By Staff writer
Shayne Nelson says banking sector is too crowded as over 50 banks vie for business from small population
The CEO of Emirates NBD, Dubai's largest lender, has reportedly called for more mergers in the UAE's banking sector, saying there are too many banks serving a relatively small population.
Speaking to Gulf Business, Shayne Nelson said that banks in the country are struggling to diversify their income streams in such a crowded marketplace.
“There are a lot of licensed banks in the UAE, but the population isn’t that big. It’s unusual for so many banks to be in a country that has the population that the UAE has,” he told the magazine in an interview.
Nelson said that consolidation would help the UAE's banking industry which has more than 50 banks operating in the country, not including those that function out of the Dubai International Financial Centre (DIFC).
He said banks should follow the example of Emirates NBD which was itself a merger of Emirates Bank International and National Bank of Dubai in 2007.
“Emirates NBD is an example of where we had two good mid-size banks create a regional champion and we need more of that going forward,” Nelson said.
Emirates NBD last month posted a 34.8 percent jump in second-quarter net profit, beating analysts' forecasts as revenue growth outstripped another significant hike in loan impairments.
The lender, 55.6-percent owned by state fund Investment Corp of Dubai, made a net profit of AED1.31 billion ($357 million) in the three months to June 30, Reuters calculated, compared to AED972 million in the same period last year.
The bank's earnings performance has been boosted in recent quarters by improved economic conditions in Dubai, which has recovered from a deep financial crisis on the back of a rebound in the key real estate sector.