Dubai’s Mashreq bank looks beyond oil-rich countries for growth

The bank wants 30 per cent of its operating income to come from international business in the next five years.

Mashreq bank said that it is aiming to boost its international business in countries including China, India and Egypt to diversify the lender’s source of income away from the oil-dependent nations of the Arabian Gulf that have been hit hard in recent years by low hydrocarbon prices.

“In the past year, growth in the international business was very helpful that we could rely on revenue outside of the UAE as a buffer,” said Jan-Willem Sudmann, group head for international banking at Mashreq.

“I would see us in the next four to five years, the goal we have set ourselves is 30 per cent [of operating income from international business[ from the current 24 per cent. I believe the way trade patterns will change over the next years are very much that we will see Asia coming to the centre of globalisation and in particular of growth in trade.”

The bank has branches in Qatar, Kuwait, Bahrain, Egypt, India and Hong Kong and has representative offices in Bangladesh, Nepal and Pakistan. The two that are receiving the most focus for growth are Hong Kong and India, he said.

And while the bank has been focusing on trade finance opportunities in India, it is now keen to financially service UAE corporations that are doing business in India and vice versa, the executive said.

Mashreq is not the only bank in the region to have cottoned on to India’s growth potential and a number of its competitors both at home and abroad, including National Bank of Abu Dhabi and Qatar’s Doha Bank, have in recent years secured lic­ences to operate there.

The country has been feted by international investors over the past couple of years after the election of the reform-minded Narendra Modi to the office of prime minister and dwindling oil prices, which have given a boost to government finances. The country is expected to grow by about 7.5 per cent this year, outpacing its neighbouring competitor China.

“There are a number of GCC banks that are moving into India, but they are establishing new businesses there, so they are coming from small levels,” the banker said. “There is room for everyone but it is also a challenging environment as the past has shown us. The Indian banks are growing quite fast and quite aggressively.”

Meanwhile, in Egypt, Mashreq is upbeat despite recent political upheavals. The banker said he sees potential for growth in Egypt after the devaluation of the currency in November and the country’s subsequent move to secure a US$12 billion loan from the IMF.

Even though the Egyptian pound lost 150 per cent of its value against the US dollar after the central bank floated the currency, Mr. Sudmann said the bank did not see a flood of default from clients with debt in hard currency and that the bank would continue lending to big corporations.

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