UAE banks set to hire more staff as recovery takes hold

Dubai: The banking sector in the United Arab Emirates has started hiring new staff as the economic recovery boosts asset growth and profitability.

According to statistics from the Central Bank of the United Arab Emirates (CBUAE), the number of bank employees increased by 738 employees compared to the third quarter of 2021 (2.3%) at the end of December 2021.

These figures exclude staff outsourced to the UAE and offshoring jobs.

After going through a period of downsizing following the pandemic, banks are back to headhunting to meet the growing demand for qualified staff in key business areas.

“We expect a 5-7% increase in our workforce this year. The constraints related to COVID had forced us to go on a tighter budget. Now the management is convinced that we need more human resources to exploit various new opportunities,” said the human resources manager of a medium-sized local bank.

Structural change

While the unfavorable business environment resulting from the pandemic has forced many banks to cut jobs, structural changes in the banking sector have also prompted a number of layoffs.

The widespread adoption of technology and digitization have changed the nature of banks’ staffing needs. While most banking services are now accessible through digital channels such as Automated Teller Machines (ATMs), Check and Cash Deposit Dispensers (CDMs), Chatbots, Internet Banking and Personal Banking mobile, staffing requirements in branch operations have decreased significantly.

With fewer people accessing banking services through branch networks, banks have either reduced the number of branches and/or replaced branches with technology-driven Electronic Banking Units (EBUs) that require a minimal staff.

Branch rationalization

According to the latest data from the CBUAE, branches of domestic banks decreased by eight from the previous quarter to 513 at the end of the fourth quarter of 2021. The banking sector in the UAE had seen a streamlining trend branches since the beginning of 2019, consolidation through bank mergers and digitization has rendered a number of branches economically unviable.

Some of the most important bank mergers in the country, such as the merger between National Bank of Abu Dhabi and the first Gulf Bank, a three-party merger between Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank and the acquisition of Noor Bank by Dubai Islamic Bank led to significant layoffs at branches.

Cost control

Most of the country’s banks introduced strict cost control measures in the wake of the pandemic, which led to a general slowdown in economic activity, business volumes and margins.

“When business volumes and margins declined, banks had little choice but to reduce operating costs. For banks, personnel costs are a key component of overall costs,” said the chief financial officer of a local bank that laid off more than 1,200 staff in the aftermath of the pandemic.

Data shows that these cost control measures have helped banks stay profitable and recover faster. The cost/income ratio (C/I) of the top 10 banks decreased by 1.7% year-on-year to reach 32.8% in 2021, as the banks managed to control costs while increasing operating income. Banks’ operational efficiency (C/I ratio) improved, supported by a 5.2% year-on-year increase in operating profits. The drop in the C/I ratio can be partly attributed to the cost control measures put in place by the banks.

Where to expect new hires

Bankers and HR consultants say hiring is expected to increase in all areas of the UAE banking sector, with more emphasis on fee-based services such as investment banking, treasury, brokerage , private equity and advisory functions.

On the lending side, secured/secured lending will be an area of ​​growth in the immediate future, with a particular focus on mortgages and trade finance that give banks recourse to borrowers’ assets and claims.

The revival of equity capital markets (ECM) activity, particularly in the primary and secondary equity markets, is giving a big boost to investment banking and brokerage businesses which are lucrative in terms of fees and free cash for local banks.

“The protracted collapse of local and regional ECM has seen hiring at a minimal level in businesses such as IPO management, underwriting, bookbuilding and brokerage businesses. Since last year, there has been a strong recovery in these business areas,” said the chief financial officer of a local bank.

Banks expect more hiring to occur in loan sales as demand for loans increases. However, with the increasing focus on digitization, the focus will be on digital sales channels with data analytics-driven hiring.

“The data says it all. Now we know where we need staff and we can predict with some accuracy what areas we need to focus on when hiring,” said the human resources manager of a Dubai-based bank.

The arrival of digital-only banks and community banks is also expected to increase the demand for banking staff. Clearly, digitally savvy banking professionals are going to be in demand.

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