Abu Dhabi Commercial Bank, the UAE's third-largest lender, is expanding its regional footprint with a branch in Saudi Arabia to capitalise on growth opportunities in the Arab world’s largest economy and grow its clientele in the kingdom.
The bank has received an in-principle approval from the kingdom’s council of ministers to open a branch in Riyadh, subject to final regulatory approvals, it said on Wednesday in a regulatory filing to the Abu Dhabi Securities Exchange, where its shares are traded.
“The bank’s decision to establish a presence in the kingdom aligns with the accelerated expansion of our business,” Ala’a Eraiqat, group chief executive of ADCB, said.
The bank will provide a range of services for corporate and institutional clients, including financing and working capital solutions, under the Saudi Central Bank’s foreign banking branch licence, it said.
First Abu Dhabi Bank, the UAE’s largest bank by assets, and Emirates NBD, the biggest bank in Dubai by assets, already have significant presence in the kingdom. Both banks have branches in Jeddah, Riyadh and Al Khobar.
Regional and international financial institutions and banks are keen to establish a presence in Saudi Arabia, as Opec’s top oil producer continues to diversify its economy away from oil.
The kingdom’s economic overhaul agenda includes development of local non-oil industries and the sale of some state assets.
A booming population in the country, coupled with economic diversification offer growth opportunities for local, regional and international banks.
“ADCB is well positioned to support clients operating in the vibrant Saudi economy,” said Mr Eraiqat.
The kingdom's economy expanded 8.7 per cent in 2022 – the highest annual growth rate among the world's 20 biggest economies.
It is expected to expand by 0.8 per cent in 2023, according to the International Monetary Fund estimates.
Saudi Arabia has also taken a number of steps to support and further boost the country's non-oil economy.
Saudi regulations, which require foreign businesses to set up a local base in the kingdom or face the risk of losing out on government contracts, came into effect on January 1.
The move aims to attract multinational companies by offering a range of benefits and premium support services, including a 30-year tax break.
ADCB said, with the new branch in Saudi Arabia it will add an important dimension to its client offering in the kingdom.
“The bank is on a strong growth trajectory, and a central element of our strategy is to support clients along economic corridors across regional markets,” Ludovic Nobili, group head of corporate and investment banking at ADCB, said.
Last year, the bank reported a 22 per cent increase in its third-quarter net profit, driven by strong loan growth and robust economic conditions in the UAE.
Net profit attributable to equity holders for three months ending September reached a record Dh1.94 billion ($528 million), up from Dh1.59 billion a year earlier.
