Abu Dhabi’s NBAD Hires From HSBC as Thursby to Recruit 450
The hires include about 180 people to sell retail products such as mortgages and personal loans as well as luring customer deposits, Chief Executive Officer Alex Thursby said in a May 1 interview in Abu Dhabi. The bank, which recruited a five-member trade finance team from HSBC Holdings Plc (HSBA), will also seek to add people with experience in North East and South East Asia as it pursues expansion plans stretching from Lagos to Singapore.
Thursby is seeking to boost the bank’s position in retail banking in the U.A.E. to the top three by 2018, compared with the current ranking of fifth. The bank is also building hubs in eight global cities to tap an expanding middle class and growing trade and investments flows within a “west-east corridor” that extends from west Africa to the east coast of China.
“We have rebuilt the whole commercial proposition in nine months and transforming the retail bank is well on,” said Thursby, who joined from Australia & New Zealand Banking Group Ltd. (ANZ) in July and last week recruited ANZ banker James Burdett as his chief financial officer. “Already that business is growing, growing aggressively from a small base.”
NBAD aims to boost retail banking revenue by 14 percent annually over the next five years, compared with industry growth of 6 percent to 7 percent, it said in March.
The bank is also boosting its wholesale lending business in London and Hong Kong and next year plans to increase its presence in the six-nation Gulf Cooperation Council, which also includes Saudi Arabia and Qatar. NBAD is working to reduce its reliance on lending and interest income while boosting fees from areas such as managing share and bond sales for clients.
Bank earnings in the U.A.E. are improving as economic growth accelerates, helped by a recovery in property prices, a revival in tourism and rising government investment. The country’s economy expanded 4.8 percent last year, the fastest pace in seven years, according to data compiled by Bloomberg.
NBAD, 70 percent owned by the Abu Dhabi government, last week reported first-quarter profit of 1.41 billion dirhams ($383 million). While that was little changed from a year earlier, it beat analysts’ estimates of 1.19 billion dirhams.
The state-owned lender will focus its international strategy on the hubs of Mumbai, Lagos, Singapore, Hong Kong, London, Paris and Washington D.C., it said in October.
Net Interest Margin
A decline in interest rates on corporate loans in the U.A.E. because of growing competition and surplus cash at banks is hurting profit margin and will be “here for a little while longer,” Thursby said. “The liquidity surpluses that is driving down price, I think has got another 12 months to run.”
Companies, especially in Dubai, are taking advantage of banks’ cash surplus and the emirate’s improving credit profile to negotiate lower interest rates. DP World Ltd. (DPW), the Dubai-owned ports operator, requested banks to cut the price on a five-year revolving credit facility to 1.5 percentage points over the benchmark rate from 2.25 percent when the loan was signed in 2012, two people familiar with the deal said April 27.
NBAD’s net interest margin, the difference between what the bank earns on assets such as loans and what it pays on liabilities such as deposits, narrowed to 1.84 percent in the first quarter from 1.97 percent a year ago, according to a presentation at the time of its results earlier this month.
The bank has also drawn up a strategy to boost its presence in Dubai as the city steps up investments after winning a bid to host the World Expo in 2020.
“A lot of our retail is being done in Dubai,” Thursby said. “Mortgages are pretty good there, it is at least half our mortgage growth.”
To contact the reporter on this story: Arif Sharif in Dubai at email@example.com