Emirates NBD, the Gulf Corporation Council’s largest
bank by assets, saw group net profit tumble 29% to $408.3m in the
first half of 2010. But retail banking profit soared 117% in the
same period. Jamal Bin Ghalaita, the bank’s deputy chief executive,
tells Farah Halime how its 2009 merger has boosted retail
banking.
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Emirates NBD is the Gulf Corporation Council’s (GCC)
biggest bank by assets with $76.7bn. It is the amalgamation of
Emirates Bank and National Bank of Dubai after a merger in 2009,
giving it the largest branch network, with around 120 branches and
ATM network (over 578 ATMs and CDMs) in the United Arab Emirates
(UAE).
The bank has since seen its head of
retail, Suvo Sarkar, jump ship to National Bank of Abu Dhabi in
February, with incoming Abdulelah Al Kindly taking control.
But the change in management hasn’t
impacted first half earnings, with the bank posting a massive
116.8% increase in retail profit to AED478.9m, compared to
AED220.9m in the first half of 2009. This in stark contrast to
Emirate NBD’s group net profit, which fell 28.9% to AED1.5bn or
$408.3million in the first half of 2010.
Retail loans were down 7.5% to
AED27.7bn, from AED30bn in the comparable period of 2009. But
deposits in the retail banking unit jumped 15.7% from AED53.8bn to
AED62.2bn in the first half of 2010.
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By GlobalDataThis had a positive affect on net
fee and commission income, which ticked 23.6% higher to AED463.8m,
compared with the year-ago period.
Jamal Bin Ghalaita, the bank’s
deputy chief executive, tells RBI how Emirates NBD will
slow loan losses, how it has boosted retail deposits and what is on
the cards for the year ahead.
Retail Banker
International (RBI): What is your take on the UAE retail
banking market at the moment?
Jamal Bin Ghalaita (JBG): The UAE Retail Banking market
has witnessed challenges in the last 18 months. However, the market
has started to stabilise; deposits are less volatile, credit
portfolio performance is improving owing to new business
underwritten, the customer base is expanding, with our SME
customers also showing early signs of revival.
RBI: Following the
merger of Emirates Bank and National Bank of Dubai, what have been
the main effects on the retail banking division?
JBG: The two biggest effects of the merger were the launch
of the new brand Emirates NBD and the significant expansion of our
retail franchise.
Additionally, we were able to
harmonise our offering. We aligned our products and services with
unified pricing and simplified our processing by adopting a
centralised approach for running operations. We were able to build
on the different yet effective sales approaches that existed in the
two legacy banks.
In short, we were able to reshape
the whole retail banking division, leveraging the strengths of the
legacy bank networks.
RBI: What are your
retail banking priorities in 2010? What will you focus on in
particular?
JBG: The top priority has been the completion of the
integration process, especially the deployment of a new core
banking platform that has enabled us to efficiently manage the
business. Our focus in 2010 is on improving our service levels,
bringing down the cost of doing business, enhancing productivity
and improving cross-sell.
RBI: In your
first-quarter results since the merger, the CEO of the bank, Rick
Pudner, said there will be continued investment in private banking
and Abu Dhabi expansion. How does retail banking fit into the plan,
if at all?
JBG: Private banking and Abu Dhabi expansion are the
pillars of our retail growth strategy. Private banking is an
extension of our offering to individual customers while the Abu
Dhabi market is extremely attractive from both corporate and retail
perspective.
In short, retail banking will
continue to be a critical component for the bank given our profile
and the customer franchise that we have in the UAE.
RBI: Could you tell
me a bit more about Emirate NBD’s plans to expand in Abu Dhabi. Is
it in terms of boosting the branch network?
JBG: The Abu Dhabi expansion strategy, in a nutshell, is
to bring our segmented offering to the customers in this market
with the same rigour and passion as we have in Dubai. A reflection
of this focus is the expansion of our retail footprint with the
opening of three new branches in Abu Dhabi and Al Ain area in the
last eight months.
RBI: What other
countries are you looking at expansion?
JBG: We continue to focus on growing and improving part of
our existing platforms in Saudi Arabia, London and Jersey. In terms
of inorganic growth we are always looking for the right
opportunities in the GCC region, at the right price.
RBI: How will the
bank cope with rising retail impairments and how will it slow loan
losses?
JBG: We have always pushed the ‘borrow wisely’ message to
our customers and we continue to lend in a structured manner that
does not burden our customers.
We also work very closely with the
UAE Central Bank and internal guidelines and policies on the
general and specific impairments. We are using extensive analytics
to manage our loss rates and have seen significant improvement in
retail asset quality.
Additionally, we have renewed our focus on providing our staff
with world-class tools, processes and training to enable them in
improving the portfolio health and managing customer needs in times
of economic challenges.
