DIFC
& UAE: Monetary
& Financial Statistics
2008
–
Q1 2012
Dr. Nasser Saidi,
Chief Economist, DIFC Authority
28 May
2012
Agenda
•
DIFC Monetary & Financial Statistics: New Publication
•
Deposits and Loans: DIFC & GCC
•
Comparison
with other International
Financial Centers
•
Assets
under
Management: DIFC
•
Equity and Commodity Markets: Nasdaq
-
Dubai and DME
•
Addendum:
-
DIFC registered companies and license categories
-
Summary Statistics
DIFC Monetary & Financial Statistics
•
DIFC
has
been
collecting
data
and
statistics
on
the
development
of
the
centre
and
the
activities
of
the
businesses,
organizations
and
agencies
since
2007
,
with
the
publication
and
dissemination
of
the
DIFC
Economic
Activity
Survey
(EAS)
.
•
The
DIFC
EAS
reports
on
aggregate
and
sectorial
income
&
expenditure
arising
from
activities
in
the
DIFC
.
The
EAS
also
reports
on
assets,
investment
and
employment
in
the
DIFC
.
•
In
line
with
complying
with
best
international
standards,
the
DIFC
is
now
publishing
and
disseminating
Monetary
&
Financial
data
and
statistics
.
The
frequency
will
be
quarterly
.
DIFC Monetary & Financial Statistics
•
Data
for
the
current
publication
were
collected
from
different
sources
.
DIFC
related
data
and
estimates
were
provided
by
DIFC
Economics
team
and
DFSA
.
•
Other
information,
including
data
on
deposits,
credits,
and
assets
under
management
outside
the
DIFC,
were
collected
from
monetary
and
statistical
authorities’
websites
and
Reuters
databases
;
estimates
are
those
of
the
DIFC
Economics
team
.
•
Comparison
of
DIFC
financial
entities
with
the
GCC
or
UAE
banks
should
be
done
cautiously,
as
the
DIFC
companies
are
involved
mostly
in
wholesale
and
investment
banking
,
and
NOT
retail
;
additionally,
the
transactions
in
the
DIFC
are
mainly
in
USD,
and
not
in
local
currency
(
in
compliance
with
the
Federal
Law
No
.
8
of
2004
,
Article
4
)
.
•
Also
worth
noting
that
a
substantial
portion
of
the
DIFC
financial
entities’
clients
are
institutional
investors,
who
tolerate
high
capital
mobility
,
when
balancing
between
risks
and
returns
.
This
explains
higher
volatility
of
DIFC’s
deposits,
credits,
and
assets
under
management
,
compared
to
those
of
the
GCC
or
UAE
banks
’
.
Developments in 2008
-
Q1 2012
•
During the last 3 years
deposits
out of DIFC grew
at an average annual rate of
39%
. Total
volume of
deposits increased 2.47
times to reach
US$ 12.9
billion
as of end of 2011
& US$12.8 in Q1 2012.
•
Average annual growth of
loans
and
advances
was
40
%
. They increased
2.53
times, and
amounted
USD 13.1 billion
at end 2011 and US$
14.7 in Q1 2012..
•
After 10.4% decline in 2010
deposits
of the DIFC
companies grew at
impressive 75.8%
in 2011;
growth rate of credit portfolio was lower, but still
high (
+38.1
%
).
•
Assets under management
at the DIFC based
companies were
US$ 7 billion
end 2011 and US$
8.1 in Q1 2012.
•
In
the
first
quarter of
2012
DIFC
deposits
were
down by
1.1%
qoq
(+25.2%
in
Q1 2011),
while
DIFC
credit
grew by a high 12.4
%
(+10.6
%).
•
High growth rates of deposits
and credits
were
observed in the first and third quarters of 2011.
Source:
DIFC
Economics, DFSA
Deposits & Loans: Annual and quarterly data for DIFC and GCC
•
Deposits and credit
growth rates of DIFC
based companies have
been
substantially
higher compared to
those of the GCC area
banks
, albeit from a low
base.
•
Higher growth
expected to continue
as DIFC based
companies expand
their activities
Source:
DIFC
Economics, DFSA, UAE Central Bank,
EcoWin
Credit portfolio distribution by Type of Economic
Activity: DIFC (Q1 2012)
Source:
DIFC
Economics, DFSA
Investments: Distribution by Geography & Type of
Economic Activity (Q1 2012)
Distribution of Investments by type of
economic activity
Geographical Distribution of Investments
Source:
DIFC
Economics, DFSA
Total volume of investment = USD 3.7
bn
•
Deposits and loans at the DIFC based
financial companies are lower than those in
some other international financial centers
with similar characteristics.
•
Other financial centres have access to their
domestic markets.
•
When combined with the data on UAE
based banks, data on deposits and loans
are comparable in absolute terms, however
demonstrating lower financial intermediation
as measured by percentage of GDP.
Deposits and Loans:
Comparison of DIFC & UAE with other Financial Centres
Source:
DIFC
Economics, DFSA, UAE Central Bank,
EcoWin
Reuters
DIFC
UAE
UAE & DIFC
Singapore
Hong Kong
Luxembourg
2008
5,230
251,362
256,592
218,464
638,086
290,384
2009
8,217
267,738
275,956
250,040
669,094
292,545
2010
7,361
285,995
293,356
295,751
715,435
268,516
2011
12,939
291,471
304,410
321,875
785,865
278,063
DIFC
UAE
UAE & DIFC
Singapore
Hong Kong
Luxembourg
2008
5,184
208,871
214,055
186,278
309,059
288,694
2009
8,133
220,136
228,269
194,878
332,526
272,014
2010
9,506
213,678
223,184
240,910
424,022
255,984
2011
13,125
223,134
236,259
282,842
504,110
233,501
Deposits, USD mn
(estimate, source: EcoWin Reuters)
Loans, USD mn
(estimate, source: EcoWin Reuters)
DIFC
UAE
UAE & DIFC
Singapore
Hong Kong
Luxembourg
2009
57.1%
6.5%
7.5%
14.5%
4.9%
0.7%
2010
-10.4%
6.8%
6.3%
18.3%
6.9%
-8.2%
2011
75.8%
1.9%
3.8%
8.8%
9.8%
3.6%
DIFC
UAE
UAE & DIFC
Singapore
Hong Kong
Luxembourg
2009
56.9%
5.4%
6.6%
4.6%
7.6%
-5.8%
2010
16.9%
-2.9%
-2.2%
23.6%
27.5%
-5.9%
2011
38.1%
4.4%
5.9%
17.4%
18.9%
-8.8%
Deposits, growth rates
Loans, growth rates
UAE & DIFC
Singapore
Hong Kong
Luxembourg
2008
87.7%
116.2%
299.9%
527.8%
2009
96.4%
118.0%
308.7%
529.7%
2010
88.9%
120.8%
303.2%
474.2%
2011
83.0%
123.0%
304.1%
470.4%
UAE & DIFC
Singapore
Hong Kong
Luxembourg
2008
73.2%
99.0%
145.2%
524.8%
2009
79.8%
91.9%
153.4%
492.5%
2010
67.6%
98.4%
179.7%
452.1%
2011
64.4%
108.1%
195.1%
395.0%
Deposits, % of GDP
(estimate)
Loans, % of GDP
(estimate)
DIFC Assets under Management:
2008
-
Q1 2012
•
The number of
DIFC companies involved
in asset
management
activities was
27
at
end
-
2011 (25 at end
-
2010). Number has
increased to
28
in Q1 2012
•
DIFC based companies’ assets
under
management
were
stable
during the
observed period,
at an
average level of
USD 7.0
-
7.5bn,
with temporary spikes in
mid
-
2008 and beginning of 2010
•
At the end of Q1 2012, assets under
management by DIFC
-
based companies
was at USD 8.1bn
•
The Centre is still quite young and
growing, with some companies placing
their AUM on their “external” books (i.e.
not on the books of their DIFC entities)
Source:
DIFC
Economics, DFSA
UAE
vs
Regional and Global Equity Markets
•
Compared to global and regional equity
markets
,
UAE exchanges have significantly
underperformed
in the past
three
years
.
•
This
DFM
-
ADX gap is largely due to the
concentration of stocks and domination of a
small number of companies in the
DFM. A
potential merger
of exchanges could lead to
improved performance & trading volumes.
•
UAE firms listed on the local exchanges
showed remarkable
profits growth
last
year,
which was not
reflected in the stock indices.
•
DFM, Nasdaq Dubai and
ADX are highly
correlated with
each other, while their
correlation with MSCI GCC is higher than that
with global and emerging markets, therefore
providing
diversification
benefits
.
•
FTSE has
reclassified
the UAE,
but the MSCI
delayed reclassifying the market in 2011, in
spite of the recent improvement in the process
of DvP.
Correlation matrix for daily percentage changes of indices*:
MSCI
EM, GCC, DFM & ADX
(Dec’07
-
Mar’12)
Source: Bloomberg, DIFC Economics
* Only for the days when trades take place on all exchanges, i.e.
Monday through Thursday
GCC Equity Markets:
Market Capitalization and # of Companies
Tadawul
(Saudi Arabia)
hosts about
25%
of the publicly traded firms in
GCC,
accounting
for
about half of the region’s market capitalization, followed by UAE at
20%.
Source: Bloomberg, DIFC Economics
Dubai Mercantile Exchange
•
The Dubai Mercantile Exchange,
launched on June 1st,
2007,
has
emerged as an international energy
futures & commodities exchange in the
Middle East, providing price
transparency and market liquidity for
sour crude
oil. It lists
Oman crude oil
as a benchmark for the region.
•
DME
figures demonstrate
a
19% year
-
on
-
year
increase
in trading volumes
in
2011. The
new record for physical
delivery
was reached in Aug 2011,
when total volume
of
traded
crude oil
amounted
95.4 million barrels.
•
DME had 20 clearing members, 25 off
-
floor members and 7 equity members
as of end of 2011.
Source: Dubai Mercantile Exchange
DIFC Companies’ Growth Since Inception
Source: DIFC Authority
Breakdown of Registered
Companies
Net number of active companies
Growth of number of active companies at the DIFC accelerated to 7% in
2011, following a slowdown during 2009
-
2010.
The number of companies is already up 2% to 861 as of Mar 2012 from 2011.
Category 1
Category 2
Category 3
Category 4
Category 5
Accepting
Deposits
Providing
Credit
Dealing in
Investments as
Principal where it
does so only as a
Matched
Principal
Dealing
as Agent
Managing
Assets
Operating a
Col
lective
Investment Fund
Arranging Credit
or Deals in
Investments
An Islamic Financial
Institution
whose
entire business is
conducted in
accordance with
Shari
'a
,
and which
Manages a Profit
Sharing Investment
Account
Advising on
Financial
Products or Cred
it
Arranging
Custody
Insurance
Intermediation
Insurance
Management
Managing a
Profit Sharing
Investment
Account
Managing a Profit
Sharing Investment
Account
Managing a Profit
Sharing
Investment
Account
Dealing in
Investments as
Principal, except
whe
re it do
es so as
a Matched
Principal
Providing
Custody & Trust
services
Acting as the
Trustee of a fund
Operating an
Alternative
Trading System
Providing Fund
Administration
PIN
Prudential
-
Insurance
Business
Representative
off
i
c
e
DFSA
Regulated
Firms
•
The number of companies
authorized by the DFSA
reached
269
in the end of
2011 (244 as of end of 2010).
•
Companies may hold more
than one license (average
number of licenses held by
authorized firms was 3). Most
actively used license was a
criteria in assigning
companies to a specific
license category.
•
Category 4 license
was the
most actively used among
authorized firms.
Source: DIFC Authority, DFSA
DIFC Deposits
, Loans & Assets Under Management
Source: DIFC, DFSA
Note: yoy = Quarter
-
on
-
previous year quarter
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