2019 has been “a pretty good year” for the UAE economy, according to the regional CEO of Standard Chartered, helping the bank to record “very strong” first quarter results.
Sunil Kaushal, Standard Chartered bank’s regional CEO for Africa and the Middle East, arrived in the United Arab Emirates in October 2015, when things were a lot more challenging.
“2015 was a tough year, with oil prices coming off the end of 2014. And the issue just got compounded at the beginning of 2016, when oil prices went down to $26, $28 and there were a lot of leading research houses saying it’s going to hit $10,” he recalled.
“Given that backdrop, there was a natural pull back across the region and across all resource-based economies, in terms of the spending that the government was doing. It is also important to remember the government spending forms a large portion of the economic activity in many of these markets…. But, the fact is, that a lot of the government spend was pulled back.”
Fast forward to 2019 and Kaushal is much more optimistic about the outlook for the UAE. “I think this has been a pretty good year, in the relative sense of where we came from,” he said.
The reason he believes things are improving is because companies in the region expected the worst and were smart enough to rein in their spending and costs.
“Clearly people worked very hard on their own business models, pulled back on core efficiencies quite hard and were able to maintain, or reduce, their costs quite significantly, in a bid to maintain the margins. Most businesses came in with a background, or a mind-set, that the environment was going to be tough and positioned themselves for that,” he said.
The banks's own performance is heavily linked to the health of the overall economy, with one being a mirror image of the other, he said.
“If you look at the 2018 numbers, the first half was very strong, in the second half, when we faced challenges, we took some steps in terms of managing our own portfolios, with some corrective actions that we took.”
Sources told Reuters that these corrective actions included job cuts in late 2018 and Kaushal acknowledged that the slowdown in the property sector in the UAE last year presented some challenges, but he is upbeat that the outlook for the bank going forward is very positive.
“If we look at our first quarter results they have been very strong, we have not recovered but we have done very well… and it is sustainable… This is not a market where growth is coming very easy, so double digit growth in constant currency is pretty good. I think we have done reasonably well.”
First quarter results announced at the end of April saw the bank’s global operations post a 10 percent rise in pre-tax profits to $1.38 billion. In a geographical breakdown of Q1 results, operating profit was up 13 percent in the Middle East and North African, compared to Q4 2018. By comparison, it was down 12 percent in Europe and the Americas and up just 1 percent in China and North Asia.
In a review of the quarterly results, the bank said the strong sectors were financial markets and corporate finance, which offset lower income from the wealth management and retail sectors. In terms of regional breakdown, it also said “higher contributions from Nigeria and Pakistan more than offset lower income in UAE”.
Read the full interview with Sunil Kaushal in Arabian Business magazine on July 14.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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