Dubai: A week away from reporting of the first half 2020 results begins, many UAE banks are headed for implementing drastic cost cutting measures to arrest decline in profits resulting from sharp decline in revenues and a potential spike in non-performing assets.
“Although some banks have been shedding jobs in small numbers quietly since the COVID-19 outbreak began; now it is obvious that more drastic measures are required to cut losses and make businesses viable,” said an industry source
Emirates NBD, the Dubai’s largest bank on Tuesday laid off 800 employees across various sections. Banking sector sources have confirmed more banks are likely to lay-off workers in the next few weeks. Banking sector across the GCC are expected to witness similar trends.
Financial regulators across the GCC announced a number of policy measures during Q2-2020 to deal with the Covid-19 crisis that was marred by lockdowns across the GCC. A significant element of these efforts involved the banking sector in the region that had to postpone installments, waive numerous charges, and support the vital SME sector. Business activities have came to a halt due to the lockdowns that affected project activity and loan offtake and repayments by businesses.
To offset the impact, governments announced numerous monetary and cash-flow measures. Central banks in the region rolled out a number of policy measures starting with rate cuts to encourage borrowing, efforts that focused on continued lending by banks to support businesses and eased the burden of loan payments. In addition liquidity support was offered through interest free funding and relaxation of requlatory capital requirements.