adminDubai. – Abu Dhabi’s largest lenders are embarking on an overseas expansion drive in pursuit of a US$137 billion corporate-banking market stretching from Asia to Africa.
National Bank of Abu Dhabi PJSC, the emirate’s biggest lender, is planning hubs in cities such as Mumbai and Lagos to boost growth and fees, while second-ranked First Gulf Bank PJSC is seeking to more than double the share of profit at its international unit and plans offices in China and Indonesia. Abu Dhabi Islamic Bank PJSC, the emirate’s largest bank complying with Muslim banking rules, is expanding in North Africa.
The banks, stifled for growth in a nation of 8,3 million, are expanding to cut dependence on local real estate markets and access trade flows across the Middle East, Africa and Asia which National Bank of Abu Dhabi estimates are driving a US$137 billion revenue opportunity for corporate-banking deals and advice. International expansion may also help banks beat new regulations that will restrict lending to government-related companies.
“There isn’t much growth left domestically, especially for the big balance sheet banks. It would be hard for a bank like NBAD to achieve 15 to 20 percent growth unless they start growing again into the public sector, real-estate and construction. Banks are increasingly looking for growth opportunities outside the UAE,” Aybek Islamov, a Dubai-based banking analyst said.
NBAD, as National Bank of Abu Dhabi is known, also plans hubs in Singapore, Hong Kong, London, Paris and Washington, DC, to serve clients in five key industries, Chief Executive Officer Alex Thursby said.
The banks will build “more than a one-branch presence” in five large, fast-growing developing economies with an expanding middle class, Thursby said. Egypt will be the first and Malaysia probably the second.
“A key part of our strategy is to build a wholesale bank across the west-east corridor. This area will have the greatest growth of the middle class,” which for NBAD extends from the west coast of Africa to the east coast of China, Thursby wrote in e-mailed comments.
NBAD already has a presence in 17 countries from China to the UK. Its international business contributed 17 percent of revenue in the nine months through September.
The UAE, with about 51 lenders, has the biggest banking market in the six-nation Gulf Cooperation Council, which also includes Saudi Arabia and Qatar.
Abu Dhabi, the biggest and the richest of the seven emirates that make up the UAE and holder of about 6 percent of the world’s oil reserves, is joining neighbouring Dubai in investing in tourism, metals, ports and real estate to diversify its economy. – AFP.
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