National Bank of Abu Dhabi, the emirate’s biggest lender by assets, said that trade between the Middle East, Africa and Asia has grown at a faster pace than it had forecast, allowing it to make more money from financing the intercontinental flow of goods.
“At a macro level, in our planning period we were forecasting 12 per cent and at the moment we are looking at 14 per cent to 15 per cent annually,” said Alex Thursby, the bank’s chief executive. “Our business, the core business of trade, is growing at 20 per cent to 25 per cent. The majority of that was funding trade flows between Asia, Africa and the Middle East.”
NBAD has been betting that its growth in the coming years will be fuelled in part by what it calls the West-East corridor that spans fast-growing emerging markets such as China, India and Egypt.
Mr Thursby said shortly after he was appointed chief executive in 2013 that NBAD planned to build eight hubs in a West-East geographical corridor of emerging markets spanning cities such as Mumbai to tap an intercontinental trade flow valued at US$137 billion.
The bank’s five-year plan includes setting up hubs in Abu Dhabi, Lagos, Washington, Mumbai, Singapore, Hong Kong, London and Paris. The bank has also said that it wants to build retail banking networks in a select number of emerging markets including Egypt.
Along with expanding the bank internationally, Mr Thursby said he wanted to focus more on generating fees in other parts of the bank’s business, such as foreign exchange and trade finance, as well as capturing trade flows. That is because the profit margin it is making on lending to customers in the Emirates is being squeezed as interest rates continue to inch lower.
Mr Thursby said that the recent drop in oil prices had some silver linings. He said Dubai would benefit from lower oil prices because it relies on doing business with many countries around it that are net oil importers, such as India. It is also increasing trade into Africa, he said.
“Trade in the West-East corridor is growing because of two reasons,” he said.
“The first reason is that the driver of Asia is requiring so much more of energy, agricultural, even manufactured goods in some cases. Africa is also growing at a good rate – from 4 per cent to 6 per cent, depending on the country.”
mkassem@thenational.ae
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