“Arab Monetary”: The UAE acquires the largest share of the assets of Arab banks

 The Arab Monetary Fund said that the assets of the Arab banking sector exceeded the $4 trillion barrier at the end of last year 2021, which represents 136 percent of the gross domestic product of all Arab countries.

The Fund added, in the annual report on financial stability in the Arab countries for the year 2022, that the assets of the banking sector in the Arab countries reached 4 trillion and 31 billion dollars at the end of last year, a growth of 5% compared to 3 trillion and 840 billion dollars at the end of 2020, reflecting The confidence of customers and the market in the banking sector despite the great challenges imposed by the “Covid-19” pandemic.

The report stated that UAE banks still accounted for the largest share of the Arab banking sector's assets, with a rate of 22.4% at the end of last year, followed by Saudi banks with a market share of 21.7%.

The report attributed the increase in the size of the Arab banking sector’s assets to the growth of its liquidity due to the incentive measures by Arab central banks, for example, the adoption of accommodative monetary policies and the liberalization of some capital margins, in order to face the repercussions of the “Corona” pandemic and its negative repercussions on the cash flows of the individual and corporate sectors during the pandemic.

The report pointed out that the banking sector in the Gulf Cooperation Council countries accounted for 67.8% of the total assets of the Arab banking sector at the end of last year, so that the GCC countries maintained their market share achieved at the end of 2020, which amounted to about 66%, while Egyptian banks acquired about 66% of the total assets of the Arab banking sector at the end of last year. It accounted for 13.6% of the total assets of the Arab banking sector, followed by Moroccan, Lebanese and Algerian banks with 4.2%, 3.7% and 3.5%, respectively.

The report indicated that the average ratio of bank assets in the Arab countries to GDP reached 136 percent at the end of last year, which reflects the importance of the Arab banking sector due to its high size, and thus the importance of the role of regulatory authorities in enhancing the strength of this sector and continuously assessing its risks. Through the use of macro and partial prudential policies and coordination with other economic policies, especially monetary and fiscal policies.

- Credit facilities.

The report pointed out that the credit facilities portfolio still constitutes the largest component of the Arab banking sector's assets, as the value of the facilities granted by the banking sector amounted to about $2.44 trillion at the end of 2021, constituting about 61% of the total assets.

The report noted that Saudi and Emirati banks ranked first and second, respectively, in terms of the volume of facilities granted by them at the end of last year, at $549.1 billion and $488.6 billion, respectively, followed by Qatari banks with $334.2 billion and Egyptian banks with $197.2 billion.

- Deposits.

The Arab Monetary Fund report stated that the deposits of the Arab banking sector continued to rise and crossed the threshold of two trillion dollars for the fifth year in a row, as the volume of deposits amounted to about two trillion and 559 billion dollars at the end of last year, compared to two trillion and 426 billion dollars at the end of 2020, a growth of 5.5%.

The report attributed the continuous increase in the volume of deposits during the period from 2013 to 2021 to the confidence of customers in the Arab banking sector, the success of banks’ policies to attract more savings, as well as the success of financial inclusion policies and strategies adopted by the regulatory authorities, in addition to the positive impact of financial services that rely on financial technologies. This will enhance access to finance and financial services.

The report indicated that the private sector deposits "current, savings and term deposits" constituted 93.8% of the total deposits at the end of last year, compared to 88.8% in 2020 and 89.3% in 2019 and 2018.

According to the report, Saudi and Emirati banks ranked first and second, with deposits amounting to about $561.2 billion and $543.7 billion at the end of last year. Gulf Cooperation Council banks accounted for 64.4 percent of the total volume of deposits in the Arab banking sector at the end of 2021.

Capital bases.

The report pointed out that the capital bases of Arab banks continued to improve for the eighth year in a row, due to the great care taken by the supervisory authorities and the banks themselves in strengthening their capital bases, and reaching safe levels that enhance financial stability in those countries and maintain the integrity of the financial conditions of banks and protect them from Any future fluctuations or crises.

The capital bases of the Arab banking sector amounted to about 479.6 billion dollars at the end of 2021, compared to 452.6 billion dollars at the end of 2020, a growth of 6%, which enhances the ability of the Arab banking sector to face potential risks and enhances its ability to absorb shocks.

The report showed that the Arab banking sector was characterized by high financial solvency, as the average capital adequacy ratio for the Arab banking sector reached about 17.8% at the end of 2021, which is higher than that targeted internationally according to Basel III standard of 10.5%, which indicates that the sector enjoys The Arab banker with a high solvency, therefore, has the ability to absorb any potential losses, and reflects the banking sector's conservatism and its hedging to face any unexpected shocks by building additional capital margins.

Profitability rates.

The report stated that the profitability rates of the Arab banking sector at the end of 2021 witnessed a remarkable improvement, after the negative repercussions of the pandemic that affected the profitability of banks in 2020, and the Arab banking sector achieved good rates of return, as the average return on assets was about 1.24% compared to 0.82% in end of 2020.

On the other hand, the rate of return on equity increased to 11.76% at the end of 2021, compared to 6.55% at the end of 2020. This reflects the good performance of banks and their efficiency in employing their assets, their effectiveness in using their capital and their ability to face losses that may be incurred. in the future.

The Arab banking sector maintained good levels with regard to liquidity indicators, reaching about 32.7% at the end of 2021, compared to 30.9% at the end of 2020.

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