Armed with deep pools of liquidity, many Middle Eastern banks are exploring new avenues of growth, from expanding their regional presence to concentrating on innovation within the Islamic finance sphere.

Local banks in the Middle East have continued to perform strongly despite the global financial downturn. The strategies of three such institutions – state-owned National Bank of Abu Dhabi, local-owned Qatar National Bank and retail franchise Emirates NBD – help to explain such a strong performance.

The events triggered by the 2008 global financial crisis have ushered in a new wave of banking regulation in the United Arab Emirates and led to a greater focus on risk management. While UAE banks now boast some of the highest capitalisation levels in the world, the biggest challenge facing the sector as a whole is that of tightening liquidity.

Dubai’s banking sector has suffered a series of setbacks in the past few years. But with a series of new bond issuance from state-owned companies being met with high demand, and banks rolling out new mortgage products, 2011 has seen an upturn in the fortunes of the emirate.

Rising oil prices and restructured debt deals have lifted the mood about the economic outlook for the United Arab Emirates. 

Hit hard by the credit and property bubbles that were at the epicentre of the global financial crisis, the United Arab Emirates' banks have since managed to shore up their stability and start to devise strategies for future growth. 

In addition to the global financial crisis, the Dubai World debt quandary has provided another test for the emirate's banks. Nevertheless, positive signs are emerging. Writer Daniel Maalo