UAE's First Gulf Bank says profit can grow 6% this year

Chief executive Andre Sayegh said net interest margins will improve this year with liquidity conditions
UAE's First Gulf Bank says profit can grow 6% this year
First Gulf Bank (FGB)
By Reuters
Sun 06 Mar 2016 06:54 PM

First Gulf Bank (FGB) , one of the UAE's biggest banks, thinks it can maintain profit growth of 6 percent in 2016, the same growth rate that it achieved last year, chief executive Andre Sayegh said on Sunday.

Net interest margins will improve this year as liquidity conditions change, he told reporters after the bank's annual general meeting. "From excess liquidity we are moving to reasonable liquidity now."

The bank's average net interest margin last year was 3.3 percent, chief financial officer Karim Karoui said. He predicted that would rise by 20 to 30 basis points this year.

FGB's loans and advances totalled 149.8 billion dirhams ($40.8 billion) at the end of 2015, up 7 percent from a year earlier. Growth may come under pressure this year as the UAE economy slows because of low oil prices.

This year, "we see low single-digit growth in loans, revenues. This is our best-case scenario," Sayegh said, adding that FGB might revise this outlook in the second half of 2016.

Small and medium-sized firms (SMEs) may be particularly hard hit in the economic slowdown compared to large companies, which often have deeper pockets and government links. Sayegh said FGB had 3.5 billion dirhams worth of SME exposure, or about 2 percent of total loans.

On fund-raising, Karoui said FGB needed to raise between $1.5 billion and $2.0 billion annually. "In which form we will issue - sukuk, bonds, loans, a private placement - we will decide," he said of this year's plans.

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