(MENAFN- Khaleej Times)New financial zone will offer a zero-tax environment for 50 years.
The total net earnings of Islamic and commercial banks in Abu Dhabi climbed 11.2 per cent in the first quarter of 2015 in year-on-year period showing the strengthens of the flourishing banking sector.
Total earnings rose 1.5 per cent in quarter-on-quarter comparison said Statistics Centre Abu Dhabi complied “Abu Dhabi-Based Banks Statistics Report” for Q1 2015.
Abu Dhabi is home to world leading financial institutions led by National Bank of Abu Dhabi which is the second biggest lender by assets in the country followed by Abu Dhabi Commercial Bank which is third biggest lender by assets.
Other lenders which are shaping up the growth of financial sector included Union National Bank First Gulf Bank Abu Dhabi Islamic Bank and Al Hilal Bank are also contributing to the economic strengthens of Abu Dhabi as an emerging financial hub.
Abu Dhabi is also setting up its tax free financial hub called Abu Dhabi Global Financial Market which financial services companies would start their business from the fourth quarter of this year.
Abu Dhabi financial zone will offer a zero-tax environment for 50 years.
In the launch phase the financial hub will benefit from Abu Dhabi’s natural strength i.e. private banking wealth management and asset management and will grow according to market demand to eventually become a broad based financial hub.
The report reviews the performance of banks headquartered in Abu Dhabi presenting such data as the gross income number of employees and their compensation interest rates on deposits loans and advances and the net earnings of Islamic and commercial banks.
The purpose of the publication is to identify the characteristics of bank activities in the emirate and to make available the necessary information in order to support the development of banking and investment in Abu Dhabi.
According to Statistics Centre Abu Dhabi (SCAD) the report data is based on records from the Central Bank of the UAE.
The net interest income of commercial banks represented 83.1 per cent of the total net earnings of all banks the remaining 16.9 per cent being the share of Islamic banks.
The report further elaborates the year-on-year increase in the gross income of commercial and Islamic banks in the first quarter of 2015 was due mainly to a 5.2 per cent rise in the interest received while the interest paid dropped by 7.2 per cent resulting in a growth of 10.9 per cent in the net interest income of commercial banks compared with the first quarter of 2014.
The corresponding rise for Islamic banks was 12.4 per cent.
Compared with the first quarter 2014 however the gross interest received and gross interest paid during the first quarter of 2015 decreased by 0.01 per cent and 3.74 per cent respectively resulting in a growth of 1.5 per cent in net interest income.
The corresponding growth for Islamic banks was 1.4 per cent.
Approximately two-thirds or 65.3 per cent of the net income of commercial banks in Abu Dhabi in the first quarter of 2015 was earned from net interest received while 8.9 per cent was generated by investment and 25.8 per cent by other sources.
While the interest rate on deposits declined 1.1 per cent in Q1 2015 compared with Q1 2014 the interest rate on personal loans advanced from 9.71 per cent to 9.74 per cent over the same period.
However the interest rate on overdrafts decreased 9.69 per cent in to 9.55 per cent in Q1 2015 compared with Q1 2014.
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