United Arab Emirates’ banks will need to boost income from fees and steal market share from foreign rivals to compensate for sluggish loan growth, the chief executive officer of the country’s second-biggest bank said.
“There are new ways of making money - wealth management products, markets, cash management or new innovative ways,” Alex Thursby, head of state-controlled National Bank of Abu Dhabi PJSC, told reporters today at a conference in Abu Dhabi. “There are going to be a lot of offers to customers that they got previously from the more international banks.”
Growth in U.A.E. bank lending slowed to one percent to four percent after the financial crisis in 2008, compared with expansion of 30 percent annually in the four years prior to that. Lending in the second-largest Arab economy has increased 5.6 percent in the seven months through July this year.
Over the next five years local banks will develop new product strategies to meet the needs of a changing market, said Thursby, who joined NBAD earlier this year from Australia & New Zealand Banking Group Ltd. (ANZ) Expatriates represent about 80 percent of the local population of 8.3 million.
“The change in the banking industry will be new product development, new areas that will give growth,” Thursby said. “U.A.E. banks will become, at the top end certainly, direct competitors to the best practices that are held by some of the two major or three major foreign banks.”
The U.A.E. has the biggest banking market in the six-nation Gulf Cooperation Council, which also includes Saudi Arabia and Qatar. Fifty-one commercial banks operate in the country, including units of HSBC Holdings Plc (HSBA) and Standard Chartered Plc. (STAN)
The U.A.E.’s wealth management business is dominated by foreign banks including UBS AG and Credit Suisse Group AG.
NBAD’s first-half profit grew 26 percent to 2.62 billion ($714 million) dirhams as lending grew 5.4 percent. Interest income made up 66 percent of operating income.
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