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Mon 19 Apr 2010 08:09 PM

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UAE lender UAB sees solid profit growth - CEO

Bank to focus on lending to medium sized trades and services businesses in the UAE.

UAE lender UAB sees solid profit growth - CEO
PROFIT GROWTH: Sharjah based UAB said that it aims to deliver profit growth consistent with past performance after posting less Q1 profit than the previous year. (Getty Images)

Sharjah based United Arab Bank said it aims to deliver profit growth consistent with past performance, as it posted first quarter net profit slightly below the same period last year.

UAB posted first quarter net profit of $17.84 million on Monday, just slightly below earnings of $65.8 million dirhams in the same period last year.

Speaking on Monday, Paul Trowbridge, chief executive officer, said: "UAB aims to deliver the sort of solid growth consistently with what we've done in the past, we believe we can deliver that."

In a separate interview with Reuters last week, Trowbridge said the banking industry still faced challenges in the wake of the global financial crisis, and that it would now have to adjust to "a new normal" after years of experiencing heady growth on the back of a booming real estate market.

Trowbridge said UAB had mostly avoided real estate, opting instead to focus on lending to mostly medium sized businesses in the UAE in sectors such as trade, services and manufacturing.

He said: "We were not set up as a property bank, we maintained a prudent and conservative strategy. We didn't lend to the sky."

Abu Dhabi listed UAB maintained profit gains throughout last year's financial crisis even as other UAE players such as Dubai Islamic Bank saw double digit earnings declines due to exposure to troubled Dubai World and its property units.

Trowbridge said the company had no exposure to Dubai World or any of the Saudi conglomerates. But the trade and manufacturing industry is experiencing its own slowdown, which has dulled some of the sheen of UAB's balance sheet.

Trowbridge said: "(Our customers) have seen lower demand for cement, steel, and glass."

He added: "Their revenues have declined and their lending needs have declined. As a result, our balance sheets have declined but this is the 'new normal.'"

However, Trowbridge said there were signs of activity picking up in the trade and manufacturing sectors.

He also said that the lender currently saw no reason to alter its provisioning policy for the year.

In 2009, UAB booked $9.25 million in provisions, but Trowbridge said this was done as a precautionary measure and was not related to any specific exposures.

That year, UAB reported earnings of $76.5 million, up 12 percent from the year before.

As part of its forward looking growth strategy, Trowbridge said the company was focusing its attention on building up its niche retail banking businesses, including its newly launched Islamic banking initiative.

UAB entered Islamic banking in March, offering deposit products and Islamic financing options. Trowbridge said the company planned to begin providing Islamic automobile financing later this year, followed by mortgages.

He added that UAB would also focus on its wealth management business by providing more personalised banking attention to high net worth clients. (Reuters)

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