Improving Banking Supervisory Mechanisms
In the OIC Member Countries
93
low-profitability episode. Since operational risk is directly related to gross income of banks, a
relatively smaller operational risk is an indication of lower profitability in the banking sector.
Figure 58: Risk-Weighted Asset Decomposition, United Arab Emirates
Source: Bankscope
Figure 59: Profitability of the Banking Sector, United Arab Emirates
Source: Bankscope
UAE's banking profit mostly relies on interest income and operating income which is similar to
the structure in Malaysia. Trading activity and derivative transactions are limited.
Risk Weig. Ass.
- Credit Risk
92%
Risk Weig. Ass.
- Market Risk
2%
Risk Weig. Ass.
- Op. Market Risk
6%
Risk-Weighted Asset Decomposition
Net Interest
Income
69%
Net Gains on
Trad. and Der.
3%
Non-Interest
Operating
Income
28%
Profitability of the Banking Sector