The UAE banking sector witnessed impressive growth rates in assets and profits in 2005 on the back of strong economic growth and a booming stock market. According to a recent Shuaa Capital report, the downturn in the stock market in H1 06 hit the banking sector in general and the smaller banks with large stock market exposure in particular. Total sector profits are expected to fall by 6% in 2006.
Assets and profits for the listed commercial banks increased by 48% and 115% respectively. The UAE economy with a real GDP growth rate of 7.3% in 2005 and a booming stock market (SC UAE Index up 102% in 2005) were the main drivers for the banking sector growth in the same year.