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Mon 20 Apr 2009 02:36 PM

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New lender eyes growth to become UAE's biggest

EXCLUSIVE: Abu Dhabi Finance CEO also says liquidity is improving in the UAE capital.

Abu Dhabi Finance said on Monday it couldn't rule out acquisitions in the long term as the group looks to become the biggest mortgage lender in the UAE.

The group was set up in November to kick-start the mortgage market in the UAE and was a joint venture between Mubadala Development, Abu Dhabi Commercial Bank, Sorouh, Aldar and TDIC. It was given $500m of capital to launch.

Speaking on the sidelines of real estate conference Cityscape in Abu Dhabi, Philip Ward, CEO of Abu Dhabi Finance told Arabian Business: “Never say never, but it’s not part of our current plans.

“Our current plans are around organic growth. To be talking 5 months in about anything other than organic growth I think would be running before we walk. But never say, never,” he added.

An exodus of foreign capital last summer after failed bets by currency traders that the dirham would lose its dollar peg triggered the current liquidity squeeze in the UAE, which has seen lending dry up between banks and the mortgage market suffer.

In November, UK lender Lloyds stopped financing apartments, with other banks such as HSBC lowering their loan to value ratios to as little as 50 percent.

In October, shares in Amlak and Tamweel were suspended after the two home loan companies admitted facing solvency, funding and liquidity issues.

However, Ward said liquidity was improving in Abu Dhabi.

“From our perspective, other lenders are becoming more active then they were when we launched in November. It’s well-known the Abu Dhabi government recapitalised a number of the Abu Dhabi banks - that is starting to feed through,” he said.

There was no chance that Abu Dhabi Finance would break even in the first year but the company was exceeding its own forecasts, Ward stressed.

“I’m not going to say when our break even target is but we are ahead of where we expected to be,” he said.

Ward refused to be drawn on whether UAE banks had overextended themselves in the boom years before the onset of the global crisis.

“This will be demonstrated in the coming months as the banks and the finance companies start declaring their results and you see what happens provision wise. That will be a true commentary on whether they over extended themselves or not.”

Abu Dhabi Finance offers a maximum 85 percent financing on properties and interest rates start at 8.5 percent.

It currently only offers mortgages in Abu Dhabi and is looking to expand into all other emirates in the UAE.

Less than 10 percent of property buyers in Abu Dhabi have a home loan. Ward predicted mortgage penetration rates in the emirate would increase up to 40 percent as more properties came online.

“Our vision is to be the biggest and best mortgage lender in the UAE,” Ward said.

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