By Elizabeth Broomhall
Sharjah-based lender wants to grow in Abu Dhabi and boost its retail division
United Arab Bank (UAB) is planning to double its balance sheet in the next five years, with six new branches planned for the UAE by the end of 2012, its founder and chairman has said.
The Sharjah-based firm is focusing on boosting its retail lending division, as well as its presence in the UAE capital as part of its immediate growth strategy, Sheikh Faisal Bin Sultan Bin Salem Al Qassimi said.
“We are now working with consultants McKinsey and Co on a plan to double our asset value,” he told Arabian Business in an interview.
“We currently have 14 branches including our new Airport Road branch in Abu Dhabi which opens this month, but by the end of this year, we’ll have about 20. Basically we want to cover all of the emirates. Abu Dhabi is going to be a major growth area for us, with three new branches planned for Reem island, Al Raha Beach and Khalidiya.
“We’re also opening another in Jebel Ali in Dubai and have a new one coming up in Sharjah for our new corporate head quarters.”
The bank’s ultimate aim is to provide UAE-wide coverage he said, with a “significant budget” allocated for expansion. It is waiting on guidance from McKinsey about where additional branches might be needed.
“The bank is also becoming more aggressive in its expansion when it comes to the retail sector,” Sheikh Faisal added. “We want to grow our commercial business as well as our retail business, but commercial is something we have been doing for many years; retail is a relatively new vertical for us.”
UAB was set up in 1975 as a joint venture between a group of UAE nationals and French international financial conglomerate, Société Générale (SG).
The 37-year old company initially planned to serve Emirati business people and selected expatriates, but gradually strayed from its original goals with UAE nationals accounting for less than 3 percent of its customers three years ago.
In 2007, the Commercial Bank of Qatar (CBQ) acquired a 40 percent stake in the firm in the place of Société Générale, encouraging the bank to re-evaluate its position.
It has since embarked on a “transformation programme” in a bid to boost its number of Emirati clients and diversify its offerings, establishing an Islamic banking unit and separate wealth management service.
Sheikh Faisal said the bank was in a good position to grow due to its history of more conservative lending practices.
In 2011, it recorded a net profit of AED330m (US$90m) and had the lowest ratio of non-performing loans in the industry, at 1.6 percent.
“When we began the bank we didn’t want to take risks, so we didn’t go into sectors like real estate. We were very satisfied to have slow growth and less profit,” he said.
“So in the last year the bank’s spirits have been really good.”
Speaking about plans for the wider Gulf, he said the firm was focusing on the UAE in the short term but could consider regional expansion in the future.
“We want to ensure that we have ultimate coverage in the UAE before we look at expanding,” he added.
“Our arm in Qatar already gives us reach in Oman as it is a shareholder in the National Bank of Oman.
“But we’re not ruling out expanding to other Gulf countries. It will depend on the results of the study by McKinsey. Maybe we could start by looking at one country.”For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.