The GCC banking sector recorded lower returns in 2016, particularly due to increased provisioning and impairment charges as loan asset quality remained under pressure.

In the UAE, the banking sector posted a 6.3 percent decline in net profit in 2016 although it recorded a return on assets of 1.6 percent (compared to 1.9 percent in 2015).

The diversification of the UAE economy, including the service sector, is helping maintain growth, according to Gulf Business‘ annual Top 50 banks in the GCC report.

Wholesale trade is growing, along with transport communication, and tourism and travel. Among UAE banks, Emirates NBD’s loans rose by 7 per cent year-on-year, while Abu Dhabi Commercial Bank’s rose by 8 per cent. Dubai Islamic Bank’s financing portfolio also grew strongly.

A big development in the UAE is that the region’s biggest merger, between the UAE’s National Bank of Abu Dhabi (NBAD) and First Gulf Bank, was announced in 2016 and has recently been finalised. The merged bank is called First Abu Dhabi Bank (FADB). The combined $183bn asset base will be the GCC’s second largest institution – just behind Qatar’s QNB – but largest by equity.

The merger is significant as it creates an institution that can compete regionally and internationally. FADB will become the number one wholesale bank in the region with international reach. The bank will look to drive growth in core home market sectors and will be able to better serve UAE corporates with international ambitions as well as support international companies operating in the country.

It will invest in distribution capabilities and focus on cross-selling wealth management products and services. Cost savings from the merger are estimated at Dhs500m ($136.1m) per year, with benefits realised over three years with an estimated one-time integration cost of Dhs600m ($163.4m).

TOP 10 BANKS IN THE UAE
(Based on total assets of listed banks at the end of 2016)

1. Emirates NBD

Assets in 2016 ($000): 121,972,233
Assets in 2015 ($000): 110,688,858
Growth (2015-2016): 10.19%
2016 net profit ($000): 1,970,913
Return on assets (ROA) in 2016: 1.62%

2. National Bank of Abu Dhabi

Assets in 2016 ($000): 114,542,200
Assets in 2015 ($000): 110,689,847
Growth (2015-2016): 3.48%
2016 net profit ($000): 1,441,885
Return on assets (ROA) in 2016: 1.26%

3. Abu Dhabi Commercial Bank

Assets in 2016 ($000): 70,321,061
Assets in 2015 ($000): 62,147,319
Growth (2015-2016): 13.15%
2016 net profit ($000): 1,131,791
Return on assets (ROA) in 2016: 1.61%

4. First Gulf Bank

Assets in 2016 ($000): 66,732,443
Assets in 2015 ($000): 61,937,482
Growth (2015-2016): 7.74%
2016 net profit ($000): 1,652,546
Return on assets (ROA) in 2016: 2.48%

5. Dubai Islamic Bank

Assets in 2016 ($000): 47,636,947
Assets in 2015 ($000): 40,810,646
Growth (2015-2016): 16.73%
2016 net profit ($000): 1,102,655
Return on assets (ROA) in 2016: 2.31%

6. Mashreqbank

Assets in 2016 ($000): 33,436,846
Assets in 2015 ($000): 31,352,348
Growth (2015-2016): 6.65%
2016 net profit ($000): 531,966
Return on assets (ROA) in 2016: 1.59%

7. Abu Dhabi Islamic Bank

Assets in 2016 ($000): 33,294,235
Assets in 2015 ($000): 32,229,240
Growth (2015-2016): 3.30%
2016 net profit ($000): 531,870
Return on assets (ROA) in 2016: 1.60%

8. Union National Bank

Assets in 2016 ($000): 28,291,749
Assets in 2015 ($000): 27,739,318
Growth (2015-2016): 1.99%
2016 net profit ($000): 430,868
Return on assets (ROA) in 2016: 1.52%

9. Commercial Bank of Dubai

Assets in 2016 ($000): 17,446,168
Assets in 2015 ($000): 15,753,849
Growth (2015-2016): 10.74%
2016 net profit ($000): 273,091
Return on assets (ROA) in 2016: 1.57%

10. RAKBANK

Assets in 2016 ($000): 11,573,708
Assets in 2015 ($000): 11,040,853
Growth (2015-2016): 4.83%
2016 net profit ($000): 180,500
Return on assets (ROA) in 2016: 1.56%

Source: Gulf Business

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