Despite 2012 being a challenging year and continued balance sheet derisking, the UAE banking system has been resilient, with capitalisation and liquidity levels remaining extremely healthy, and bank deposits and loans and advances showing single digit growth in the past year.
However, the UAE banking sector also faced additional regulatory tightening from the Central Bank in terms of customer protection laws, lending limits on large exposures, and liquidity regulations. As a result, competition has increased and margins have started to come under pressure. On the other hand, the environment for wholesale funding has become much more favourable and banks have taken advantage of that to strengthen and lengthen their
Against this backdrop, the key themes for 2012 for Emirates NBD were balance sheet optimisation, better capital and funding allocation, a drive towards revenue growth evidenced by strategic plans and roadmaps to transform the wholesale banking business.
In addition to this, the focus has also been on group-wide cost optimisation programmes, enhancing support functions such as the expansion of our shared services provider, Tanfeeth, strengthening platforms and optimising the distribution network and branch set-up. Finally, the bank has undertaken measured investments in growth areas such as enhancing our international footprint with the launch of the China representative office in May 2012.
For the banking industry, 2013 could continue to witness price competition, putting further pressure on margins.
Furthermore, competition will be seen, not only between banks, but also from other platforms, such as mobile phone telecom operators, who are launching their own mobile money solutions to provide easy remittance options for their customers.
However, banks are generally in an expansionary mode but, like in more mature markets, they are putting more and more efforts into reviewing their infrastructure setup, and optimising end-to-end processes, in order to create leaner and more efficient organisations.
Moreover, they will focus on network optimisation, differentiation of branch formats, improved customer service and convincing value propositions for their customers to capture a greater share of the fee-generating business.
For Emirates NBD, the focus in 2013 is on building a strong and engaged team, delivering excellent customer experience, and growing core businesses.
This growth includes a transformation in our wholesale banking business, expanding our retail and wealth management franchise and integrating Emirates Islamic Bank and Dubai Bank into a leading Islamic banking proposition in the region.