United Arab Bank will benefit from a stream of job seekers from other parts of a world still characterised by anaemic economic growth, even if oil prices dampen some parts of its business, said its chief executive Paul Trowbridge.
As a result the bank’s business will probably be compensated by extending credit to other segments such as individuals, he said.
Speaking at his office in Sharjah, Mr Trowbridge said: “We’re seeing population growth increase here. I am getting a stream of CVs from Europe because this is a much better place to be in than Europe professionally.
“There are a large number of people who have come here from other Middle East and North African countries, particularly an emphasis on North Africa because the UAE and the Gulf region is better off than other countries.”
Many banks, including UAB, reported record profit for 2014 amid strong economic growth driven by government spending. UAB’s net income advanced 9.6 per cent last year to Dh605 million from Dh552m in 2013 as the bank benefited from record low interest rates that encouraged individuals and companies to take out loans to fund everything from cars to homes as well as corporate expansion.
But many economists, including those at HSBC and Standard Chartered, have lowered their 2015 forecasts for Arabian Gulf countries.
StanChart expects the UAE economy to grow 3.8 per cent this year, slowing from 4.5 per cent last year. And that may start reflecting in bank earnings this year, analysts said.
Behind the lower expectation of economic growth is the fall in demand for hydrocarbons. Crude oil has lost about 50 per cent since prices peaked last June amid an increase of supply from North American producers and waning demand from big emerging markets such as China.
The UAE is the eighth largest producer of crude oil in the world and the federal government relies on crude oil exports to fund more than 60 per cent of its budget.
Still, the IMF has forecast global growth of 3.5 per cent this year, giving the UAE an edge over most other countries around the world.
And within the UAE, it is expected that some emirates will be more affected than others with Dubai, which does not rely on oil exports, outperforming those that do.
And economists said the part of the country’s GDP that is not heavily dependent on hydrocarbons to make money will continue to flourish, including transport and tourism.
“Some of the things that have driven economic growth, the weighting to them has changed,” Mr Trowbridge said. “The reliance on oil prices being where they are has necessarily fallen off. It has been replaced by other factors. Dubai’s airport has become the world’s busiest, and that brings with it huge employment, more people out here, more consumption of goods.”
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