Business is booming for banks in the United Arab Emirates (UAE) if their financial results for 2003 are anything to go by.

High oil prices, heavy investments in the oil and gas sectors and the trend forEmirati investors to bring investments made abroad back home have all helped banks achieve these strong results, and in at least one case, so has increased letter of credit (L/C) business.

L/C increase

Commercial Bank of Dubai posted net profits up 18 per cent up in 2003 from the previous year. Total business increased by 10 per cent while the bank's loan portfolio grew by 18 per cent.

One of the bank's largest increases however was seen in the size of its L/C portfolio, which increased by a massive 46 per cent to around US$790 million.

Export boom

One factor that may be driving the increase in L/C business may be the rising level of export and re-export business the UAE writes with its regional neighbours. Exports to the other Gulf Co-operation Council states of Saudi Arabia, Bahrain, Qatar, Kuwait and Oman were up around 33 per cent in 2003 compared with the previous year.

Other UAE-based banks reporting strong profits increases for 2003 include Union National Bank, which reported a 25 per cent rise and Bank of Sharjah, which announced a 47.9 per cent jump in its profits.

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