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Mon 11 Feb 2008 02:57 AM

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UNB unveils Gulf acquisition plans

Abu Dhabi lender looks to expand overseas as it faces increased competition in home market.

Abu Dhabi's Union National Bank expects profit growth to hold steady this year and is mulling acquisitions to enter at least one other Gulf market in 2008, the bank's chief executive said.

Abu Dhabi's fourth largest lender by market value saw profit rise 17% in 2007 to 1.18 billion dirhams, spurred by economic growth.

"Our profit growth is sustainable and we expect to achieve similar growth of around 17% or more in 2008," Mohamed Naser Abdeen told newswire Reuters in interview in Abu Dhabi on Sunday.

The lender beat analysts' forecasts in the fourth quarter doubling profit to 346.04 million dirhams ($94.23 million) from the year earlier period.

"The growth will come from our core business, which is retail, corporate, investment banking and a few other areas," he said.

The bank is looking to expand overseas as it faces increased competition in its home market.

In Egypt, where it last year bought Alexandria Commercial & Maritime Bank, the lender operates nine branches.

Union National, which is part owned by the governments of Abu Dhabi and Dubai, has applied for an operating licence in Qatar.

"We are looking at the GCC markets and we will enter these markets in one way or the other this year, either through licences or through acquisitions," Abdeen said, adding that the lender was looking for small acquisitions in which UNB would hold a majority stake.

It expects to open a representative office in Shanghai by the end of March, Abdeen said. A representative office cannot take deposits.

Abdeen said it was not the "right time" to tap the debt markets, despite having only used $500 million of a $2.5 billion European Medium Term Notes programme.

"We will go to the markets when there is a good opportunity...the bank is very liquid now," he said.

The bank expects its new real estate subsidiary to begin operations by the end of the first quarter.

The firm, in which UNB will hold a 40% stake with the remainder offered to shareholders, will have a paid-up capital of 1 billion dirhams.

"We see good prospects for the new company now and in times to come because of the massive developments in this crucial sector of the UAE economy," said Abdeen.

The bank's Islamic subsidiary Wifaq, which made a profit of 40 million dirhams, plans to increase the number of branches to four by year-end from one, Abdeen said.

Shares of UNB, which are up 5.38% this year, fell 1.31% on Sunday. (Reuters)

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