United Arab Bank (UAB) boosted its profits sharply in the second quarter, taking market share from crippled international lenders battling debt troubles at home but leaving itself overextended.
The lender based in Sharjah reported net profits of Dh118.2 million (US$32.1m) in the second quarter, a 64.4 per cent increase compared with the same period last year as a result of improved operating income.
UAB had captured market share as international banks refocused on their home markets and scaled back in the Middle East, said Paul Trowbridge, the bank’s chief executive. “We’ve come under the radar and we’ve taken market share from other banks.”
While lending has grown at a snail’s pace across the sector so far this year, UAB has sought to find opportunities among “government and semi-governmental organisations”, particularly in Abu Dhabi, Mr Trowbridge added.
Last year, UAB was among the lenders that aggressively cut interest rates on home loans in an effort to revive property sales, sparking a pricing war over mortgage rates.
UAB grew its loan book by 5.6 per cent to Dh9.5 billion during the quarter as it opened new branches across the Emirates but deposit growth failed to keep pace.
The bank’s coverage of its loan book with deposits deteriorated, with the value of loans currently outstripping deposits by Dh1.2bn and total lending equivalent to 113 per cent of deposits. UAB plans to open three branches by the end of the year and a further five by the end of next year, in an effort to raise deposits and address the funding imbalance, Mr Trowbridge said.
ghunter@thenational.ae
