DIFC & UAE: Monetary & Financial Statistics2008 Q1 2012

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


Thank you!