190317 jobs
While the adverse business environment resulting from the pandemic forced many banks to shed jobs, structural shifts happening in the banking industry also caused a number of redundancies. Image Credit: Gulf News Archives

Dubai: The UAE’s banking sector has begun hiring new staff as the economic recovery is driving asset growth and profitability.

According to the Central Bank of UAE (CBUAE) statistics, the number of banks’ staff rose by 738 employees compared to Q3 2021 (2.3 per cent) at the end of December 2021.

These numbers exclude outsourced staff in the UAE and offshored jobs.

After going through a period of downsizing that followed the pandemic, banks are back to head hunting to meet the rising demand for qualified personnel in key business areas.

“We are looking at a 5 to 7 per cent increase in our staff strength this year. COVID-related constraints had forced us to go on a tighter budget. Now the management is convinced that we need more human resources to tap into various new opportunities,” said human resources head of a medium-sized local bank.

Structural shift

While the adverse business environment resulting from the pandemic forced many banks to shed jobs, structural shifts happening in the banking industry also caused a number of redundancies.

The wide-spread technology adoption and digitalisation has changed the nature of staffing requirements of banks. While most banking services can now be accessed through digital channels such as automated teller machines (ATMs), cheque and cash deposit machines (CDMs), chatbots, internet banking and mobile banking, staff requirement in branch operations have come down drastically.

With the number of people accessing banking services though branch networks coming down, banks have either cut down the number of branches and/or have substituted branches with technology-driven electronic banking units (EBUs) that require minimal level of staffing.

Branch rationalisation

According to the latest CBUAE data, national banks’ branches fell by eight compared to the previous quarter to 513 at the end of Q4 2021. The UAE’s banking sector had been experiencing a trend of branch rationalisation from early 2019 as consolidation through mergers among banks and digitisation made a number of branches economically unviable.

Some of the big-ticket bank mergers in the country such as the merger between National Bank of Abu Dhabi and the first Gulf Bank, a three-way merger among Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank and the acquisition of Noor Bank by Dubai Islamic Bank have resulted in substantial branch redundancies.

Cost control

Most banks in the country introduced stringent cost control measures following the pandemic that resulted in a general slowdown in economic activity, business volumes and margins.

“When business volumes and margins were shrinking, banks were left with little option but to reduce operating costs. For banks, staff cost is a key component of overall costs,” said the chief financial officer of a local bank that let go more than 1,200 staff in the aftermath of the pandemic.

Data shows these cost control measures helped banks to remain profitable and recover faster. Cost-to-income (C/I) ratio of the top 10 banks decreased by 1.7 per cent year on year to 32.8 per cent in 2021, as banks managed to control cost while increasing the operating income. The operating efficiency (C/I ratio) of banks improved, supported by a 5.2 per cent year on year increase in operating profits. The lower C/I ratio can be partially attributed to cost control measures implemented by banks.

Where to expect new hiring

Bankers and human resources consultants say hiring is set to rise across the board in 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, collateralised/secured lending will be an area of growth in the immediate future with special emphasis on mortgages and trade finance that gives recourse to banks on assets and receivables of borrowers.

Revival in the equity capital markets (ECM) activity, especially in the primary and secondary equity markets, are giving a big boost to both investment banking and brokerage business that are lucrative in terms of fees and free liquidity for local banks.

“Prolonged slump in the local and regional ECM had seen hiring at minimal level in businesses such IPO management, underwriting, book building and brokerage business. From last year there has been a big pick up in these areas of business,” said the chief financial officer of a local bank.

Banks expect higher number of recruitments to happen in loan sales as the loan demand picks up. However, with the growing emphasis on digitalisation, emphasis will be on digital sales channels with hiring based on data analytics.

“Data tells it all. Now we know where we need people and with some accuracy we can forecast areas we need to focus while hiring,” said the human resources head of a Dubai based bank.

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