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Abu Dhabi: The UAE has emerged as the largest banking economy in the Gulf Cooperation Council (GCC), with aggregate assets of Dh1.23 trillion ($335.6 billion) at the end of 2007, according to a survey by The National Investor.
A study conducted by the Abu Dhabi-based magazine pegged the banking sector's total assets in the Gulf at $805 billion.
Saudi Arabia, which held the top position in terms of assets, is now placed second behind the UAE with total assets of $286.9 billion. The UAE has also recorded the highest degree of banking intermediation in terms of loans and deposits, the study found.
Developed system
It said the high level of banking penetration is reflective of the relatively developed nature of banking infrastructure in the UAE.
According to the study, the UAE's banking sector also witnessed robust growth in assets on the back of big-ticket infrastructure projects, real estate investments and consumer spending.
"The UAE's banking sector witnessed strong growth on the back of a benign interest rate scenario, high oil prices and a favourable macroeconomic environment," said Mihir J Marfatia, an analyst at National Investor.
The study said that with 21 national and 27 foreign banks, the UAE banking sector is maturing quickly. National banks account for 77.4 per cent of the total banking assets in the UAE as they have access to the government's surplus funds and have no restrictions on the number of branches, unlike foreign banks.
Aggregate assets of foreign banks increased by 30.4 per cent and of local banks by 22.1 per cent during 2007.
Despite restrictions on the number of branches, foreign banks are increasing their thrust towards corporate lending, especially for big-ticket projects.
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