Financial Performance of UAE Banking Sector- AComparison of before and during Crisis Ratios

Abstract

 Abstract—Prior to the outbreak of recent global economic crisis, the banking sector of UAE had enjoyed double digit growth, but the global crisis restricted the massive growth of UAE banks. This paper contributes to emerging body of research by examining the financial performance indicators of the banks and identifying whether the financial performance indicators of UAE banks have been impacted by the Global economic crisis. This paper studies all banks listed on Abu Dhabi Stock Exchange. The study covers a period of 2005 to 2010, which has been classified into before crisis, during crisis and after crisis period. The performances of the banks have been measured by financial ratios. Leverage, Liquidity and Profitability ratios of UAE banks have been calculated and analyzed to draw interpretations. To find out the impact of crisis on these ratios a difference in the before and during the crisis period have been analyzed by Wilcox on test. The results of the study concludes that the recent global crisis has impacted the UAE bank's financial performance specially the profitability measured by Return on Assets and Return on Equity. All profitability ratios of bank have decreased during the crisis period. Liquidity of banks has also decreased during the crisis period especially in terms of cash & portfolio Investments to deposits. On the contrary the Leverage ratios of UAE's baking sector have increased during the crisis period as compared to the pre crisis period.