ID :
78034
Wed, 09/02/2009 - 15:59
Auther :
Shortlink :
https://www.oananews.org//node/78034
The shortlink copeid
First Gulf Bank tops efficiency ratios among UAE banks
Abu Dhabi, Sept 2, 2009 (WAM) - All the major UAE banks have maintained high efficiency ratios derived from the difference between costs and income, with First Gulf Bank (FGB) boasting one of the highest. FGB has a cost-to-income ratio of just above 20 per cent for the first half of the current year.
"FGB has further tightened its costs by Dh36 million or 12 per cent quarter-on-quarter, making the bank one of the most efficient in the world with a cost-to-income ratio of 19.6 per cent in the second quarter, down from 22.2 per cent in the first quarter," said a study on UAE banks by Credit Suisse.
FGB has maintained the efficiency ratio at the same level through the first half of 2008 and the first half of the current year at around 20 per cent. In the case of National Bank of Abu Dhabi (NBAD), the ratio has marginally gone down from 24.53 per cent to 26.44 per cent in the first half of the current year. The higher the number, lower the efficiency.
However, Mashreqbank has not been able to curb the deterioration of the efficiency ratio as it has gone from 36.62 per cent in the first half of 2008 to 37.53 per cent during the same period in the current year. Likewise, Abu Dhabi Commercial Bank's efficiency ratio went from 31.11 per cent to 33.37 per cent during this period. But Emirates NBD, the largest bank in the UAE, has been able to curb the ratio and improve the efficiency of the bank. Its ratio has gone from 37.42 per cent to 32.84 per cent between the first halves of 2008 and the current year.
"Though the efficiency ratio of UAE banks is bound to improve in the coming quarters with more cost cutting measures including lay-offs being in the offing, the imminent provisions to be made against exposures to certain corporate loans including the Saudi duo will certainly weigh on the net profit of the banks," said an analyst who sought to remain anonymous.
According to him, a few banks that have been aggressive on the retail side are carrying about 20 per cent non-performing loans (NPLs) in their credit card and personal loan portfolios. Substantial provisions required to be made by some banks for the current year will certainly have an impact on their capital adequacy ratio (CAR) which currently is at healthy levels.
"FGB has further tightened its costs by Dh36 million or 12 per cent quarter-on-quarter, making the bank one of the most efficient in the world with a cost-to-income ratio of 19.6 per cent in the second quarter, down from 22.2 per cent in the first quarter," said a study on UAE banks by Credit Suisse.
FGB has maintained the efficiency ratio at the same level through the first half of 2008 and the first half of the current year at around 20 per cent. In the case of National Bank of Abu Dhabi (NBAD), the ratio has marginally gone down from 24.53 per cent to 26.44 per cent in the first half of the current year. The higher the number, lower the efficiency.
However, Mashreqbank has not been able to curb the deterioration of the efficiency ratio as it has gone from 36.62 per cent in the first half of 2008 to 37.53 per cent during the same period in the current year. Likewise, Abu Dhabi Commercial Bank's efficiency ratio went from 31.11 per cent to 33.37 per cent during this period. But Emirates NBD, the largest bank in the UAE, has been able to curb the ratio and improve the efficiency of the bank. Its ratio has gone from 37.42 per cent to 32.84 per cent between the first halves of 2008 and the current year.
"Though the efficiency ratio of UAE banks is bound to improve in the coming quarters with more cost cutting measures including lay-offs being in the offing, the imminent provisions to be made against exposures to certain corporate loans including the Saudi duo will certainly weigh on the net profit of the banks," said an analyst who sought to remain anonymous.
According to him, a few banks that have been aggressive on the retail side are carrying about 20 per cent non-performing loans (NPLs) in their credit card and personal loan portfolios. Substantial provisions required to be made by some banks for the current year will certainly have an impact on their capital adequacy ratio (CAR) which currently is at healthy levels.
