• Middle East Financial Industry
• Banking Sector in the UAE
• Islamic Private Equity
• Project Finance Activity
• e-Commerce in the UAE
• Finance Sector and IT

Middle East Financial Industry – Strong Financial Growth
The Middle East's financial sector, which includes more than 600 financial institutions, continues to grow, and there is a steady flow of new entrants to the market. Several new financial institutions continue to set up in the Dubai International Financial Centre, as well as the newly established Qatar Financial Centre. In Bahrain the number of financial institutions jumped from 327 at the end of 2002 to more than 390 in 2007. Over the next 5 years, a large number of new institutions are expected to enter the financial sector, as a result of the following developments:

• Unprecedented economic growth on the back of high oil prices and sustained growth in many sectors, including construction and real estate
• Repatriation of more than US$300 billion by regional investors from overseas markets since 2001
• Opening up of the GCC banking sector in compliance with the requirements of the World Trade Organisation (WTO); several new foreign banks and insurance companies have been licensed to operate locally in previously closed markets such as Kuwait and Saudi Arabia; in addition, local banks and insurance firms have been allowed to set up operations in neighbouring countries
• Phenomenal growth (20% per annum) in the Islamic Finance market
• Six-fold growth in the regional insurance market, to reach US$44 billion by 2010
• A huge and growing project finance market expected to reach US$500 billion by 2010
• Continued expansion of the regional capital markets, including the setting up of the Dubai International Financial Exchange (DIFX) and Dubai Gold & Commodities Exchange (DGCX)
• Development of new financial centre's in Dubai (Dubai International Financial Centre), Bahrain (Bahrain Financial Harbour), Qatar (Qatar Financial Centre) and Saudi Arabia (King Abdullah Financial District)
• Establishment of EAMAR International Bank, an Islamic rival to the World Bank

Banking Sector in the UAE
In the United Arab Emirates, 48 banks, amounting to a total of 21 local banks, 25 foreign banks and 2 specialised banks, are competing in a country with a population of just 4.3 million with a GDP of roughly US$130 billion

Islamic Private Equity

• The compound average growth rate for GDP growth in key Islamic financial markets in the UAE (2003-04) was 18%, ranking behind only Kuwait (24%) and Qatar (21%) among GCC countries
• Banking assets growth in key Islamic financial markets for 2003-04 was 23%, the largest growth rate of any GCC country

Project Finance Activity

• Middle East project finance activity surged more that 50% as total volumes peaked over US$30 billion in 2005, compared to US$17 billion in 2004
• The UAE ranks third behind Qatar and Oman in the Middle East with over US$2.4 billion raised in project finance activity
• The project finance market in the Middle East is expected to reach US$500 billion by 2010

e-Commerce in the UAE

• The value of business-to-business (B2B) and business-to-consumer (B2C) e-Commerce in the UAE in 2003 is estimated at value of US$1.161 billion. B2B e-Commerce, valued at US$1 billion in 2003, accounts for the lion’s share of e-Commerce in the UAE
• The B2B market is expected to register a value of US$5.774 billion in 2008, at a Compound Average Growth Rate (CAGR), 2003-2008, of 42 percent – more than the value of the B2B e-Commerce in the GCC as a whole, in 2003
• The UAE ranks second in the GCC, following Saudi Arabia, in B2B e-Commerce
• B2B e-Commerce in the UAE is driven by the same factors and elements as found in other markets. The greatest driver being globalization, and the increased reliance of multinationals and local companies on private exchanges, consortiums and B2B e-market places
• B2C e-Commerce in the UAE, on the other hand, will grow at a compound average growth rate (2003-2008) of 20 percent – less than half the growth rate of B2B e-Commerce – to a value of US$400 million end 2008, up from US$161 million in 2003.
• The B2C e-Commerce market is driven by a relatively conservative mindset and online culture, which has not yet opened up fully to online purchases and commerce (UAE payment card penetration end 2003 is estimated at 54.4 percent), despite the high rate of ICT penetration in the country

Finance Sector and IT – Significant Investments

• The Gulf IT market is the fastest growing globally. Total spending on IT by Middle East banks in 2006 is estimated to be US$1.4 billion. The sector is growing by 12%-15% per annum. According to IDC, banks in the Gulf represent the largest single vertical in terms of overall IT investments
• One third of the region’s top 100 banks are planning to upgrade their core banking systems, with the average spend expected to be US$35 million
• 25 – 30% of IT budgets are spent on web related banking technologies
• By 2010, GCC banks and financial institutions spend on the document and enterprise content management sector is projected to grow up to US$280 million
• Middle East banks currently account for 30% of the regional storage software demand
• According to Madar Research, GCC banks spend an average of 4.29% of their revenues on IT. This is slightly less than the worldwide industry average of 4.36% - 6.90%. MENAFN Research estimates the increase in IT budgets of regional financial houses is set for more growth, and would eventually match the Western average by 2006

*Worldwide averages for all indicators are based on estimates by international research firms, including Gartner and Meta Group

Sources: AME Info, Arab Banker, Arabian Banking & Finance, Arabian Business, Banker Middle East, Business Intelligence Middle East, Financial Times, Gartner, Gulf News, IDC, IMF, Islamic Business and Finance, Khaleej Times, Madar Research, Reuters, UN World Investment Report, World Bank, World Economic Forum, Zawya

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