UAE's Union Nat'l Bank sees '08 profit up 17%

PRIME TIME: UNB says its overseas investments are of very high quality. (ITP Images)

Abu Dhabi's Union National Bank (UNB) is poised for a rise of no less then 17 percent in 2008 profit despite the global financial crisis as its main business lines remain robust, its top executive said on Sunday.

Mohammad Nasr Abdeen also said UNB has borrowed money under a government package meant to boost liquidity, and has tightened fresh funding to real estate and consumers.

But, "From subprime till today, UNB has not been affected at all because majority of our investments are in the UAE and some outside were of very high quality. We were lucky not to be hurt," he told newswire Reuters in an interview.

"Our results are generally above expectations and we can sustain our growth in the fourth quarter and for sure there will be good growth over and above 2007 in profits," he said.

UNB posted a profit of 1.17 billion dirhams ($319 million) in 2007, up 17 percent over the previous year.

"There is growth from all our main lines of business, even if interest income falls slightly due to less lending," he said. The bank has taken two medium-term loans from the Ministry of Finance facility, he said, declining to give figures.

"But we did not avail the Central Bank facility, we consider it as last resort," he said.

The finance ministry poured $6.8 billion into the financial system in October as part of a $19.1 billion rescue facility. But as the credit crunch bites, UNB has slowed lending especially to the real estate and consumer finance although it will honour all financing commitments already made, he said.

"It is important to slow down a bit to understand and review strategies and reduction in availability of liquidity forced banks to slow down a bit. For consumer financing, we have slightly modified our policy and for real estate finance, it is wise to slow down a little bit.

"Those who have got commitments will not be affected but taking new business will be subject to slow financing."

UNB will open at least 5 to 6 new branches in 2009 along with more ATMs across the country. The bank currently has 50 branches in the UAE. But UNB will be cautious in expanding overseas, Abdeen said.

"We will be more selective due to the existing circumstances and unless there is a very good opportunity, we are not in a hurry."

The bank's subsidiary in Egypt, the Alexandria Commercial & Maritime Bank (ACMB) is one of the "best acquisitions", he said.

"We have expanded the bank to about 20 branches now and there's potential to expand it further in 2009, similar to the UAE branch expansion."

ACMB made a 15 percent return on equity last year, he said and a similar or higher growth is expected this year. UNB plans to open its first branch in Qatar "in a few weeks" and is awaiting licences from other GCC markets, he said.

UNB secured a branch licence from Qatar this year for wholesale banking. (Reuters)

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