Emirates NBD sees high single-digit retail book growth this year and next

The biggest bank in Dubai expects its cards business to continue growing and NPLs to remain under check

A logo sits on display outside the main office for the Emirates NBD PJSC bank in Dubai, United Arab Emirates, on Tuesday, Sept. 4, 2018. Abu Dhabi is engineering a second bank merger in its latest attempt to stay competitive in the era of lower oil prices. Photographer: Christopher Pike/Bloomberg
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Emirates NBD, the biggest lender in Dubai by assets, expects its retail banking business that accounts for about half of the bank’s total revenues to grow in high single digits this year and in 2019 as bad loans remain under check and the UAE’s economy picks up.

"We are pretty much on track to meet it [growth targets]," Suvo Sarkar, senior executive vice-president and group head of retail banking told The National on Tuesday. "Across all our products, we are growing market share, which goes to tell you that customers care about the banks with solid brands and good service."

Banks in the UAE, the second-biggest economy in the Arabian Gulf region, are expected to perform better this year than last, as liquidity improves on a stronger economic environment and a rebound in oil prices, which are hovering around $70 per barrel mark after a three-year slump. However, profits for the lenders will likely settle at a lower rate than the pre-oil price crisis years, while margins will remain tight, analysts from Moody’s and S&P have predicted this year.

Mr Sarkar said there are “headwinds for sure for most of the participants of the market”, but customer-focused banks are doing better than the rest.

“We are still seeing growth of revenues as budgeted so we are not seeing any impact on our revenues this year, both for private and retail banking,” Mr Sarkar, who also looks after the bank’s wealth management business, said on the sidelines of Emirates NBD’s Emaar-branded cards launch ceremony in Dubai.


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Double-digit growth in spending on Emirates ENB cards is also helping the lender’s overall retail book growth. About 80 per cent of the expenditures in the UAE are in cash so card business volumes are set to continue growing. The growth in the cards business probably doesn’t reflect the state of the retail stores, where total sales of card and cash may or may not be growing for the banks, however, for the lenders, cards are the one of the fastest growing areas of the business, he noted.

“We are seeing the spend grow on our cards 15 per cent year-on-year. That is helping us in getting a very decent revenue growth in [our] card business, Mr Sarkar said. “Even the Government is working very closely with the UAE Banking Federation to make transactions more secure through cards.”

Non-performing loans, which plagued the retail books of some of the lenders after Government spending cuts resulted in job losses, are “totally under control” for the Dubai-headquartered lender, he said.

“We have been with the [Etihad] Credit Bureau and that has helped us to keep our new vintages in check. Loss rate on cards is 5 per cent [and] our overall retail book is about 2 per cent so, as of now, we don’t really see a reason to worry,” he said.

In July Emirates NBD reported a 30 per cent growth in its second-quarter net profit, beating analysts’ forecasts, on the back of higher net interest income and lower provisions. Its net income attributable to equity holders climbed to Dh2.6 billion in the three months to the end of June.