UAE trade finance income rises amid resurgence in foreign trade

DUBAI – UAE trade fees and commissions rose by an average of 7 percent in 2011, with a majority of reporting banks posting figures far in excess of AED100 million, the latest UAE Tajara Monitor, published by Cash Management Matters (CMM), showed Tuesday.

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 when set against an overall decrease, of some 5 percent 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 percent at more than AED1 trillion, and nearly 18 percent above their recent peak of 2008. Imports increased by 23 percent in 2011 from the previous year, and, at AED844 billion, represent a 15 percent 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 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. 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 percent 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 percent of total assets, liabilities, operating income and net profit.

The Saudi Gazette 2012, Aug 29 2012