FIRMLY ROOTED IN SHIFTING TIMES
Foreign investors have long viewed the UAE, and by extension its financial sector, as a bedrock of stability in a turbulent region, and one of considerable growth potential.
2018 came with a widespread deterioration of investment sentiment in many of the Emerging Markets grouped under the MSCI Equity Index. However, within the UAE, the Emirate of Abu Dhabi has grown to become a more sophisticated, diversified market built on a very solid foundation which has proven to be extremely attractive for capital inflows.
Ranked sixth in the world, the UAE overall holds around USD500 billion in offshore wealth, with the major share derived from Saudi Arabia, Iraq, and Iran. Glancing onshore, the Central Bank last year performed its regulatory stress test to gauge the resilience of local banks to macro-financial shocks over a three-year horizon. The conclusion, a positive one, was that the system had adequate capacity to withstand adverse turbulence. Indeed, systemic stability has been the verdict for the UAE, Saudi Arabia, and Kuwait, three nations that account for 75% of GCC banking assets.
The Central Bank's Financial Stability Report for 2017 also indicated that the nation's stable macroeconomic and financial-market conditions had yet to reflect in credit expansion in the domestic retail or corporate arena. Back in May 2015, the Central Bank had introduced a liquidity coverage ratio (LCR) glide path as part of a gradual migration to a Basel III regulatory framework, with full implementation by 2019. Meanwhile, International Financial Reporting Standard (IFRS) 9 was implemented throughout the nation's banking sector as of January 1, 2018.
Narrowing Our Scope
The UAE banking sector is host to 22 local and 27 foreign banks. The total 4Q2017 net income of Abu Dhabi-headquartered banks printed at USD2.1 billion, with 83% derived from commercial banks and 17% from Islamic counterparts. Despite a recovery in oil prices of late, major producer Abu Dhabi has felt hydrocarbon-related tremors across its economy, with the banking sector taking remedial steps. This has resulted in pronounced staff cuts and the prospect of consolidation of the banking universe. In fact, official figures show that in the past couple of years banks in the Emirate cut around 1,700 jobs, with the employee count falling from 13,200 at end-2016 to 11,900. Local banks are not alone in downsizing, as foreign players such as Royal Bank of Scotland, Lloyds, Barclays, and Standard Chartered have also tightened their operational belts in the UAE.
Regional Leader Arises
Last year's leading story in the sector was the merger (only the UAE's third) of National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB), effective on March 30, and a real economic shot in the arm at a time of economic sluggishness. First Bank of Abu Dhabi (FAB) is the nation's largest financial entity with assets of USD183 billion, a full quarter of the entire Emirati banking universe. It is also the region's second-largest lender after Qatar National Bank (QNB). The combined results of the new entity began reporting in 2Q2017. And as of 1Q2018, net profit stood at AED3 billion. Its credit ratings, the highest of any bank in the MENA region, sum it all up perfectly at Aa3, AA-, and AA1 from Moody's S&P and Fitch, respectively.
The Abu Dhabi government and state-owned bodies retained around 37% of the new entity, with FGB shareholders holding roughly 52% of the combined bank. On April 1, 2017, the combined lender commenced trading on the Abu Dhabi Securities Exchange (ADX) under the NBAD ticker. As of end-March 2018, its market capitalization (MCap) was USD34.7 billion. Under NBAD livery, the behemoth became strongly positioned to challenge foreign banks and expand its international footprint. While its domestic network spans 89 branches and 584 ATMs across the UAE, it enjoys a global presence in 19 countries beyond the country.
Further Consolidation?
Observers also asked whether it would ultimately spark further consolidation among remaining banks. They contrast the UAE banking sphere with Saudi Arabia's 25 banks catering to around 33 million people. Speculation has surrounded the potential mergers of Abu Dhabi Commercial Bank (ADCB) and Union National Bank (UNB), and Abu Dhabi Islamic Bank and Al Hilal Bank, without development to date. Indeed, now is a period of observation by the market.
The Stock View...
With an MCap of USD125.52 billion, the Abu Dhabi Securities Exchange (ADX) has a 32% ratio of GDP. As of August 5, 2018, its MCap accounted for 11.77% of the GCC markets' combined MCap. At the same time, the YtD return had printed at 9.27% and the 1-year return at 10.42%, while the 52-week range was at 4,244.50-4,862.86. On July 25, 2018 the index had hit a three-year record high of 4830.42 on a daily gain of 1.12. Historically, the ADX General reached an all time high of 6237.98 in April of 2005 and a record low of 1001.81 in July of 2001.
...and a Key IPO
A barometer of the global economic events, in 2017, the benchmark index, the ADX General shed 3.3% for the year. However, listed companies market cap in ADX, the region's leading financial market together with Saudi Arabia's Tadawul, reached USD146 billion, by the end of August 2018, with a remarkable increase in the general index by 13.4% from the start of 2018. Last year saw the notable IPO of the Abu Dhabi National Oil Company's (ADNOC) fuel distribution unit, the largest listing on the Abu Dhabi bourse of the previous decade. The deal, in which ADNOC raised USD851 million from the 10% stake listing, was touted as confirmation of the UAE's resilient growth fundamentals.
Insurance
Regional noise such as conflict and less dramatic factors such as the introduction of VAT have together weighed on the MENA region's insurance market. And clearly, the new era of cheap oil prices has taken its toll, too. Yet for 2017, the net profit of the UAE's listed insurers soared 45% due in large part to compulsory medical insurance rolled out across the GCC. By 2021, the UAE's insurance market is set to appreciate to USD18.1 billion. Ongoing sector reform is aimed at greater operational competitiveness, and also at greater local retention of the reinsurance business.
Like their banking counterparts, the UAE's 61 registered insurance companies make for a crowded pool, according to the Insurance Authority (IA). The top five retain over a 50% market share. The penetration of both non-life and life insurance remains problematic in the MENA region, at below 2% on average and at one-third of the global average by industry data. While Morocco had the highest penetration rate of 3.5%, Egypt had the lowest of 0.6%, while the UAE was just shy of 2.9% in 2017. Meanwhile in the Islamic financial arena, Sharia-compliant health and life insurer Takaful Emarat bought Al Hilal Bank's Islamic insurance business unit to form the UAE's largest takaful entity.
ADNIC, A Profitable Example
Established in 1972, Abu Dhabi National Insurance Company (ADNIC), a guiding light among regional multi-line insurers, has printed a healthy 1H2018 performance. Gross written premiums rose 14.7% to AED1.81 billion from the same period of 2017, while its overall premium retention ratio climbed to 53.2% from 43.7%. Meanwhile, net profit gained 17.1% to AED150.5 million, up from AED128.5 million YoY.
As the capital of the UAE, Abu Dhabi's financial sector is the flagship of a nation that seeks to further grow its economic diversification and that enjoys a clean bill of health, regardless of the uncertainty that plagues the wider region.

TABLE OF CONTENTS
Focus: Tackling Unlawful Cryptocurrency Use
Crypto Crime
The rapidity and anonymity of crypto-transactions make them attractive not only to risk-prone investors, but also to criminals. Finding an efficient solution that does not completely undermine or overturn the nature of digital currencies is proving to be extremely hard.
read articleGuest Speaker
Juan Carlos Varela, President, Republic of Panama
TBY talks to Juan Carlos Varela, President of the Republic of Panama, on expanding the country's diplomatic footprint, the importance of participating in Expo 2020, and both countries' respective leadership roles as regional entrepôts.
read articleInterview
Rashed A. Al Blooshi, Chief Executive, Abu Dhabi Securities Exchange (ADX)
TBY talks to Rashed A. Al Blooshi, Chief Executive of Abu Dhabi Securities Exchange (ADX), on highlighting the opportunities available to companies on ADX, adopting best practices in the field, and further developing the market.
read articleFocus: ADNOC’s Partnership Model
Spheres of Influence
Following the announcement of an expanded partnership model and a more active approach to managing its businesses and portfolio of assets, a series of cooperation accords position the national oil company as a champion of commercial liberalism.
read articleInterview
hmed Omar Abdulla, CEO, Abu Dhabi Polymer Company Ltd (Borouge),
TBY talks to Ahmed Omar Abdulla, CEO of Abu Dhabi Polymer Company Ltd (Borouge), on the impact of its new Borouge 4 plant, specialized solutions for global challenges, and the need to continue to invest in innovation.
read articleInterview
Philippe Peccard, President Middle East Engineering & Investment Projects, Linde Group
TBY talks to Philippe Peccard, President Middle East Engineering & Investment Projects of Linde Group, on being a key partner of its regional partners, developing the downstream value chain, and further enhancing operations with technology.
read articleFocus: In-Country Value
Time to Commit
The announcement of the In-Country-Value program is a significant step for ADNOC and Abu Dhabi in growing the local private sector. Vertically, it will develop the energy industry through a trickle-down effect; horizontally, it will affect other sectors through a multiplier effect in the long-term.
read articleInterview
Ali Vezvaei, Executive President & CEO, Bilfinger Middle East
TBY talks to Ali Vezvaei, Executive President & CEO of Bilfinger Middle East, on its keys areas of focus in the UAE, trends in the hydrocarbons sector, and the application of energy efficiency technologies to new sectors.
read articleInterview
Samia Bouazza, Managing Director , Multiply Marketing Consultancy
TBY talks to Samia Bouazza, Managing Director of Multiply Marketing Consultancy, on satisfying sophisticated consumers with high purchasing power, targeting different categories of the population, and thinking globally while acting locally.
read articleInterview
Yousuf Al Shaibani, Director General, Mohammed Bin Rashid Space Centre (MBRSC)
TBY talks to Yousuf Al Shaibani, Director General of the Mohammed Bin Rashid Space Centre (MBRSC), on the goals of the national space program, attracting youth to the program, and the significance of KhalifaSat.
read articleInterview
Abdulla Jassem bin Kalban, Managing Director & CEO , Emirates Global Aluminium (EGA)
TBY talks to Abdulla Jassem bin Kalban, Managing Director & CEO of Emirates Global Aluminium (EGA), on its expansion upstream, strategies to grow the sector, and sustainability initiatives.
read articleInterview
Sheikh Abdulla bin Mohammed Al Hamed, Chairman , Department of Health (DoH)
TBY talks to Sheikh Abdulla bin Mohammed Al Hamed, Chairman of the Department of Health (DoH), on facilitating investment for local and foreign investors and building and maintaining a sustainable workforce.
read articleFocus: Technical Training vs. Academic Teaching
Balanced Learnıng
Abu Dhabi's technical institutes are growing in popularity among young Emiratis; however, finding a balance with more traditional academic programs is paramount to ensure the development of a truly knowledge-based economy.
read articleInterview
Noura bint Mohammed Al Kaabi, Minister , Culture and Knowledge Development
TBY talks to Noura bint Mohammed Al Kaabi, Minister of Culture and Knowledge Development, on the Creative Industries Contributions Index, bridging the AI-culture divide, and adopting a systems leadership approach moving forward.
read articleInterview
Mohamed Khalifa Al Mubarak, Chairman , Department of Culture and Tourism (DCT)
TBY talks to Mohamed Khalifa Al Mubarak, Chairman of the Department of Culture and Tourism (DCT) Abu Dhabi, on the role of innovation, the late Sheikh Zayed's cultural vision, and strengthening cultural engagement among youth.
read articleInterview
Saif Saeed Ghobash, Undersecretary , Department of Culture and Tourism (DCT)
TBY talks to Saif Saeed Ghobash, Undersecretary of the Department of Culture and Tourism (DCT) Abu Dhabi, on becoming a beacon of cultural tourism, tailoring its approach to different markets, and penetrating the MICE segment.
read articleInterview
Humaid Matar Al Dhaheri, Group CEO , Abu Dhabi National Exhibitions Company (ADNEC),
TBY talks to Humaid Matar Al Dhaheri, Group CEO of Abu Dhabi National Exhibitions Company (ADNEC), on fast-tracking Abu Dhabi's economic diversification, the importance of the Year of Zayed, and technology's impact on the world of event planning.
read articleInterview
Dr. Thani bin Ahmed Al Zeyoudi, UAE Minister , Climate Change and Environment
TBY talks to Dr. Thani bin Ahmed Al Zeyoudi, UAE Minister of Climate Change and Environment, on the UAE's commitment to reducing its ecological footprint, transitioning to a climate-resilient green economy, and the importance of sustainable green finance.
read articleInterview
Neri Askland, Vice President , Middle East and UAE Country Manager of Statoil
TBY talks to Neri Askland, Vice President of Middle East and UAE Country Manager of Statoil, on its efforts to help reduce its carbon footprint, opportunities for R&D in the area, and its collaboration with Masdar.
read articleFocus: Nuclear Energy
The Nuclear Option
The UAE is the first country in the MENA region to develop nuclear power, with Abu Dhabi's Barakah nuclear power plant. The Emirate hopes to achieve energy security and embrace alternative sources of energy, ensuring full cooperation and support from the international community.
read articleInterview
Christer Viktorsson, Director General , Federal Authority for Nuclear Regulation (FANR)
TBY talks to Christer Viktorsson, Director General of Federal Authority for Nuclear Regulation (FANR), on the role of the institution in advancing the nuclear energy regulatory environment, the Barakah Power Plant, and the importance of an integrated network.
read articleInterview
Eng. Omar Husain Al Hashmi, Acting Managing Director , Abu Dhabi Sewerage Services Company (ADSSC),
TBY talks to Eng. Omar Husain Al Hashmi, Acting Managing Director of Abu Dhabi Sewerage Services Company (ADSSC), on its successes with STEP, helping Abu Dhabi to reduce its carbon footprint, and its successful Emiratization policies.
read articleInterview
Saeed Al Bahri Salem Al Ameri, Director General , Abu Dhabi Food Control Authority (ADFCA)
TBY talks to Saeed Al Bahri Salem Al Ameri, Director General of Abu Dhabi Food Control Authority (ADFCA), on the Farmers Income Support Program, the UAE's agroecological climate, and introducing intelligent control systems.
read articleInterview
Falah Al Ahbabi, Chairman, Department of Urban Planning and Municipalities (DPM)
TBY talks to Falah Al Ahbabi, Chairman of Department of Urban Planning and Municipalities (DPM), on coordinating joint-investment programs and strategic alliances with the private sector and integrating technology within developments and services.
read articleInside Perspective
Mohammed Ahmed Bin Abdulaziz Al-Shehhi, Undersecretary of Economic Affairs, the Ministry of Economy
Mohammed Ahmed Bin Abdulaziz Al-Shehhi, Undersecretary of Economic Affairs of the Ministry of Economy, on efforts to enhance the UAE's intellectual property framework, creating a knowledge-based economy, and fostering a culture of innovation.
read articleInterview
Khalifa Al Mubarak, Group Chief Executive Officer & Managing Director, Mubadala Investment Company
TBY talks to Khaldoon Khalifa Al Mubarak, Group Chief Executive Officer & Managing Director of Mubadala Investment Company, on the company's diversification strategy, its technology investments, and its focus on innovation.
read articleFocus: Economic Stimulus Package
Desert Breeze
Abu Dhabi unveiled the new stimulus package, Ghadan 21, in effort to counter the post-oil crisis slowdown. While it might be too soon to call for the end of austerity measures, it definitely signifies the leadership's commitment to grow the Emirate's economy.
read articleInterview
Rashed Lahej Al Mansoori, Chairman, Statistics Centre- Abu Dhabi (SCAD)
TBY talks to Rashed Lahej Al Mansoori, Chairman of Statistics Centre-Abu Dhabi (SCAD), on its efforts to improve data collection and lower costs, innovative statistical development tools, and its Emiratization policies.
read articleInterview
Saeed Al Neyad, Director General, Abu Dhabi Monitoring and Control Centre (ADMCC)
TBY talks to Saeed Al Neyadi, Director General of Abu Dhabi Monitoring and Control Centre (ADMCC), on being a critical enabler for various key partner organizations, efforts to increase Abu Dhabi's competitiveness in tourism and commerce, and improving the quality of life for citizens and visitors.
read articleInterview
Nick Cochrane-Dyet, Chairman, British Business Group (BBG)
TBY talks to Nick Cochrane-Dyet, Chairman of British Business Group (BBG), on Abu Dhabi's forward-looking strategy, the need for British firms to continue to bring value to the Emirate, and areas of opportunity for the UK.
read article