Introduction
In the United Arab Emirates, banking is one of the spheres that have been going through rapid development within recent years. Banks are enhancing their influence and widening the areas of their presence. Also, UAE banking has been a focus of academic attention. The UAE feature a combination of various banking systems that can be generally divided into two major categories: Islamic banking and conventional banking. The differences between them have been studied repeatedly. For example, Miniaoui and Gohou (2013) found that the conventional banking system had been performing better during a financial crisis than the Islamic one. However, the Islamic banks quickly caught up with the conventional ones when the crisis was over.
Noor Bank PJSC was founded in 2007 under the name Noor Islamic Bank PJSC, but the name was changed in 2014 due to widening the number of services and not limiting them to the Islamic banking only. The bank provides a wide range of banking services to individuals and corporate bodies (Company Overview of Noor Bank PJSC, 2016). For the bank’s personal clients, available services include opening and managing personal accounts and various finance programs for personal sales. For corporate clients, the bank provides corporate accounts, corporate finance, and a number of specific Islamic banking services that are in demand among companies devoted to Islamic financial operation. The bank recognizes the benefits of priority banking and provides priority accounts services. Receiving banking services from Noor Bank PJSC is possible via various channels, including mobile, Internet, and SMS. Besides these services, the bank is also involved in trading, insurance, and treasury services.
Literature
According to the Noor Bank’s financial reporting documentation, the company’s financial results and cash flow in 2014 were indicating a rather successful performance. The bank’s operating income from Islamic banking and sukuk (Islamic bonds) amounted to more than 895 million AED compared to 678 million AED in the previous year (244 and 185 million USD respectively) (Noor Bank P.J.S.C.: Directors’ report and financial statements, 2015). Net income from Islamic financing increased 61 percent within one year. Total operating income exceeded one billion AED for this first time in the company’s history.
Operating expenses included three indicators: staff costs, general and administration expenses, and depreciation. While staff costs were observed to grow from 235 million AED to 340 million AED (64 and 93 million USD respectively), general and administration expenses decreased 1.6 percent and depreciation decreased 1 percent. Operating profit before impairment on investment in Islamic financing instruments amounted to 524 million AED (143 million USD), which is 115 percent more than in 2013. Operating profit after impairment on investment in Islamic financing instruments increased more than two times, too (Noor Bank P.J.S.C.: Directors’ report and financial statements, 2015). Noor Bank’s profit in 2014 was 678 million AED (185 million USD), which was a 166-percent increase compared to the previous year.
Under the profit rate risk section, Noor Bank summarizes its assets and liabilities that are associated with profit rate risk and reports that the net position on balance sheet amounted to 4.443 billion AED (1.21 billion USD; up to 3 months) (Noor Bank P.J.S.C.: Directors’ report and financial statements, 2015). It is estimated that a 1-percent change in profit rate would result in an income statement change of 27 million AED (compared to 29 million AED in 2013). The balance sheet overall indicated a decrease of profit risks.
References
Company Overview of Noor Bank PJSC. (2016). Web.
Miniaoui, H., & Gohou, G. (2013). Did Islamic banking perform better during the financial crisis? Evidence from the UAE. Journal of Islamic Economics, Banking and Finance, 9(2), 115-130.
Noor Bank P.J.S.C.: Directors’ report and financial statements for the year ended 31 December 2014. (2015). Web.