Recent years have been nothing if not uneventful for banks in the United Arab Emirates, now in recovery mode following Dubais 2009 debt crisis and benefitting from a regional repositioning of capital in the wake of the 2011 Arab Spring.
In all of this, Sharjahs United Arab Bank (UAB) has performed relatively well, reporting a string of positive financial results notable for a 60 per cent year-on-year increase in first quarter net profit, following record profits in 2012. With an expansionary path in the UAE, UAB is an increasingly familiar face among business and retail consumers.
Full-year 2012 results, where the bank announced the highest annual net profit in its 38-year history of Dhs410 million ($111.6 million) - up 24 per cent on 2011 - will have made particularly pleasing reading for chief executive Paul Trowbridge, his executive management team and the banks shareholders.
The ambitious strategic growth plans initiated by the bank, which describes itself as the UAEs fastest-growing and second-most profitable in terms of return on assets, are clearly paying dividends as the countrys business sector capitalises on a general recovery in trade volumes and new business opportunities.
UAB has grown rapidly during the challenging global scenario, Trowbridge tells The Gulf, setting the scene for what has been some ride for the bank since 2009. In that time its customer deposits, loans and total assets have more than doubled; it is now one of the top 25 listed companies in terms of market capitalisation; and its nationwide branch network has expanded from just nine in 2009 to 20 by last year.
In 2012 we proactively managed the risk and kept our NPLs [non-performing loans] at a record low of 1.6 per cent. We were also able to reduce our cost of funds with a good liquidity prevailing in the market, the chief executive explains, adding that UABs record net profit in 2012 was based on what he terms robust growth in its retail, corporate and SME [small and medium-sized enterprise] segments.
For us the main challenge is to maintain this growth momentum in the revived economic environment with proactive risk management, he states.
On the face of it, the bank appears well placed to do so. A December 2007 strategic alliance with the Commercial Bank of Qatar (CB), Qatars largest private sector bank which has a 40 per cent interest in UAB, created a GCC regional banking partnership whose synergies, best practices and shared services Trowbridge also credits for UABs impressive 2012 performance.
Then there was the strategic decision taken in the middle of last year to launch its SME Banking business, tapping into a sector of the national economy which the government has earmarked for greater growth. The business is, says Trowbridge, performing in line with expectations, with more than 700 new-to-bank customers, mainly traders and manufacturers.
We expect SME Banking to become a significant contributor to our balance sheet and profitability in the near future, he insists.
The bank also hopes its decision to beef up its corporate banking capabilities will continue to bear fruit. It recently established a dedicated Large Corporates unit within its Corporate Banking Group to support the growth potential of larger companies; and more generally Trowbridge is optimistic UABs corporate banking business can capitalise on improved corporate credit demand and increased government spending - particularly in infrastructure - in 2013, following what he says was the successful realignment of risk appetite and industry-leading growth in 2012.
The bank will continue to capture emerging lending opportunities resulting from the considerable recovery of the UAE economy led by the hospitality, trade, logistics and retail sectors, he says, optimistically. Another strategic priority in 2013 will be to capture a larger share of customer transactional banking requirements by building up its Transaction Banking services.
This activity takes place within a UAE banking sector which recovering and growing steadily if unspectacularly, and where issues of mortgage loans caps, liquidity regulation and the monitoring of large exposure limits have dominated the headlines.
A recent meeting of the UAE Banks Federation revealed that UAE banks had witnessed eight per cent asset growth in 2012, its members praising the sectors resilience in the face of various challenges in recent years.
From its vantage point UAB - established in 1975 as a joint venture between a diverse group of Emirati investors and Socit Gnrale, the French international financial conglomerate - will continue to increase its visibility in the country, opening 10 new branches in 2013 alone, mainly in the emirates of Abu Dhabi and Dubai, and another 20 off-site ATMs.
Customers interacting with the bank this year could also increasingly find they are dealing with an Emirati rather than an expatriate. In 2012 43 per cent of all UAB staff were Emirati, many in senior positions. Every branch manager, for example, is now a national.
The banks distribution network will also be supported with enhanced online banking, a new mobile banking platform and an enlarged mobile sales force which, says Trowbridge, will further improve the banks ability to deliver its products and services to target customer segments. The bank will also look to capitalise on the reputation of UAB Rewards, recently voted the countrys best loyalty programme by The Banker Middle East.
Trowbridge insists that while it vakues its Sharjah roots, the banks expansion plans across the UAE federation are clear. Traditionally UAB has always been focused on the development of Sharjah and have six branches in Sharjah alone. We are equally focused on the development of the UAE with a strong branch network across all Emirates to cater to the growing needs of our target customer segments within corporate, retail, SME and Sadara wealth management segments, he states.
UAB has very successfully positioned its brand across the UAE, as a provider of customer friendly financial solutions at competitive pricing to its target customer segments, he concludes.
