UAE banks cut more than 600 workers, 75 branches in 2017

National and foreign banks are continuing to seek cost savings, according to the UAE Banks Federation

Poll: 66% of UAE residents say better banking standards needed

Banks in the UAE laid off more than 600 staff last year and cut branches, according to the UAE Banks Federation’s 2018 annual report.

Data on the banking sector showed 29,056 employees at national banks in December 2017 compared to 29,532 in the same month the previous year, a reduction of 479.

Foreign banks in the country cut their workforce by 128, reducing staff from 7,439 to 7,311.

The cuts followed particularly pronounced layoffs the previous year when national banks cut 2,820 staff from the 32,352 seen in December 2015 and foreign banks cut 368 from the 7,807 seen the previous year.

The number of national bank branches also reduced by 75 last year compared to 2016 from 846 to 771, while foreign banks cut three branches, from 85 to 82.

The UAE Banks Federation noted that banks had maintained a strategy of reducing operating costs by cutting physical infrastructure and seeking efficiency savings.

“Banking infrastructure has been contracting since 2014, with consolidation in branches and employees,” the report noted.

“The reduction in the physical infrastructure and employees is because of consolidation, improving cost efficiencies and greater focus on alternate, digital channels.”

One key area of consolidation last year came through the merger of two of the country’s largest banks in Apri – National Bank of Abu Dhabi and First Gulf Bank.

Read: First Abu Dhabi Bank’s 2017 profit hit by merger costs

Outside of the reduction in staff, the UAE banking sector saw a 4.1 per cent increase in deposits last year to Dhs1,627.7bn ($430bn).

Assets grew 4 per cent to Dhs2,695bn ($733.7bn).

The UAE Banks Federation said it expected oil prices to remain at similar levels this year to 2017, strengthening the country’s fiscal position, investment and spending.

Banks are expected to see an impact on their profits due to the implementation of IFRS9, value added tax, Basel III and AML compliance but are set to engage in more prudent and performance-based lending to SMEs, according to the organisation’s 2018 outlook.

They will also continue to seek cost efficiencies to improve profitability through consolidation, “back office offshore models” and fintech solutions, it said.