ABU DHABI: Commercial Bank of Dubai's (CBD) Islamic operations expects deposit growth of 20 percent in 2011 as funds from the UAE and countries hit by unrest lifts deposits, its Islamic banking head said. CBD saw Islamic banking deposits climb to 10 percent of the bank's total deposits of about 30 billion dirhams at the end of 2010, said Nabil Tayeb Khoory on the sidelines of an Islamic banking seminar at the central bank Thursday. "There is a lot of liquidity in the region and with what's happening in the region, customers want security," he said. "We have security here in the UAE, particularly in Dubai." Khoory said the Islamic bank is seeing funds coming from countries such as Egypt and Bahrain, which have been hit by political strife in the Gulf region. The executive added that while Dubai had suffered from stress during the financial crisis, the financial environment has improved. "You can say the problem is behind us," he said. Meanwhile, the first few months of 2011 saw UAE banks consolidate their liquidity positions and pursue new lending opportunities, especially within retail and small business banking, signaling a heat up in what many expect will be a fierce competition for winning the business and loyalty of a limited group of good-quality consumers. “I see ample liquidity in the banking system at present,” said Rick Crossman, head of personal financial services for UAE at HSBC. “What we are seeing is a potential increase in lending competition, with supply more available and chasing a relatively small number of borrowers,” said Daniel Cowan, Middle East and North Africa banks analyst at Morgan Stanley. Supported by the early signs of a pickup in economic activity and by the UAE's relative political stability, banks saw their deposits leap 14.3 percent at the end of March 2011 from a year ago and achieved an annualized growth rate of 23 percent in the first quarter. The rise in deposits, coupled with restoration of balance sheets through write-downs at most banks, brought down the loans-to-deposits (LTD) ratio to less than 100 percent in March for the first time since 2007. Bankers expect the funds to remain within the country's banking system at least until confidence returns to revolt
