Abu Dhabi has increased the share capital of its wholly-owned Al Hilal Bank by Dh400 million, a timely boost for the Islamic lender, which is modernising its branch network and investing in technology.
The increase in capital by the Abu Dhabi Investment Council, the state-owned firm that has tied-up with Mubadala Investment Company, was granted in June, Alex Coelho, the Al Hilal chief executive, told The National. Al Hilal's share capital has risen to Dh3.5 billion from Dh3.1bn, as it pursues growth plans, he added.
“While the increase will further strengthen the bank’s balance sheet and capital base, from a more long-term perspective, it allows us to meet the growing demand for Islamic finance by investing in areas with the greatest growth prospects,” said Mr Coelho.
Lenders in the UAE, the Arabian Gulf's second-biggest economy, are recovering from tough operating conditions amid muted growth because of the three-year oil price slump that forced the Government and consumers to cut spending. Crude prices have rebounded from the lows of near $30 per barrel in January 2016, staying mostly above $70 per barrel during the first half of this year.
Banks are expected to increase profitability as demand for credit picks up and the Government resumes spending, especially in oil and gas and infrastructure sectors, kick-starting economic growth, according to analysts including those from Moody's Investors Service and S&P Global Ratings.
The Central Bank of the UAE has raised this year's economic growth forecast to 2.7 per cent from its previous projection of 2.5 per cent. Non-oil GDP growth is forecast to rise to 3.9 per cent this year compared with 3.4 per cent last year.
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The bank, which completed the first decade of operations this year, has a well balanced portfolio, almost equally split between retail and corporate banking, Mr Coelho said.
“We are neither only a corporate bank or a retail bank,” he said. “There’s a beauty into that ... when you are a corporate bank and you have a full-fledged retail presence you have an excellent offering,”
The lender is now placing more emphasis on its wealth management businesses, he said.
Improving asset quality, expanding its offerings and digitising services have been the big priorities for the Islamic lender.
"We as a bank are clearly focused on the quality of the assets," Mr Coelho said. "We are not concerned with the general growth but we are concerned with qualitative growth, both in retail and corporate banking [businesses]."
The bank, which is modernising its branch network, is also heavily investing in electronic banking.
Al Hilal has updated its Euro Medium Term Note programme for a possible bond issuance. However, Mr Coelho would not specify either the time or the size of possible transactions and whether Al Hilal has appointed financial advisers on the deal.
“We don’t have a date yet. We are soft sounding the market and discussing it with our peers to see where’s the best window for us,” he said.
The lender issued a $100 million private placement sukuk last year, its third issuance under the $2.5bn EMTN programme, it said at the time.
Bloomberg earlier this year reported that the bank has hired Emirates NBD, First Abu Dhabi Bank, HSBC, JP Morgan and Nomura Holdings to manage the sale of another dollar-denominated sukuk transaction.
Last year, Al Hilal uncovered a fraud attempt, which Mr Coelho said was a one-time occurrence. However, the bank’s internal control processes identified the “unusual transaction” and blocked “all but a relatively small amount on the same day the incident occurred”.
However, Bloomberg in April reported that the amount involved was worth more than Dh500 million. It said the matter involved employees of the bank who allegedly withdrew funds from dormant customer accounts.
Mr Coelho said "No customer accounts were impacted, directly or indirectly and the bank does not anticipate a loss from this incident," he said. "There will be no loss on the bank's balance sheet at all."
He said Al Hilal has strengthened its controls and procedures to prevent any such incident from recurring.
“Even before I arrived, the bank had been strengthening all of its core systems and improving its governances and all the aspects of fraud prevention,” he said.
How to improve Arabic reading in early years
One 45-minute class per week in Standard Arabic is not sufficient
The goal should be for grade 1 and 2 students to become fluent readers
Subjects like technology, social studies, science can be taught in later grades
Grade 1 curricula should include oral instruction in Standard Arabic
First graders must regularly practice individual letters and combinations
Time should be slotted in class to read longer passages in early grades
Improve the appearance of textbooks
Revision of curriculum should be undertaken as per research findings
Conjugations of most common verb forms should be taught
Systematic learning of Standard Arabic grammar
Breast cancer in men: the facts
1) Breast cancer is men is rare but can develop rapidly. It usually occurs in those over the ages of 60, but can occasionally affect younger men.
2) Symptoms can include a lump, discharge, swollen glands or a rash.
3) People with a history of cancer in the family can be more susceptible.
4) Treatments include surgery and chemotherapy but early diagnosis is the key.
5) Anyone concerned is urged to contact their doctor
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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!["We are not concerned with the general growth but we are concerned with qualitative growth, both in retail and corporate banking [businesses]," said Alex Coelho, CEO of Al Hilal Bank. Courtesy Al Hilal Bank](https://www.thenationalnews.com/resizer/v2/4WPDH3PVIPAGGAODCRPQ7VJ3ZY.jpg?smart=true&auth=c909ce996d4bd4856be8f7705379c2a79518ed2d6b93b21fce526c612d674211&width=800&height=450)
