Emirates Development Bank (EDB), the state-owned lender focused on financing the UAE's priority sectors, boosted funding to industrial companies by 418 per cent during the first half of 2022 to drive the sector's growth.
The Abu Dhabi-based bank approved Dh2.4 billion ($653m) in loans to the UAE’s industrial sector in the first six months of the year, up from Dh464m in the previous-year period, it said in a statement on Sunday.
The surge in industrial financing increased the bank's contribution to the UAE's gross domestic product to Dh1.9bn during the period, up from Dh425m in the first half of 2021.
EDB also more than doubled its lending to small and medium enterprises to Dh351m in the first half of 2022 through its credit guarantee scheme, up from the Dh168m allocated during 2021, it said.
The results underscore the potential of the UAE's industrial sector and the bank’s ability to mobilise finance to drive its expansion, said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and chairman of the EDB board.
"These results are a testament to the bank’s progress towards supporting the UAE’s economic diversification agenda and increasing its global competitiveness," Dr Al Jaber said.
"By expanding access to capital, the bank is helping develop a global hub for industry, advanced technology and the industries of future."
EDB funds companies in priority sectors including health care, infrastructure, food security and technology.
The lender works with state entities including the Ministry of Industry and Technology and free zones such as Dubai Industrial City, Jebel Ali Free Zone and Khalifa Industrial Zone in Abu Dhabi to provide financing to their clients.
Last year, the UAE launched its industrial 'Operation 300bn' strategy to position the Arab world’s second-largest economy as a global industrial centre by 2031. The 10-year plan focuses on increasing the industrial sector's contribution to the country's GDP from Dh133bn in 2021 to Dh300bn in 2031.
The strategy focuses on boosting production in 11 priority sectors, supporting the growth of national industries, attracting foreign investment and ensuring availability of dedicated financing for local industrial companies.
"Over the past period, we worked tirelessly to strengthen our capabilities partnerships, share our vision with industry leaders and cement our role in driving the national economy to reach greater heights and consolidate its pioneering position," said Ahmed Al Naqbi, chief executive of EDB.
"As we look forward to the remainder of this year, we remain committed to providing an all-encompassing business ecosystem for SMEs and start-ups."
In the second half of 2022, EDB plans to use its assets in vital sectors and expand its digitalisation agenda across the bank, it said.
EDB aims to boost its funding to Dh5bn by the end of this year, Mr Al Naqbi said in June.
In June last year, S&P Global Ratings affirmed its “AA-“ credit rating with a “stable" outlook for EDB.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
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China
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Japan
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Norway
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Canada
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