UAE banks to see growth in assets, deposits, Q1 2009

The UAE banking sector has seen positive growth in both assets and deposits for the first quarter of the year, according to the vice chairman of the Emirates Banks Association.

Ahmed Al Tayer, who is also the chairman of Emirates NBD, told reporters on the sidelines of an Arab banking conference in Dubai on Sunday that current high loan to deposit ratios at the country's banks were being resolved by increases in deposited sums.  

His comments come just two months after it was revealed that loan to deposit rates were as high as 125 percent at some banks, a situation the UAE Central Bank governor Sultan Nasser Al Suweidi termed "not appropriate" at the time.

Gross loans and advances at UAE banks at the end of January exceeded deposits by AED116bn, Suweidi said, adding that “all banks must be working on this."

Tayer said banks were now seeing a boost in deposits. “People are raising their deposits and the first quarter will show positive deposits," he said  

Furthermore, speculation that cash withdrawls during the second quarter of 2009 would increase as expatriates left the UAE when the schools closed, was not a large concern, Tayer added.

It was “normal” summer behaviour for people to “spend on their holidays”, he countered.   

Assets held by UAE banks are also set to grow in the first quarter of 2009, despite the downturn in Dubai's real estate sector.

 “Q1 will show growth in assets,” Tayer said, but did not elaborate on where the growth would come from.

In response to questions on possible mergers among Emirates banks, Tayer said he thought plans were on hold for the time being, while the sector waited to see how the global crisis panned out.

“After this crisis everybody has revised their strategies so I do not think anyone will take decision today for consolidations and mergers,” he said.

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