aspirations with increasing cost pressure. But, there are country specific opportunities for banks that can manage a fast expansion.”