Commercial banks in the United Arab Emirates (UAE) are expected to report net profit growth of about 20 per cent in 2013, higher than that posted last year, the chairman of the Gulf state’s banking federation said on Wednesday.
UAE banks such as Dubai lender Emirates NBD and National Bank of Abu Dhabi posted strong second-quarter earnings thanks to an economic recovery in key sectors, primarily real estate, and lower provisions as the Gulf state recovers from debt troubles at Dubai’s state-linked entities.
“Banks here (the UAE) managed to overcome challenging global and regional conditions. We expect banks to report a 20 per cent growth in net profit in 2013,” Abdulaziz al-Ghurair, chairman of the banking federation and chief executive of Dubai lender Mashreq, told reporters in Dubai.
Al-Ghurair said profit growth for banks in the country last year was 15 per cent.
Total assets of UAE banks grew eight per cent to Dhs1.9 trillion ($517 billion) in the first six months of this year, while net profit during the period was Dhs13.6 billion, al-Ghurair said.
Lenders in the Gulf state are not ready to implement The Foreign Account Tax Compliance Act, or FATCA, a law that cracks down on offshore tax avoidance by Americans, the executive said.
“UAE banks are not ready to implement the FATCA. It will cost banks here not less than Dhs100 million to get the right systems and infrastructure in place,” he said.
“We don’t like FATCA and we don’t want it but we don’t have a choice.”
The U.S. Treasury Department said in July it would postpone enforcement of a new law that cracks down on offshore tax avoidance by Americans by six months to give foreign banks more time to figure out how to comply.
FATCA requires foreign banks, insurance companies and investment funds to send the U.S. Internal Revenue Service information about Americans’ offshore accounts worth more than $50,000.