Abu Dhabi’s Hilal Bank Considers Capital Hike To Fuel Growth -CEO

Abu Dhabi government-owned Al Hilal Bank is considering a capital increase this year to support growth of its operations, its chief executive said on Monday.

The Islamic lender, owned by the Abu Dhabi Investment Council, an investment arm of the Abu Dhabi government, plans to expand its retail and wholesale banking business locally and internationally over the next five years.

“There might be a need to raise capital this year. We have a strong shareholder supporting us, and there is also a market to raise capital,” Mohamed Jamil Berro said in an interview.

He declined to elaborate. Asked about the possibility of an initial public offer of shares to raise capital, he said the decision lay with shareholders.

Unlisted Al Hilal has paid-up capital of Dhs4 billion ($1.08 billion), of which Dhs3.09 billion have been drawn. The bank’s capital adequacy ratio is around 13 per cent, below the average of roughly 20 per cent for banks in the United Arab Emirates. The UAE central bank stipulates a minimum 12 per cent ratio for banks.

Al Hilal posted a net profit of Dhs441.4 million last year, up 42 per cent on the back of strong asset growth. Berro said growth could slow to more sustainable levels this year.

“We may not sustain 40 or 42 per cent – we will sustain a good level, the average of the market, of high teens in 2014,” he said.

The bank’s assets grew 20 per cent to Dhs38.71 billion in 2013.

Al Hilal plans to grow organically in its domestic market, maintaining a 60:40 balance between retail and wholesale (corporate) business, while any overseas expansion or acquisitions will be opportunistic, Berro said.

“For the next five years, there is plenty in the local economy for us to grow,” he said.

The bank plans to open two new branches in the UAE this year, taking the total to 24 including three overseas branches in Kazkhstan.