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)
Total volume of investment = USD 3.7 bn
Distribution of Investments by type of
economic activity
Geographical Distribution of Investments
Source: DIFC Economics, DFSA
Deposits and Loans:
Comparison of DIFC & UAE with other Financial Centres
• 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.
Deposits, USD mn (estimate, source: EcoWin Reuters)
2008
2009
2010
2011
DIFC
5,230
8,217
7,361
12,939
Loans, USD mn (estimate, source: EcoWin Reuters)
DIFC
5,184
8,133
9,506
13,125
UAE
UAE & DIFC Singapore Hong Kong Luxembourg
208,871
214,055
186,278
309,059
288,694
220,136
228,269
194,878
332,526
272,014
213,678
223,184
240,910
424,022
255,984
223,134
236,259
282,842
504,110
233,501
DIFC
57.1%
-10.4%
75.8%
UAE
UAE & DIFC Singapore Hong Kong Luxembourg
6.5%
7.5%
14.5%
4.9%
0.7%
6.8%
6.3%
18.3%
6.9%
-8.2%
1.9%
3.8%
8.8%
9.8%
3.6%
2008
• When combined with the data on UAE
2009
based banks, data on deposits and loans
2010
are comparable in absolute terms, however
2011
demonstrating lower financial intermediation
as measured by percentage of GDP.
Deposits, growth rates
Deposits, % of GDP (estimate)
2008
2009
2010
2011
UAE & DIFC
87.7%
96.4%
88.9%
83.0%
Singapore Hong Kong Luxembourg
116.2%
299.9%
527.8%
118.0%
308.7%
529.7%
120.8%
303.2%
474.2%
123.0%
304.1%
470.4%
Loans, % of GDP (estimate)
2008
2009
2010
2011
UAE & DIFC
73.2%
79.8%
67.6%
64.4%
Singapore Hong Kong Luxembourg
99.0%
145.2%
524.8%
91.9%
153.4%
492.5%
98.4%
179.7%
452.1%
108.1%
195.1%
395.0%
UAE
UAE & DIFC Singapore Hong Kong Luxembourg
251,362
256,592
218,464
638,086
290,384
267,738
275,956
250,040
669,094
292,545
285,995
293,356
295,751
715,435
268,516
291,471
304,410
321,875
785,865
278,063
2009
2010
2011
Loans, growth rates
2009
2010
2011
DIFC
56.9%
16.9%
38.1%
UAE
UAE & DIFC Singapore Hong Kong Luxembourg
5.4%
6.6%
4.6%
7.6%
-5.8%
-2.9%
-2.2%
23.6%
27.5%
-5.9%
4.4%
5.9%
17.4%
18.9%
-8.8%
Source: DIFC Economics, DFSA, UAE Central Bank, EcoWin Reuters
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)
* Only for the days when trades take place on all exchanges, i.e.
Monday through Thursday
Source: Bloomberg, DIFC Economics
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% yearon-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 offfloor members and 7 equity members
as of end of 2011.
Source: Dubai Mercantile Exchange
DIFC Companies’ Growth Since Inception
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.
Net number of active companies
Breakdown of Registered Companies
Source: DIFC Authority
DFSA Regulated Firms
Category 1
Category 2
Category 3
Accepting
Providing Credit
Deposits
Dealing in
Investments as
Principal, except
where it does so as
a Matched
Principal
Dealing in
Investments as
Principal where it
does so only as a
Matched Principal
Managing a
Profit Sharing
Investment
Account
Managing a Profit
Sharing Investment
Account
• 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.
Dealing as Agent
Operating a
Collective
Investment Fund
Managing Assets
Providing
Custody & Trust
services
Category 4
Advising on
Financial
Products or Credit
Arranging Credit
or Deals in
Investments
Category 5
An Islamic Financial
Institution whose
entire business is
conducted in
accordance with
Shari'a, and which
Manages a Profit
Sharing Investment
Account
PIN
Representative
office
PrudentialInsurance
Business
Arranging
Custody
Insurance
Intermediation
Insurance
Management
Operating an
Alternative
Trading System
Acting as the
Trustee of a fund
Managing a Profit
Sharing
Investment
Account
Providing Fund
Administration
Source: DIFC Authority, DFSA
DIFC Deposits, Loans & Assets Under Management
Source: DIFC, DFSA
Note: yoy = Quarter-on-previous year quarter
Thank you!