Trade finance income rises in the UAE against the backdrop of resurgent foreign trade

With a majority of reporting banks posting figures far in excess of AED 100 million, trade fees and commissions rose by an average of 7%, in 2011 in the UAE. Several banks engaged in the crucial sector of trade finance were rewarded for their continued efforts and innovations by showing double-digit increases on the previous year. The sector’s contribution is even more impressive, as illustrated in the latest UAE Tajara Monitor, published by Cash Management Matters (CMM), when set against an overall decrease, of some 5% year-on-year, in total bank fees and commissions.

Against continued global market uncertainty, UAE foreign trade grew substantially in 2011, with imports, non-oil exports and re-exports each registering double-digit growth. Total exports, including re-exports, closed the year up 32% at more than AED 1 trillion, and nearly 18% above their recent peak of 2008. Imports increased by 23% in 2011 from the previous year, and, at AED 844bn, represent a 15% increase over their 2008 peak.

The UAE economy has for a long time been underpinned by export promotion and, according to His Excellency Obaid Al Tayer, the Minister of State for Financial Affairs, trade finance is the next most important item on the economic agenda after the Comprehensive Financial Policy for Stability.

Currently, CMM analyses, in the UAE Tajara Monitor, the trade finance and corporate banking performance of 12 major locally incorporated banks, which are licensed entities with the Central Bank of the UAE. The report includes the headline CMM Corporate Banking and Trade Finance League Table, based on the individual banks’ performances over a range of relevant sub-sectors.

National Bank of Abu Dhabi continues to top the overall table, as they have done since 2008, but the competition is making inroads into their lead. Indeed, from top to bottom, there has been movement in terms of market share, as would be expected in such an important and competitive banking sector.

Trade finance continues to be a lead product and the largely trade-related contingent liabilities equated consistently above 50% of corporate assets in 2011 for the banks tracked. Similarly, the corporate banking segment underlined its systemic importance accounting for, in the region of, 40% of total assets, liabilities, operating income and net profit.

About Cash Management Matters -CMM

Cash Management Matters was founded in 2002 and has a formidable track record in delivering business strategy and general management on Cash Management, Trade Services & Finance.

As an independent advisory boutique, CMM has operated within the niche cash & trade flow sector for many years across the GCC and the wider Middle-East and North Africa region. It has worked with a wide range of clients, from banks ,corporates, accountancy firms and regulators, to deliver transparency, efficiency and improved profits and talent in terms of infrastructure, product range and client satisfaction.

CMM combines leading edge technology with over 100 combined years of banking expertise to offer products, solutions, training and advisory services that are tailored to meet the individual needs of the designated customer segment and a bank’s own business management requirements.

The Tajara Monitor is one of several initiatives undertaken by CMM to aid transparency in this important area of banking.

For more details please write to:
info@cashmanagementmatters.com
Tel: +973 17530078
Fax: +973 17537697
P.O.Box 30738
Manama
Bahrain